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  Exhibit 10.1 EMPLOYMENT AGREEMENT      This Employment Agreement (this “Agreement”) is entered into by and between Offshore Logistics, Inc., a Delaware corporation (the “Company”) and Michael R. Suldo, an individual (the “Executive”), effective as of the 1st day of June, 2005 (“Effective Date”). Except as otherwise provided herein, capitalized terms used herein shall have the meaning specified in Section 10.      WHEREAS, the Company desires to employ the Executive and to enter into an employment agreement embodying the terms of such employment and services; and      WHEREAS, the Executive desires to accept such employment and service as a Senior Vice President of the Company and to enter into this Agreement.      NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which is mutually acknowledged, the Company and the Executive agree as follows:      1. Employment, Duties and Acceptance.      (a) Employment Period.      (i) The Company hereby agrees to employ the Executive for a term commencing on the Effective Date and expiring at the end of the day on May 31, 2007 (the “Initial Employment Period”).      (ii) The Initial Employment Period shall be automatically further extended at the end of the Initial Employment Period and on each anniversary thereafter (each such date being a “Renewal Date”), so as to terminate one (1) year from such Renewal Date, unless at least ninety (90) days prior to a Renewal Date either Party gives a Notice of Non-Renewal to the other Party that the Employment Period should not be further extended after the next Renewal Date, in which event the end of the term of the Executive’s employment by the Company shall be the Renewal Date next following such Notice of Non-Renewal. As used in this Agreement, the “Employment Period” shall mean the period beginning on the Effective Date and ending on the expiration of the term of the Executive’s employment with the Company pursuant to this Section 1(a), subject to earlier termination of the Executive’s employment with the Company pursuant to Section 3 hereof.      (iii) Notwithstanding the foregoing provisions of this Section 1(a), if a Change of Control Effective Date (as defined in Section 10(i) hereof) occurs during the Employment Period, then the Employment Period shall extend to include and shall terminate at the end of the Change of Control Period, subject to earlier termination pursuant to Section 3 hereof, and the Employment Period shall no longer be subject to extension on the Renewal Date.      (b) Position. From and after the Effective Date during the remainder of the Employment Period, the Executive shall serve as a Senior Vice President of the Company and   --------------------------------------------------------------------------------   shall report to the President and Chief Executive Officer of the Company. Executive shall also serve in those offices and directorships of subsidiary corporations or entities of the Company to which the Executive may from time to time be appointed or elected, including, but not limited to, President of Air Logistics, L.L.C. During the Employment Period, the Executive shall devote substantially all of the Executive’s business time, energy and talents to the Company and its Affiliated Group. During the Employment Period, it shall not be a violation of this Agreement for the Executive, subject to the requirements of Section 5, to (A) serve on corporate, civic or charitable boards or committees, provided that, without the written approval of the Board, the Executive shall be permitted to serve on no more than one such corporate board, (B) deliver lectures or fulfill speaking engagements and (C) manage personal investments, so long as such activities do not interfere with the performance of the Executive’s responsibilities as a Senior Vice President of the Company or violate any Company policies.      (c) Location of Services. The Executive’s principal location of employment shall be at the Company offices located in New Iberia, Louisiana; provided, that the Executive will be required to travel frequently outside of the applicable principal location of employment in connection with the performing the Executive’s duties under this Agreement.      (d) Duties. The Executive agrees that during the Employment Period, the Executive shall be the Chief Operating Officer of the Company in the Western Hemisphere responsible for the management and supervision of the aircraft operations functions of the Company and the Affiliated Group in the Western Hemisphere. During any Change of Control Period, the Executive’s position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned to the Executive at any time during the 120-day period immediately preceding the Change of Control Effective Date.      (e) Acceptance of Employment by the Executive. The Executive hereby accepts such employment and shall render the services and perform the duties described above.      2. Compensation and Benefits.      (a) Base Salary. During the Employment Period, the Executive shall receive an annualized base salary (“Annual Base Salary”) at the rate of $215,000 (Company salary grade 12), payable semi-monthly or such other payroll period pursuant to the Company’s normal payroll practices for its senior executives. The current Annual Base Salary shall be reviewed at such time as the salaries of other senior executives of the Company are reviewed generally; provided, that the Executive’s reviews shall occur at least annually and may be increased and decreased, but not decreased below $215,000 per year, during the Employment Period. All such reviews shall consider factors the Company deems material; including, but not limited to: (i) market benchmarking; (ii) increases in cost of living; (iii) Executive’s job performance; and (iv) overall Company performance. During any Change of Control Period, the Annual Base Salary shall be at least equal to 12 times the highest monthly base salary paid or payable, including any base salary which has been earned but deferred, to the Executive by the Company and the Affiliated Group in respect of the 12-month period immediately preceding the month in which the Change of Control Effective Date occurs. During any Change of Control Period, (x) Annual 2 --------------------------------------------------------------------------------   Base Salary shall not be reduced, and (y) the term “Annual Base Salary” as utilized in this Agreement shall refer to Annual Base Salary as determined pursuant to the foregoing subpart (x).      (b) Annual Bonus. For each fiscal year completed during the Employment Period, the Executive shall be eligible to receive an annual cash bonus (“Annual Bonus”) based upon performance targets that are established by the Committee, provided that the Executive’s target Annual Bonus shall be equal to 50% of the Executive’s Annual Base Salary (the “Target Bonus”), and the maximum Annual Bonus shall be equal to 100% of the Executive’s Annual Base Salary. Annual performance metrics will be set by the Committee based upon objective performance criteria of the Company, such as earnings per share and return on capital employed, as well as individual performance and, with respect to the Company’s fiscal year ending March 31, 2006, pursuant to the provisions of the FY 2006 Annual Incentive Compensation Plan. During any Change of Control Period, the Executive shall be awarded, for each fiscal year ending during the Change of Control Period, an Annual Bonus in cash at least equal to the Recent Annual Bonus. Each such Annual Bonus shall be paid no later than the end of the third month of the fiscal year next following the fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect to defer the receipt of such Annual Bonus.      (c) Stock Option Grant. The Company shall grant to the Executive stock options pursuant to the Incentive Plan to purchase 3,700 shares of the Company’s common stock (the “Stock Options”). The Stock Options shall have a per share exercise price equal to the closing price of a share of common stock of the Company on the date of grant which shall be as soon as reasonably practicable after approval of this Agreement by the Committee, shall have a ten-year term, and shall vest in three annual installments on each of the first three anniversaries of the Effective Date, with 33% of the Stock Options vesting on each of first two anniversaries of the Effective Date, and the remaining 34% vesting on the third anniversary of the Effective Date, provided in each case that the Executive remains in the employ of the Company through such date. Except as specifically provided herein, the terms and conditions of the Stock Options shall be subject to the terms of the Incentive Plan and the award agreement evidencing the grant. During the Employment Period, the Executive may receive such additional Awards (as defined in the Incentive Plan), if any, pursuant to the Incentive Plan as may be determined, from time to time, by the Committee.      (d) Performance Accelerated Restricted Stock Unit Grant. The Company shall grant to the Executive pursuant to the Incentive Plan, 3,700 Performance Accelerated Restricted Stock Units (the “Restricted Shares”). The Restricted Shares will vest five years after the Effective Date so long as Executive has been continuously employed by the Company and the Company’s annualized total shareholder return (as defined in the award agreement) is at least 3% during the entire vesting period. Vesting of the Restricted Shares will be accelerated if the Company’s annualized total shareholder returns during such vesting period reach certain thresholds provided in the award agreement evidencing the grant of the Restricted Shares (which thresholds shall be consistent with those provided in awards to other senior executives of the Company) and under the circumstances described in Section 3(e). Except as specifically provided herein, the terms and conditions of the Restricted Shares shall be subject to the terms of the Incentive Plan and the award agreement evidencing the grant. During the Employment Period, the Executive may receive such additional Awards (as defined in the Incentive Plan), if any, pursuant to the Incentive Plan as may be determined, from time to time, by the Committee. 3 --------------------------------------------------------------------------------        (e) Deferred Compensation. As soon as reasonably practicable after December 31 of each year during the Employment Period the Company will credit an amount equal to fifteen percent (15%) of the aggregate cash paid by the Company to Executive as Annual Base Salary and Annual Bonus for the calendar year ended December 31 (less Company contributions to qualified plans) into a Company deferred compensation plan (the Offshore Logistics, Inc. Deferred Compensation Plan Effective: January 1, 2004, as amended from time to time), which will be subject to the vesting schedule set forth in such plan. In the event that legislation implemented subsequent to the date of this Agreement causes the deferrals contemplated hereby not to be respected for tax purposes, such amounts shall be paid to the Executive in the year of accrual on December 31st of each such year (conditioned on the Executive’s continued employment on such date), on a fully taxable basis, and without adjustment for tax impact.      (f) Employee Benefits. During the Employment Period, the Executive (subject to applicable law and regulation) shall be eligible for participation in the Company health and medical, welfare, retirement (including the Offshore Logistics, Inc. Employee Savings and Retirement Plan, as amended from time to time), non-qualified deferred compensation, perquisite, fringe benefit, and other benefit plans, practices, policies and programs, as may be in effect from time to time, for executives of the Company generally; provided, that, except as otherwise provided in this Agreement, the Executive shall not be eligible for any Company severance benefit plans, practices, policies and programs. As soon as reasonably practicable after execution and delivery of this Agreement by the Company and the Executive and thereafter during the Employment Period, the Company shall provide the Executive with a Company-paid portable, term life insurance policy covering the Executive’s life in the amount of $500,000 with death benefits payable to the Executive’s designated beneficiaries. The Executive shall cooperate with the Company in applying for such coverage, including submitting to a physical exam and providing all relevant health and personal data. During any Change of Control Period, in no event shall the benefits described in this Section 2(f) provide the Executive with benefits that are less favorable, in the aggregate, than the most favorable of such benefits in effect for the Executive at any time during the 120-day period immediately preceding the Change of Control Effective Date or, if more favorable to the Executive, those provided generally at any time after the Change of Control Effective Date to other peer executives of the Company and the Affiliated Group.      (g) Expenses. During the Employment Period, the Executive shall be eligible for prompt reimbursement for business expenses reasonably incurred by the Executive in accordance with the policies of the Company as may be in effect from time to time for Company executives generally.      (h) Vacation. During the Employment Period, the Executive shall be eligible for paid vacation at the rate of four (4) weeks per year in accordance with the policies of the Company.      (i) Company Automobile. During the Employment Period, the Company shall provide the Executive with an automobile allowance of $1,500 per month to be used by Executive to acquire, maintain and operate an automobile which Executive may use for business purposes during the Employment Period. 4 --------------------------------------------------------------------------------        (j) Office and Support Staff. During any Change of Control Period, the Executive shall be entitled to an office or offices of a size and with furnishings and other appointments, and to exclusive personal secretarial and other assistants, at least equal to the most favorable of the foregoing provided to the Executive by the Company and the Affiliated Group at any time during the 120-day period immediately preceding the Change of Control Effective Date or, if more favorable to the Executive, as provided generally at any time thereafter with respect to other peer executives of the Company and the Affiliated Group.      3. Termination of Employment.      (a) Death or Disability. The Executive’s employment shall terminate automatically upon the Executive’s death during the Employment Period. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may provide the Executive with written notice in accordance with Section 9(b) of this Agreement of its intention to terminate the Executive’s employment. In such event, the Executive’s employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”), provided that, within the 30-day period after such receipt, the Executive shall not have returned to full time performance of the Executive’s duties.      (b) Cause. The Company may terminate the Executive’s employment during the Employment Period with or without Cause.      (c) Good Reason. The Executive’s employment may be terminated by the Executive with or without Good Reason. The Executive’s employment may be terminated by the Executive for Good Reason if (x) an event or circumstance set forth in Section 10(aa) shall have occurred and the Executive provides the Company with written notice thereof within 30 days after the Executive has knowledge of the occurrence or existence of such event or circumstance, which notice shall specifically identify the event or circumstance that the Executive believes constitutes Good Reason, (y) the Company fails to correct the circumstance or event so identified within 30 days after the receipt of such notice, and (z) the Executive resigns within 90 days after the date of delivery of the notice referred to in clause (x) above.      (d) Notice of Termination. Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other Party hereto given in accordance with Section 9(b) of this Agreement. The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the rights of the Executive or the Company hereunder.      (e) Special Vesting Terms for Stock Option and Awards. All unvested Stock Options and other Awards (including, without limitation, the Restricted Shares) granted pursuant to this Agreement or the Incentive Plan will become fully vested and unrestricted (i) in the event of the Company’s termination of the Executive’s employment without Cause during the Employment Period, (ii) upon termination of the Executive’s employment by the Company due to the 5 --------------------------------------------------------------------------------   Executive’s death or Disability, or (iii) upon the occurrence of a Change of Control. If the Executive’s employment is terminated prior to the Termination Date, the period of exercise for the Executive’s vested Stock Options shall be as follows:      (i) Upon the Executive’s termination of employment by reason of the Executive’s death or Disability, any Stock Options held by the Executive that were exercisable immediately before the Date of Termination may be exercised at any time until the earlier of (A) the second anniversary of the Date of Termination and (B) the expiration date of the Stock Options.      (ii) Upon the Executive’s termination of employment by the Company for Cause, any Stock Options and Restricted Shares held by the Executive shall be forfeited, effective as of the Date of Termination.      (iii) Upon termination of the Executive’s employment for any reason other than the Executive’s death or Disability or termination by the Company for Cause, any Stock Options held by the Executive that were exercisable immediately before the Date of Termination may be exercised at any time until the earlier of (A) the 90th day following the Date of Termination and (B) the expiration date of such Stock Options.      (iv) Notwithstanding the foregoing provisions of this Section 3(e), if the Executive dies after the Executive’s employment by the Company is terminated but while any of the Stock Options remain exercisable as set forth above, such Stock Options may be exercised at any time until the later of (A) the earlier of (1) the first anniversary of the date of such death and (2) the expiration date of such Stock Options and (B) the last date on which such Stock Options would have been exercisable, absent this Section 3(e)(iv).      (v) Notwithstanding the foregoing provisions of this Section 3(e), upon the termination of the Executive’s employment with the Company for any reason, other than termination for Cause by the Company, during the 24-month period following any Change of Control Effective Date, any Stock Options held by the Executive as of the Change of Control Effective Date that remain outstanding as of the Date of Termination may thereafter be exercised, until the later of (A) the last date on which such Stock Options would be exercisable in the absence of this Section 3(e)(v) and (B) the earlier of (1) the third anniversary of the Change of Control Effective Date and (2) the expiration date of such Stock Options. Notwithstanding anything in this Agreement to the contrary, express or implied, except as provided in Section 4(a)(ii), the provisions of this Agreement are in addition to and not in limitation of the Executive’s rights under the Incentive Plan and any other plan, program, policy or practice provided by the Company or any of the Affiliated Group and for which the Executive may qualify.      (f) Resignation from All Positions. Notwithstanding any other provision of this Agreement, upon the termination of the Executive’s employment for any reason, unless otherwise requested by the President and Chief Executive Officer and accepted by the Executive, the Executive shall immediately resign as of the Date of Termination from all positions that the 6 --------------------------------------------------------------------------------   Executive holds or has ever held with the Company and any other member of the Affiliated Group (and with any other entities with respect to which the Company has requested the Executive to perform services and which has been accepted by the Executive), including, without limitation, all boards of directors of any member of the Affiliated Group. The Executive hereby agrees to execute any and all documentation to effectuate such resignations upon request by the Company, but the Executive shall be treated for all purposes as having so resigned upon termination of the Executive’s employment, regardless of when or whether the Executive executes any such documentation.      4. Obligations upon Termination.      (a) Good Reason; Other Than for Cause; Non-Renewal by Company; Expiration. If, during the Employment Period, (1) the Company shall terminate the Executive’s employment other than for Cause, death or Disability, (2) the Executive shall terminate the Executive’s employment for Good Reason, (3) the Executive’s employment terminates voluntarily or involuntarily by reason of the Company providing to the Executive a Notice of Non-Renewal, or (4) the Executive’s employment terminates voluntarily or involuntarily upon expiration of the term of this Agreement at the end of a Change of Control Period unless the Company provides the Executive with a Comparable Offer at least ninety (90) days prior to the end of the Change of Control Period:      (i) The Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the aggregate of the following amounts:   A.   the Accrued Amounts (as defined in Section 10(a) hereof); and     B.   an amount equal to:   (1)   in the event such termination occurs at any time other than a Change of Control Period, the product of (x) two and (y) the sum of (i) the Executive’s Annual Base Salary at the Date of Termination and (ii) the Target Bonus; or     (2)   in the event such termination occurs during or at the end of a Change of Control Period, the product of (x) three and (y) the sum of (i) the Executive’s Annual Base Salary and (ii) the Highest Annual Bonus.      (ii) To the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement (other than, in the event the Executive’s termination occurs outside of a Change of Control Period, any severance plan, program, policy or practice or contract or agreement) of the Company and its Affiliated Group (such amounts and benefits, the “Other Benefits”) in accordance with the terms and normal procedures of each such plan, program, policy or practice, based on accrued benefits through the Date of Termination. 7 --------------------------------------------------------------------------------        (iii) Until the earlier to occur of (A) the expiration of eighteen months after the Date of Termination, (B) the date on which the Executive attains the age of 65, (C) the date the Executive first becomes eligible to receive health benefits under another employer-provided plan, from and after the Executive’s Date of Termination, or (D) the death of the Executive, the Company shall, via proper COBRA election by Executive, continue medical and dental benefits to the Executive (and, if applicable, to the spouse and dependents of the Executive who received such benefits under the Executive’s coverage immediately prior to the Date of Termination) at least equal to those that would have been provided to the Executive (and to any such dependent) in accordance with the plans, programs, practices and policies of the Company had the Executive remained actively employed, provided that Executive makes all required COBRA payments to the Company, and the Company shall immediately reimburse Executive for each such COBRA payment.      (iv) As a condition to the Executive’s receipt of payments and benefits described under Sections 4(a)(i), 4(a)(ii) and 4(a)(iii) in the event the Executive’s termination occurs outside of a Change of Control Period, the Executive must execute and deliver to the Company a full release of all claims that the Executive may have (and such release must become irrevocable) against the Company, its Affiliated Group, and all of their officers, employees, directors, and agents, in a form mutually and reasonably agreeable to the Parties hereunder; provided, however, that the Executive shall retain the Executive’s indemnification and related rights as a former officer and director under the Certificate of Incorporation and Bylaws of the Company and the Executive’s rights under the Directors and Officers Insurance Policy(ies) maintained by the Company from time to time.      (b) Cause; Without Good Reason; Non-Renewal by Executive. If the Executive’s employment shall be terminated for Cause during the Employment Period, if the Executive shall resign without Good Reason during the Employment Period, or if the Executive’s employment terminates by reason of the Executive providing to the Company a Notice of Non-Renewal, this Agreement shall terminate without further obligations to the Executive, other than the Company’s obligation to pay or provide to the Executive an amount equal to the Accrued Amounts and the Other Benefits. For purposes of this Section 4(b) only, the Accrued Amounts shall not include the amount described in Section 10(a)(i)(2).      (c) Death or Disability. If the Executive’s employment is terminated by reason of the Executive’s death or Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive’s legal representatives under this Agreement, other than the Company’s obligation to pay or provide to Executive’s estate, heirs or beneficiaries or to Executive, as the case may be: (i) the Accrued Amounts; and (ii) the Other Benefits. With respect to the provision of Other Benefits, in the event the Executive’s termination occurs during a Change of Control Period, the term “Other Benefits” as utilized in this Section 4(c) shall include, without limitation, and the Executive’s estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most favorable benefits provided by the Company and the Affiliated Group to the estates and beneficiaries of peer executives of the Company and the Affiliated Group under such plans, programs, practices and policies relating to death benefits, if any, as in effect with respect to other peer executives and their beneficiaries at any time during 8 --------------------------------------------------------------------------------   the 120-day period immediately preceding the Change of Control Effective Date or, if more favorable to the Executive’s estate and/or the Executive’s beneficiaries, as in effect on the date of the Executive’s death with respect to other peer executives of the Company and the Affiliated Group and their beneficiaries.      5. Covenants. The Executive recognizes that the Company’s willingness to enter into this Agreement is based in material part on the Executive’s agreement to the provisions of this Section 5, and that the Executive’s breach of the provisions of this Section 5 could materially damage the Company.      (a) Confidential Information. The Company will provide its confidential and trade secret information to the Executive, and the Executive agrees to hold in a fiduciary capacity for the benefit of the Company and the Affiliated Group, all Confidential Information. The Executive shall not communicate, divulge or disseminate Confidential Information at any time during or after the Executive’s employment with the Company and the Affiliated Group, except with the prior written consent of the Company, or as otherwise required by law or legal process or governmental inquiry or as such disclosure or use may be required in the course of the Executive performing the Executive’s duties and responsibilities hereunder. Notwithstanding the foregoing provisions, if the Executive is required to disclose any such confidential or proprietary information pursuant to applicable law or governmental inquiry or a subpoena or court order, the Executive shall promptly notify the Company in writing of any such requirement so that the Company or the appropriate member of the Company and the Affiliated Group may seek an appropriate protective order or other appropriate remedy. The Executive shall reasonably cooperate with the Company and the Affiliated Group to obtain such a protective order or other remedy. If such order or other remedy is not obtained prior to the time the Executive is required to make the disclosure, then unless the Company waives compliance with the provisions hereof, the Executive shall disclose only that portion of the confidential or proprietary information which the Executive is advised by counsel in writing (either the Executive’s or the Company’s) that the Executive is legally required to so disclose. Upon the Executive’s termination of employment with the Company and the Affiliated Group for any reason, the Executive shall promptly return to the Company all records, files, memoranda, correspondence, notebooks, notes, reports, customer lists, drawings, plans, documents, and other documents and the like relating to the business of the Company and the Affiliated Group or containing any trade secrets relating to the Company and the Affiliated Group or that the Executive uses, prepares or comes into contact with during the course of the Executive’s employment with the Company and the Affiliated Group, and all keys, credit cards and passes, and such materials shall remain the sole property of the Company and/or the Affiliated Group, as applicable. The Executive agrees to execute any standard form confidentiality agreements with the Company that the Company generally enters into or may enter into in the future with its senior executives. The Executive agrees to represent in writing to the Company upon termination of employment that the Executive has complied with the foregoing provisions of this Section 5(a).      (b) Work Product and Inventions. The Company and/or its nominees or assigns shall own all right, title and interest in and to the Developments, whether or not patentable, reduced to practice or registrable under patent, copyright, trademark or other intellectual property law anywhere in the world, made, authored, discovered, reduced to practice, conceived, created, developed or otherwise obtained by the Executive (alone or jointly with others) during the 9 --------------------------------------------------------------------------------   Executive’s employment with the Company and the Affiliated Group, and arising from or relating to such employment or the business of the Company or of other member of the Affiliated Group (whether during business hours or otherwise, and whether on the premises of using the facilities or materials of the Company or of other members of the Affiliated Group or otherwise). The Executive shall promptly and fully disclose to the Company and to no one else all Developments, and hereby assigns to the Company without further compensation all right, title and interest the Executive has or may have in any Developments, and all patents, copyrights, or other intellectual property rights relating thereto, and agrees that the Executive has not acquired and shall not acquire any rights during the course of the Executive’s employment with the Affiliated Group or thereafter with respect to any Developments.      (c) Non-Solicitation of Affiliated Group Employees. The Executive shall not, at any time during the Restricted Period, other than in the ordinary exercise of the Executive’s duties while serving as a Senior Vice President, without the prior written consent of the Company, directly or indirectly, solicit, recruit, or employ (whether as an employee, officer, agent, consultant or independent contractor) any person who is or was at any time during the previous 12 months, an employee, representative, officer or director of the Company or any member of the Affiliated Group. Further, during the Restricted Period, the Executive shall not take any action that could reasonably be expected to have the effect of directly encouraging or inducing any person to cease their relationship with the Company or any member of the Affiliated Group for any reason. A general employment advertisement by an entity of which the Executive is a part will not constitute solicitation or recruitment.      (d) Non-Competition. In consideration of the Company’s promise to provide the Executive with the confidential and trade secret information of the Company, the Executive agrees as follows:      (i) Areas Other Than Louisiana. Except with respect to competition in the State of Louisiana, or with respect to competition in or above the waters off the State of Louisiana in the areas specified in subparagraph (B) of Section 5(d)(ii) of this Agreement, during the Restricted Period, the Executive shall not, either directly or indirectly, compete with the business of the Company anywhere in the world where the Company or any member of the Affiliated Group conducts business by (1) becoming an officer, agent, employee, partner or director of any other corporation, partnership or other entity, or otherwise render services to or assist or hold an interest (except as a less than 2-percent shareholder of a publicly traded corporation or as a less than 5-percent shareholder of a corporation that is not publicly traded) in any Competitive Business, or (2) soliciting, servicing, or accepting the business of (A) any active customer of the Company or any member of the Affiliated Group, or (B) any person or entity who is or was at any time during the previous twelve months a customer of the Company or any member of the Affiliated Group, provided that such business is competitive with any significant business of the Company or any member of the Affiliated Group.      (ii) Louisiana. With respect to competition in the State of Louisiana, or with respect to competition in or above the waters specified in subparagraph (B) of this Section 5(d)(ii). 10 --------------------------------------------------------------------------------     A.   Executive, during the Restricted Period, agrees to refrain from carrying on or engaging in a business similar to the business of the Company or any member of the Affiliated Group, or from soliciting customers of the business of the Company or any member of the Affiliated Group, within the Parishes of Lafayette, Vermillion, Cameron, Iberia, St. Mary, Plaquemines, Terrebonne, Lafourche, St. Bernard, Orleans, Calcasieu and Jefferson in the State of Louisiana, so long as the Company or any member of the Affiliated Group carries on a like business therein during the Restricted Period, and     B.   Executive, during the Restricted Period, agrees to refrain from carrying on or engaging in a business similar to the business of the Company or any member of the Affiliated Group or from soliciting customers of the business of the Company or any member of the Affiliated Group in or above the waters of the Gulf of Mexico adjacent to the Parishes of Lafayette, Vermillion, Cameron, Iberia, St. Mary, Plaquemines, Terrebonne, Lafourche, St. Bernard, Orleans, Calcasieu and Jefferson in the State of Louisiana, so long as the Company or any member of the Affiliated Group carries on a like business therein during the Restricted Period.     C.   All non-capitalized terms in subparagraphs (A) and (B) of this Section 5(d)(ii) are intended to and shall have the same meanings that those terms (to the extent they appear therein) have in La. R.S. 23:921.C. Subject to and only to the extent not inconsistent with the foregoing sentence, the Parties understand the following phases to have the following meanings:   (1)   The phrase “carrying on or engaging in a business similar to the business of the Company or any member of the Affiliated Group” includes engaging, as principal, agent, trustee, or through the agency of any corporation, partnership, association or agent or agency, in any business that conducts an offshore oil and gas helicopter service business in competition with the Company or any member of the Affiliated Group or being the owner (except as a less than 2-percent shareholder of a publicly traded corporation or as a less than 5-percent shareholder of a corporation that is not publicly traded) of any interest in any corporation or other entity, or an officer, director, or employee of any corporation or other entity (other than the Company or any member of the Affiliated Group), or a member or employee or any partnership, or an owner or employee of any other business that conducts an offshore oil and gas helicopter service business in competition with the Company or any member of the Affiliated Group. Moreover, the term also includes (i) directly or indirectly inducing any current customers of the Company or any member of the Affiliated Group to patronize any offshore oil and gas helicopter service business in competition with the Company or any member of the Affiliated 11 --------------------------------------------------------------------------------         Group; (ii) canvassing, soliciting, or accepting any offshore oil and gas helicopter service business of the type conducted by the Company or any member of the Affiliated Group; (iii) directly or indirectly requesting or advising any current customers of the Company or any member of the Affiliated Group to withdraw, curtail or cancel such customer’s offshore oil and gas helicopter service business with the Company or any member of the Affiliated Group; or (iv) directly or indirectly disclosing to any other person, firm, corporation or entity, the names and addresses of any of the current customers of the Company or any member of the Affiliated Group. In addition, the term includes, directly or indirectly, through any person, firm, association, corporation or other entity with which Executive is now or may hereafter become associated, causing or inducing any present employee of the Company or any of its subsidiaries to leave the employ of the Company or any of its subsidiaries to accept employment with the Executive or with such person, firm association, corporation, or other entity.   (2)   The phrase “a similar business to the business of the Company or any member of the Affiliated Group” means an offshore oil and gas helicopter service business.     (3)   The phrase “carries on a like business” includes, without limitation, actions taken by or through a wholly-owned subsidiary or other affiliated corporation or entity.   D.   Notwithstanding any other provision of this Agreement, Section 5(d)(ii) of this Agreement shall not apply with respect to any geographic area outside of the geographic territory expressly set forth in this Section 5(d)(ii).      (e) Assistance. The Executive agrees that during and after the Executive’s employment by the Company, upon request by the Company, the Executive will assist the Company and the Affiliated Group in the defense of any claims, or potential claims that may be made or threatened to be made against the Company and/or any member of the Affiliated Group in any Proceeding, and will assist the Company and the Affiliated Group in the prosecution of any claims that may be made by the Company and/or any member of the Affiliated Group in any Proceeding, to the extent that such claims may relate to the Executive’s employment or the period of the Executive’s employment by the Company. The Executive agrees, unless precluded by law, to promptly inform the Company if the Executive is asked to participate (or otherwise become involved) in any Proceeding involving such claims or potential claims. The Executive also agrees, unless precluded by law, to promptly inform the Company if the Executive is asked to assist in any investigation (whether governmental or otherwise) of the Company and/or any member of the Affiliated Group (or their actions), regardless of whether a lawsuit has then been filed against the Company and/or any member of the Affiliated Group with respect to such investigation. The Executive agrees to fully and completely cooperate with any investigations conducted by or on behalf of the Company and for any member of the Affiliated Group from 12 --------------------------------------------------------------------------------   time to time. The Company agrees to reimburse the Executive for all of the Executive’s reasonable out-of-pocket expenses associated with such assistance, including travel expenses and any attorneys’ fees, and shall pay a reasonable per diem fee for the Executive’s service. In addition, the Executive agrees to provide such services as are reasonably requested by the Company to assist any successor to the Executive in the transition of duties and responsibilities to such successor. Any services or assistance contemplated in this Section 5(e) shall be at mutually agreed to and convenient times.      (f) Remedies. The Executive acknowledges and agrees that the terms of this Section 5: (i) are reasonable in geographic and temporal scope, (ii) are necessary to protect legitimate proprietary and business interests of the Company in, inter alia, near permanent customer relationships and confidential information. The Executive further acknowledges and agrees that (x) the Executive’s breach of the provisions of this Section 5 will cause the Company irreparable harm, which cannot be adequately compensated by money damages, and (y) if the Company elects to prevent the Executive from breaching such provisions by obtaining an injunction against the Executive, there is a reasonable probability of the Company’s eventual success on the merits. The Executive consents and agrees that if the Executive commits any such breach or threatens to commit any breach, the Company shall be entitled to temporary and permanent injunctive relief from a court of competent jurisdiction, in addition to, and not in lieu of, such other remedies as may be available to the Company for such breach, including the recovery of money damages. If any of the provisions of this Section 5 are determined to be wholly or partially unenforceable, the Executive hereby agrees that this Agreement or any provision hereof may be reformed so that it is enforceable to the maximum extent permitted by law. If any of the provisions of this Section 5 are determined to be wholly or partially unenforceable in any jurisdiction, such determination shall not be a bar to or in any way diminish the Company’s right to enforce any such covenant in any other jurisdiction.      6. Non-Exclusivity of Rights. Except as provided in Section 4(a)(ii), nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company or any of the Affiliated Group and for which the Executive may qualify, nor, subject to Section 9(g), shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or any of the Affiliated Group. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of the Affiliated Group at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement except as explicitly modified by this Agreement.      7. No Duty to Mitigate. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and except as specifically provided in Section 4(a)(iii), such amounts shall not be reduced whether or not the Executive obtains other employment. 13 --------------------------------------------------------------------------------        8. Assignment; Successors.      (a) No Assignment. This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive other than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.      (b) Successors. The Company shall cause any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all or a substantial portion of its business and/or assets to assume expressly and agree to perform this Agreement immediately upon such succession in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.      9. Miscellaneous.      (a) Governing Law; Captions; Amendments. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws. The Parties hereto irrevocably agree to submit to the jurisdiction and venue of the courts of the State of Delaware in any Delaware Proceeding. In the event of a Delaware Proceeding, the Company shall pay all of the Executive’s reasonable travel expenses incurred by him for the Executive’s travel between the Executive’s principal residence and/or principal place of business at such time and Delaware in connection with such Delaware Proceeding. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the Parties hereto or their respective successors and legal representatives.      (b) Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other Party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: At the address most recently on file for the Executive at the Company at the time of such notice. If to the Company: Offshore Logistics, Inc. 2000 W. Sam Houston Parkway South, Suite 1700 Houston, Texas 77042 Attention: President and Chief Executive Officer 14 --------------------------------------------------------------------------------   With a Copy to: Gardere Wynne Sewell LLP 1000 Louisiana, Suite 3400 Houston, Texas 77002-5011 Attention: N. L. Stevens III or to such other address as either Party shall have furnished to the other Party in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.      (c) Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.      (d) Withholding. Notwithstanding any other provision of this Agreement, the Company may withhold from any amounts payable or benefits provided under this Agreement any Federal, state, local and foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.      (e) No Waiver. The Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.      (f) Press Release. The Parties agree that the Company may issue a press release and may otherwise publicly disclose the Executive’s employment with the Company.      (g) Director’s and Officer’s Insurance. The Company shall provide the Executive with Director’s and Officer’s insurance coverage, including indemnification, on terms no less favorable than the terms of the coverage provided to similarly situated current and former directors and officers of the Company. In the event that the validity of this Agreement is challenged (other than by the Executive or the Executive’s representatives), the Executive’s reasonable expenses incurred therewith shall be reimbursed by the Company.      (h) Representations and Understandings. The Executive hereby represents and warrants to the Company that the Executive is not party to any contract, understanding, agreement or policy, whether or not written, with the Executive’s current employer (or any other previous employer) or otherwise, that would be breached by the Executive’s entering into, or performing services under, this Agreement, and that the Executive is fully able to assume the duties and responsibilities set forth in this Agreement without restrictions of any kind. The Executive further represents that the Executive has disclosed to the Company in writing all material threatened, pending, or actual claims that are unresolved and still outstanding as of the Effective Date, in each case, against the Executive of which the Executive is aware, if any, as a result of the Executive’s employment with the Executive’s current employer (or any other previous employer) or the Executive’s membership on any boards of directors. 15 --------------------------------------------------------------------------------        (i) Entire Agreement; Conflicts. This Agreement and the other agreements referred to herein, constitute the entire agreement between the Parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understanding, both written and oral. In the event of direct conflict between the provisions of this Agreement and any Company policies or practices, the provisions of this Agreement shall control.      (j) Counterparts. This Agreement may be executed by facsimile and in multiple counterparts, each of which shall constitute an original and all of which shall constitute one and the same document.      (k) Section 280G Limitation on Payments.      (i) In the event that all or any portion of the benefits provided under this Agreement, either alone or together with other payments and benefits that the Executive receives or is then entitled to receive from the Company or any member of the Affiliated Group, would constitute a “parachute payment” within the meaning of Section 280G of the Code, the Company shall reduce such payments and benefits provided to the Executive under this Agreement to the extent necessary so that no portion thereof shall be subject to the excise tax imposed by Section 4999 of the Code; but only if, by reason of such reduction, the net after-tax benefit to the Executive shall exceed the net after-tax benefit if such reduction were not made. “Net after-tax benefit” for these purposes shall mean (A) the total amount payable to the Executive under this Agreement (and all other payments and benefits which the Executive receives or is then entitled to receive from the Company or any member of the Affiliated Group) that would constitute a “parachute payment” within the meaning of Section 280G of the Code, less (B) the amount of federal income taxes payable with respect to the foregoing calculated at the Executive’s applicable marginal income tax rate for each year in which the foregoing shall be paid to the Executive (based upon the rate in effect for such year as set forth in the Code at the time of the payment under this Agreement), less (C) the amount of excise taxes imposed with respect to the payments and benefits described in (A) above by Section 4999 of the Code. The amount of any reduction made under this Section 9(k) in the payment to which the Executive is entitled under this Agreement is hereinafter referred to as the “Relinquished Amount.”      (ii) All determinations required to be made under this Section 9(k), including whether and when a Relinquished Amount shall be imposed and the amount of such Relinquished Amount, shall be made by the Company’s independent auditing firm used immediately prior to the Change of Control (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and the Executive. The Company shall provide any and all information, records and documents relating to Executive’s compensation and benefits paid or payable by the Company as may be reasonably requested by the Accounting Firm in connection with its determination of the Relinquished Amount. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting 16 --------------------------------------------------------------------------------   Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company.      (iii) Notwithstanding anything herein to the contrary, expressed or implied, the Company’s obligations to the Executive pursuant to this Section 9(k) shall be limited to providing to the Executive payments and benefits in accordance with the determinations of the Accounting Firm. The Company shall not be liable for any inaccuracies in the determination of the Relinquished Amount by such Accounting Firm.      (l) Section 409A Compliance. The Parties acknowledge that Section 409A of the Code was enacted pursuant to the American Jobs Creation Act of 2004, generally effective with respect to amounts deferred after January 1, 2005, and only limited guidance has been issued by the Internal Revenue Service with respect to the application of Code Section 409A to certain arrangements, such as this Agreement. The Internal Revenue Service has indicated that it will provide further guidance regarding interpretation and application of Section 409A of the Code during 2005. The Parties acknowledge that the full effect of Section 409A of the Code on potential payments pursuant to this Agreement cannot be determined at the time that the Parties are entering into this Agreement. The Parties agree to work together in good faith in an effort to comply with Section 409A of the Code based on further guidance issued by the Internal Revenue Service from time to time, provided that the Company shall not be required to assume any increased economic burden.      10. Definitions. As used in this Agreement, the following terms shall have the respective meanings assigned to them below:      (a) “Accrued Amounts” shall mean:      (i) in the event termination of the Executive’s employment occurs at any time other than a Change of Control Period, the sum of (1) the Executive’s Annual Base Salary through the Date of Termination, to the extent not theretofore paid, (2) the product of (x) the Target Bonus and (y) a fraction (which, for purposes of clarity, shall equal less than 1), the numerator of which is the number of days in the then-current fiscal year through the Date of Termination, and the denominator of which is 365, (3) the Executive’s business expenses that are reimbursable pursuant to this Agreement but have not been reimbursed by the Company as of the Date of Termination, (4) any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon) and any accrued but unused vacation allowances for the year in which the Date of Termination occurs, and (5) any Annual Bonus earned prior to the Termination Date but unpaid; or      (ii) in the event termination of the Executive’s employment occurs during a Change of Control Period, the sum of (1) the Executive’s Annual Base Salary through the Date of Termination to the extent not theretofore paid, (2) the product of (x) the higher of (I) the Recent Annual Bonus and (II) the Annual Bonus paid or payable, including any bonus or portion thereof which has been earned but deferred (and annualized for any fiscal year consisting of less than twelve full months or during which the Executive was employed for less than twelve full months or during which the Executive was employed 17 --------------------------------------------------------------------------------   for less than twelve full months), for the most recently completed fiscal year during the Employment Period, if any (such higher amount being referred to as the “Highest Annual Bonus”) and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365, (3) the Executive’s business expenses that are reimbursable pursuant to this Agreement but have not been reimbursed by the Company as of the Date of Termination, (4) any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon) and any accrued vacation pay, in each case to the extent not therefore paid, and (5) any Annual Bonus earned prior to the Termination Date but unpaid.      (b) “Affiliated Group” shall mean any entity controlled by, controlling or under common control with the Company.      (c) “Agreement” is defined in the Preamble to this Agreement.      (d) “Annual Base Salary” is defined in Section 2(a).      (e) “Annual Bonus” is defined in Section 2(b).      (f) “Board” shall mean the Board of Directors of the Company.      (g) “Cause” shall mean:      (i) the Executive’s willful failure to substantially perform the Executive’s duties under this Agreement, or the Executive’s willful failure to perform specific directives of the President and Chief Executive Officer of the Company, which directives are consistent with the scope and nature of the Executive’s duties as set forth in Section 1(d) hereof, other than any such failure resulting from incapacity due to physical or mental illness, which failure has continued for a period of at least 30 days following delivery to the Executive of a written demand for substantial performance specifying the manner in which the Executive has failed hereunder; or      (ii) the Executive’s commission of malfeasance, fraud, or dishonesty, or the Executive’s willful and material violation of Company policies; or      (iii) the Executive’s indictment or formal charge for, and subsequent conviction of, or plea of guilty or nolo contendere to, a felony, or a misdemeanor involving moral turpitude; or      (iv) the Executive’s material breach of Section 5 of this Agreement. A termination of employment of the Executive shall not be deemed to be for “Cause” unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for such purpose, finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in one or more of the clauses in Section 10(g) above, and specifying the particulars thereof. 18 --------------------------------------------------------------------------------        (h) “Change of Control” shall mean:      (i) the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of either (x) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 10(h)(i); or      (ii) individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or      (iii) consummation by the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another corporation (a “Business Combination”), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50.1% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries ) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly 35% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination, and 19 --------------------------------------------------------------------------------   (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or      (iv) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.      (i) “Change of Control Effective Date” shall mean the first date during the Employment Period on which a Change of Control occurs. Anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if the Executive’s employment with the Company is terminated prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (1) was at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (2) otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of this Agreement the “Change of Control Effective Date” shall mean the date immediately prior to the date of such termination of employment.      (j) “Change of Control Period” shall mean the greater of (i) the period commencing on the Change of Control Effective Date and ending on the Termination Date in effect on the Change of Control Effective Date, and (ii) the period commencing on the Change of Control Effective Date and ending on the second anniversary of the Change of Control Effective Date.      (k) “Code” shall mean the Internal Revenue Code of 1986, as amended.      (l) “Committee” shall mean the Compensation Committee of the Company.      (m) “Company” shall mean Offshore Logistics, Inc., a Delaware corporation, and any successor to its business and/or assets that assumes and agrees to perform this Agreement by operation of law, or otherwise.      (n) “Comparable Offer” shall mean a binding offer of employment by the Company to the Executive on terms substantially the same as the terms of this Agreement, or on terms more beneficial to the Executive, including, without limitation, terms and provisions regarding (i) the Executive’s position, title, duties, authority, and responsibilities, (ii) base salary, annual bonus, options, restricted shares, severance payments and other compensation provided to the Executive, and (iii) health and medical, welfare, retirement, deferred compensation, perquisite, fringe benefit and other benefit plans in which the Executive will be eligible for participation.      (o) “Competitive Business” shall mean any person or entity (including any joint venture, partnership, firm, corporation, or limited liability company) that engages in any principal or significant business of the Company or any member of the Affiliated Group as of the Date of Termination (or any material or significant business being actively pursued as of the Date of Termination that the Company or any member of the Affiliated Group enters into during the Restricted Period).      (p) “Confidential Information” shall mean any and all secret or confidential information, knowledge or data relating to the Company and the Affiliated Group and their 20 --------------------------------------------------------------------------------   businesses (including, without limitation, any proprietary and not publicly available information concerning any processes, methods, trade secrets, research or secret data, costs, names of users or purchasers of their respective products or services, business methods, operating procedures or programs or methods of promotion and sale) that the Executive obtains during the Executive’s employment by the Company and the Affiliated Group that is not public knowledge.      (q) “Date of Termination” means (i) if the Executive’s employment is terminated by the Company for Cause or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein within 30 days of such notice, as the case may be; (ii) if the Executive’s employment is terminated by the Company, other than for Cause or Disability, the date on which the Company notifies the Executive of such termination; (iii) if the Executive voluntarily resigns without Good Reason, the date on which the Executive notifies the Company of such termination; (iv) if the Executive’s employment is terminated by reason of death, the date of death of the Executive; (v) if the Executive’s employment is terminated by the Company due to Disability, the Disability Effective Date; or (vi) if the Executive’s employment is terminated by the Executive or the Company as a result of a Notice of Non-Renewal, the end of the applicable Employment Period.      (r) “Delaware Proceeding” shall mean any action or proceeding brought under, with respect to or in connection with this Agreement in the courts of Delaware.      (s) “Developments” shall mean any and all inventions, ideas, trade secrets, technology, devices, discoveries, improvements, processes, developments, designs, know how, show-how, data, computer programs, algorithms, formulae, works of authorship, works modifications, trademarks, trade names, documentation, techniques, designs, methods, trade secrets, technical specifications, technical data, concepts, expressions, patents, patent rights, copyrights, moral rights, and all other intellectual property rights or other developments whatsoever.      (t) “Disability” shall mean the inability of the Executive to perform the Executive’s duties with the Company on a full-time basis for 150 consecutive days during the Employment Period as a result of incapacity due to mental or physical illness, which is determined to be total and permanent by a licensed physician selected by the Company or its insurers and reasonably acceptable to the Executive or the Executive’s legal representative. If the Parties cannot agree on a licensed physician, each Party shall select a licensed physician and the two physicians shall select a third who shall be the approved licensed physician for these purposes.      (u) “Disability Effective Date” is defined in Section 3(a).      (v) “Effective Date” is defined in the Preamble to this Agreement.      (w) “Employment Period” is defined in Section 1(a)(iii).      (x) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.      (y) “Executive” is defined in the Preamble to this Agreement.      (z) “Extended Employment Period” is defined in Section 1(a)(ii). 21 --------------------------------------------------------------------------------        (aa) “Good Reason” shall mean, during any Change of Control Period and in the absence of the Executive’s consent, (i) any reduction in the position or duties of the Executive, (ii) any failure by the Company to comply with Section 2 hereof, or (iii) the relocation of the Executive’s job location to a location more than fifty (50) miles from New Iberia, Louisiana.      (bb) “Highest Annual Bonus” is defined in Section 10(a)(ii).      (cc) “Incentive Plan” shall mean the Company’s 2004 Stock Incentive Plan and any successor plan, as each may be amended.      (dd) “Initial Employment Period” is defined in Section 1(a)(i).      (ee) “Notice of Non-Renewal” is defined in Section 1(a)(ii).      (ff) “Notice of Termination” shall mean a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, and (iii) if the Date of Termination is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice).      (gg) “Other Benefits” is defined in Section 4(a)(ii) and Section 4(c).      (hh) “Party” shall mean the Company and the Executive, individually, and “Parties” shall mean the Company and the Executive collectively.      (ii) “Proceeding” shall mean any action, suit or proceeding, whether civil, criminal, administrative, investigative or otherwise.      (jj) “Recent Annual Bonus” shall mean the Executive’s highest Annual Bonus for the last three fiscal years prior to the Change of Control Effective Date (annualized in the event that the Executive is not employed by the Company for the whole of such fiscal year).      (kk) “Renewal Date” is defined in Section 1(a)(iii).      (ll) “Restricted Period” shall mean the period from the Effective Date through the date eighteen (18) months following the Date of Termination; provided, however, that there shall be no Restricted Period in the event that the termination of the Executive’s employment occurs during a Change of Control Period.      (mm) “Restricted Shares” is defined in Section 2(d).      (nn) “Stock Options” is defined in Section 2(c).      (oo) “Target Bonus” is defined in Section 2(b).      (pp) “Termination Date” shall mean May 31, 2007, or such later date to which the Employment Period of this Agreement is extended in accordance with the terms of Section 1(a). 22 --------------------------------------------------------------------------------             IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, the Company has caused this Agreement to be executed in its name and on its behalf, as of the Effective Date.               “EXECUTIVE”                     Michael R. Suldo                   “COMPANY”                   OFFSHORE LOGISTICS, INC.                     William E. Chiles         President and Chief Executive Officer     23

Exhibit 10.95 LICENSING AGREEMENT This Agreement is by and between Charles & Colvard, Ltd., having its principal office at 300 Perimeter Park Drive, Suite A, Morrisville, North Carolina 27560 (“Licensor”) and Samuel Aaron International having its principal office at 31-00 47th Avenue, 4th Floor, Long Island City, NY 11101 (“Licensee”): A. Licensor desires to license certain of its trademarks, which are set forth in the Brand Identity Guidelines. B. The Trademarks and Copyright Works are valuable rights of the Licensor. Licensor desires to and Licensee agrees to protect the integrity of the Trademarks and Copyright Works so as to avoid consumer confusion and to distinguish Licensor’s products from those of its competitors. Licensee shall exercise this protection by conforming to certain guidelines concerning the use of the Trademarks and Copyright Works, as described in the Brand Identity Guidelines. C. Licensee wishes to use the Trademarks and Copyright Works in connection with the advertising, promotion and sale of Licensee’s products which incorporate Charles & Colvard created Moissanite jewels. Now, therefore, in consideration of the mutual promises of the Agreement, the parties agree as follows: 1. GRANT OF LICENSE Licensor grants to Licensee, subject to the terms and conditions of this Agreement, the non-exclusive right unless initially agreed upon to use the Trademarks and Copyright Works listed in the Brand Identity Guidelines, in connection with Licensee’s advertisement, promotion and sale of Licensee’s products which incorporate Charles & Colvard created Moissanite jewels. Licensee may use the Trademarks and Copyright Works: (i) only in the United States of America and Canada except with knowledge of C&C its agents or employees; (ii) only in connection with Licensee’s advertisements, sales promotional and sales materials (including but not limited to online advertising and promotion) (collectively “Advertisements”); and (iii) only as permitted by this Agreement. Licensee may make no other use of the Trademarks and Copyright Works and Licensor reserves any rights, benefits and opportunities not expressly granted to Licensee under this Agreement, except with the written approval of Charles & Colvard. 2. TERM AND TERMINATION The term of this Agreement shall begin on the date of this Agreement and end simultaneously with the termination of the Manufacturing Agreement dated August 18, 2006 between Licensor and Licensee concerning manufacture of jewelry incorporating Charles & Colvard created Moissanite Jewels unless sooner terminated by either party hereto. 3. ROYALTIES Licensee is not obligated to pay Licensor any royalties for the use of the Trademarks or Copyright Works under the terms of this agreement. 4. QUALITY AND APPROVAL (a) Purpose of Quality Control; Prior Approval Licensee shall not use the Trademarks and/or Copyright Works in connection with Advertisements before obtaining Licensor’s approval, except as detailed in (b) and (c). (b) Pre-approved Materials. All advertising, promotional and sales material bearing or incorporating the Trademarks and/or Copyright Works which are supplied to Licensee directly by Licensor, or previously approved by Licensor, without change or alteration of any kind, shall be considered approved. (c) Purpose of Quality Control. In order to maintain the quality and reputation of the Trademarks and the rights in the Copyright Works, all Advertisements that are instituted solely by Licensee and are not co-op, retail initiated, etc., shall have approval, oral or otherwise by Licensor, Licensee is not responsible for advertisements from its customers but will make best efforts to maintain the quality and reputation of C&C branding with its customer. 5. TRADEMARK AND COPYRIGHT OWNERSHIP AND NOTICES (a) Licensee’s use of the Trademarks shall, depending upon the directions provided by Licensor, in every instance be combined with one of the following notices: (i) Reg. U.S. Pat. & TM. Off.; (ii) ®; (iii) Trademark of Charles & Colvard; (iv) TM; or (v) such other similar language as shall have Licensor’s prior approval. -------------------------------------------------------------------------------- (b) Licensor and Licensee agree and intend that all material, including without limitation all artwork and designs, created by Licensee or any other person or entity retained or employed by Licensee bearing, displaying or containing the Trademarks or Copyright Works (“Copyright Materials”) are works made for hire within the meaning of the United States Copyright Act and shall be the property of Licensor, where such work is specific to trademarks of C&C for all other marketing, trade names, copyrights owned by Licensee (artwork, design, etc.) ownership shall remain with Licensee. As owner, Licensor shall be entitled to use and license others to use the Copyright Materials. To the extent the Copyright Materials are not works made for hire, Licensee hereby irrevocably assigns to Licensor, its successors and assigns, the entire right, title and interest in perpetuity throughout the world in and to any and all rights, including all copyrights and related rights in such Copyright Materials. All other Materials produced for marketing by Licensee which do not contain the Copyright Materials shall remain the property of Licensee. Licensee warrants and represents that: (i) the Copyright Materials are completely original and are not based on or derived from the work or works of any third party; (ii) only Licensee created or contributed to the Copyright Materials; (iii) the Copyright Materials are an original work of authorship, and no royalties, honorariums or fees were, are or will be payable to other persons by reason of Licensor’s use of the Copyright Materials; and (iv) the Copyright Materials do not infringe the rights of others. If Licensee wishes to retain a third party to assist Licensee in the creation of the Copyright Materials, Licensee shall obtain Licensor’s prior approval and shall obtain and provide to Licensor an original assignment from the third party to Licensor of the third party’s rights in the Copyright Materials. (c) SAI will use best efforts to ensure the following notice (or such other notice as shall have Licensor’s prior approval) shall appear in connection with the Copyright Works and/or Copyright Materials at least once on Advertisements using Copyright Works and/or Copyright Materials: © (year of first publication) Charles & Colvard® All Rights Reserved. (d) Upon Licensor’s reasonable request in writing and at no cost to Licensee, Licensee agrees to execute such additional documents reasonably proposed by Licensor, or do or have done all things as may be reasonably requested and at no cost by Licensor to vest and/or confirm the sole and exclusive ownership of all right, title and interest, including copyrights and related rights in and to the Copyright Materials in favor of Licensor, its successors and assigns. 6. RIGHTS IN THE TRADEMARKS AND COPYRIGHT WORKS (a) Licensee shall not make any unlicensed use, file any application for registration or claim any other proprietary right to any of the Trademarks, Copyright Works, Copyright Materials or derivations or adaptations thereof, or any marks or works similar thereto as to the best of its knowledge and such filing pertaining to moissanite material. (b) Licensee acknowledges the validity of and Licensor’s title to the Trademarks, Copyright Works and Copyright Materials as disclosed to it by Licensor and shall not do, to the best of its knowledge, or suffer to be done any act or thing, which will impair the rights of Licensor in and to such Trademarks, Copyright Works or Copyright Materials. Licensee shall not acquire and shall not claim any title or any other proprietary right to the Trademarks, Copyright Works, Copyright Materials or in any derivation, adaptation, variation or name thereof by virtue of this license or Licensee’s creation or usage, unless as discussed in Section 5 (b). 7. ELECTRONIC MATERIALS - CD ROM USE AND WEBSITE Licensor hereby grants to Licensee a limited, non-exclusive, royalty-free license to use certain trademarks and certain copyrights in works as are made available by Licensor on specified CD Rom or from Licensor’s website (the “Licensed Materials”) solely in connection with the advertising, promotion, and sale of Licensee’s products which incorporate Charles & Colvard created Moissanite. Licensee is granted the right to use the Licensed Materials only in conformity with the terms of this agreement and the guidelines concerning the use of Licensor’s trademarks and copyright works as described in the Brand Identity Guidelines, as may be amended from time to time. Licensee may make no other use of the Licensed Materials without first obtaining the specific written consent of Licensor. Licensee shall have no right to, nor shall it attempt to challenge, assign, sublicense, transfer, pledge, lease, rent, or share the rights granted under this License Agreement to or with any third party, in whole or in part, without the prior written consent of Licensor. Licensee acknowledges and agrees that such Licensed Materials (and trademarks and copyrights therein) as disclosed to it by Licensor are proprietary to Licensor and protected under applicable U. S. and foreign laws. Upon termination of this Agreement, Licensee must destroy all copies, electronic or otherwise, of the Licensed Materials and/or any materials incorporating parts thereof. Licensee agrees to comply with Licensor’s standards for controlling the quality of products sold under or in connection with the Licensed Materials. Licensee may not reverse engineer, modify, or create derivative works based upon the Licensed Materials or any part thereof, except as is specifically permitted in the Brand Identity Guidelines. -------------------------------------------------------------------------------- The following notice (or such other notice as shall have Licensor’s prior written approval) shall appear in connection with the Licensed Materials at least once on all documentation: “Used pursuant to license from Charles & Colvard, Ltd.” License shall also use “© (year of first publication) Charles & Colvard, Ltd. All Rights Reserved” in connection with copyright works and ™ or ®, as appropriate, in connection with trademarks. Furthermore, upon notice from Licensor posted electronically that it has changed the appearance of the Licensed Materials (or any of the trademarks and/or copyright works therein), Licensee shall use only the changed version in any and all materials produced by Licensee within no less than four (4) weeks following Licensor’s initial notice. 8. COOPERATION WITH LICENSOR If Licensee learns of any infringement of the Trademarks, Copyright Works or Copyright Materials or of the existence, use or promotion of any mark or design similar to the Trademarks, Copyright Works or Copyright Materials, Licensee shall promptly notify Licensor. Licensor will, in its discretion, decide whether to object to such existence, use or promotion. Licensee agrees to cooperate fully with Licensor in the prosecution of any trademark or copyright application that Licensor may reasonably desire to file or in the conduct of any litigation relating to the Trademarks, Copyright Works or Copyright Materials, as may reasonably be required by Licensor and at no cost to Licensee. 9. EXTENT AND AMENDMENT OF THE LICENSE From time to time, Licensor may add other articles, trademarks, or copyright works to the Brand Identity Guidelines, and the parties agree that by such action this Agreement shall be amended to include such additions. Furthermore, upon notice from Licensor that it has changed the appearance of any of the Trademarks or Copyright Works, Licensee shall incorporate the new version of the changed Trademark or Copyright Work into all Advertisements bearing the changed Trademark or Copyright Work within four (4) weeks following Licensor’s initial notice. 10. COMPLIANCE WITH GOVERNMENT STANDARDS Licensee represents and warrants that the Advertisements shall comply with, meet and/or exceed all Federal, State or Provincial, and local laws, ordinances, standards, regulations and guidelines, including, but not limited to, those pertaining to product, quality, labeling and propriety. Licensee agrees that it will not publish material in its Advertisements or cause or permit any material to be published, in violation of any such Federal, State or Provincial, or local law, ordinance, standard, regulation or guideline. 11. POST-TERMINATION AND-EXPIRATION RIGHTS AND OBLIGATIONS (a) At the expiration or termination of this Agreement, all rights granted to Licensee under this Agreement shall forthwith revert to Licensor, and Licensee shall refrain from further use of the Copyright Works, Copyright Materials and/or the Trademarks, either directly or indirectly, or from use of any marks or designs similar to the Copyright Works, Copyright Materials or the Trademarks. Licensee will immediately cease all use of Advertisements bearing or including the Trademarks, Copyright Works and/or Copyright Materials. Licensee also shall turn over to Licensor all photographs, codes and other materials, which reproduce the Copyright Works, Copyright Materials or the Trademarks or shall provide evidence satisfactory to Licensor of their destruction. Licensee shall be responsible to Licensor for any damages caused by the unauthorized use by Licensee or by others of such photographs, codes and other materials, which are not turned over to Licensor. Upon termination of this agreement, to facilitate the selling of any remaining inventory Licensee may request the use of certain rights under this agreement for a 90 day period, the approval of which will not be unreasonably denied by the Licensor. (b) Licensee acknowledges that any breach or threatened breach of any of Licensee’s covenants in this Agreement relating to the Trademarks, Copyright Works and/or Copyright Materials, including without limitation, Licensee’s failure to remove such materials from its Advertisements at the termination or expiration of this Agreement will result in immediate and irreparable damage to Licensor and to the rights of any subsequent license of Licensor. Licensee acknowledges and admits that there is no adequate remedy at law for any such breach or threatened breach, and Licensee agrees that in the event of any such breach or threatened breach, Licensor shall be entitled to injunctive relief and such other relief as any court with jurisdiction may deem just and proper, without the necessity of Licensor posting any bond. 12. ASSIGNMENT AND SUBLICENSE (a) Licensee shall not assign or transfer any of its rights under this Agreement or delegate any of its obligations under this Agreement (whether voluntarily, by operation of law, change in control or otherwise) without Licensor’s prior approval. Any attempted assignment, transfer, or delegation by Licensee without such approval shall be void and a material breach of this Agreement. A change in the majority ownership or a material change in the management of Licensee shall constitute an assignment of rights under this Section requiring Licensor’s prior approval. -------------------------------------------------------------------------------- (b) Licensee may sublicense its rights hereunder to authorized jewelry distributors or retailers engaged in the sale of Licensee’s products which incorporate Charles & Colvard created Moissanite jewels; provided Licensee shall first notify, in writing, Licensor of any such authorized jewelry distributor or retailer to be sublicensed hereunder and each of which must agree to be bound by the terms of this Agreement. Each such sublicense shall be deemed automatically approved by Licensor. Any other proposed sublicense shall require Licensor’s prior written approval. Licensee shall use all commercially reasonable efforts to insure the use of the rights granted by the sublicense are used in conformity with the terms of this Agreement, including but not limited to notification by Licensee to Licensor of any misuse of the rights and full cooperation with Licensor in asserting Licensor’s rights to the full extent of the law. 13. INDEPENDENT CONTRACTOR Licensee is an independent contractor and not an agent, partner, joint venture, affiliate or employee of Licensor. No fiduciary relationship exists between the parties. Neither party shall be liable for any debts, accounts, obligations or other liabilities of the other party, its agents or employees, Licensee shall have no authority to obligate or bind Licensor in any manner. Licensor has no proprietary interest in Licensee and has no interest in the business of Licensee, except to the extent expressly set forth in this Agreement. 14. SEVERABILITY If any provision of this Agreement shall be determined to be illegal and unenforceable by any court of law or any competent government or other authority, the remaining provisions shall be severable and enforceable in accordance with their terms so long as this Agreement without such terms or provisions does not fail of its essential purpose or purposes. The parties will negotiate in good faith to replace any such illegal or unenforceable provision or provisions with suitable substitute provisions which will maintain the economic purposes and intentions of this Agreement. 15. SURVIVAL Licensee’s obligations and agreements under Sections 5, 6, 9 , 10 and 11 shall survive the termination or expiration of this Agreement. 16. MISCELLANEOUS (a) Captions. The captions for each Section have been inserted for the sake of convenience and shall not be deemed to be binding upon the parties for the purpose of interpretation of this Agreement. (b) Scope and Amendment of Agreement. This Agreement constitutes the entire agreement between the parties with respect to the use of Licensor’s Trademarks, Copyright Works and Copyright Materials and supersedes any and all prior and all written requirements agreed in said agreements “term”, “license”, or otherwise, are to be delivered certified mail attention “Richard Katz” at Samuel Aaron International, 31—47th Avenue, Long Island City, NY 10514. With the exception of the addition of new Trademarks, Copyright Works, and Copyright Materials as provided for in Section 5, this Agreement may be amended only by written instrument expressly referring to this Agreement, setting forth such amendment and signed by Licensor and Licensee. (c) Governing Law and Interpretation. This Agreement will be deemed to have been executed in the State of North Carolina, United States of America and will be construed and interpreted according to the laws of that State without regard to its conflicts of law principles or rules. The parties agree that each party and its counsel have reviewed this Agreement and the normal rule of construction that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. (d) Attorneys’ Fees. If Licensor brings any legal action or other preceding to interpret or enforce the terms of this Agreement, or if Licensor retains a collection agent to collect any amounts due under this Agreement, then Licensor shall be entitled to recover reasonable attorneys’ fees and any other costs incurred, in addition to any other relief to which it is entitled only if Licensee’s allegations are favorable in a binding legal proceeding. (e) Waiver. The failure of Licensor to insist in any one or more instances upon the performance of any term, obligation or condition of this Agreement by Licensee or to exercise any right or privilege herein conferred upon Licensor shall not be construed as thereafter waiving such term, obligation, or condition or relinquishing such right or privilege, and the acknowledged waiver or relinquishment by Licensor of any default or right shall not constitute waiver of any other default or right. No waiver shall be deemed to have been made unless expressed in writing and signed by the Chief Executive Officer. -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their authorized representatives on the dates indicated below.   CHARLES & COLVARD, LTD.   LICENSEE: SAMUEL AARON INTERNATIONAL By:   /s/ Robert S. Thomas     By:   /s/ Richard Katz   Robert S. Thomas       Richard Katz   President & CEO       Chief Operating Officer & CFO Date: 2 Oct. ‘06     Date: 10/2/06

EXHIBIT 10.1 INDEMNITY AGREEMENT THIS INDEMNITY AGREEMENT (this “Agreement”) dated as of                         , 20   , is made by and between FAVRILLE, INC., a Delaware corporation (the “Company”), and                          (“Indemnitee”). R E C I T A L S: A.            The Company desires to attract and retain the services of highly qualified individuals as directors, officers, employees and agents. B.            The Company’s Amended and Restated Bylaws (the “Bylaws”), require that the Company indemnify its directors, and empowers the Company to indemnify its officers, employees and agents, as authorized by the Delaware General Corporation Law, as amended (the “Code”), under which the Company is organized and such Bylaws expressly provide that the indemnification provided therein is not exclusive and contemplates that the Company may enter into separate agreements with its directors, officers and other persons to set forth specific indemnification provisions. C.            Indemnitee does not regard the protection currently provided by applicable law, the Company’s governing documents and available insurance as adequate under the present circumstances, and the Company has determined that Indemnitee and other directors, officers, employees and agents of the Company may not be willing to serve or continue to serve in such capacities without additional protection. D.            The Company desires and has requested Indemnitee to serve or continue to serve as a director, officer, employee or agent of the Company, as the case may be, and has proferred this Agreement to Indemnitee as an additional inducement to serve in such capacity. E.             Indemnitee is willing to serve, or to continue to serve, as a director, officer, employee or agent of the Company, as the case may be, if Indemnitee is furnished the indemnity provided for herein by the Company. A G R E E M E N T : NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the parties hereto, intending to be legally bound, hereby agree as follows: 1.             Definitions. (a)       Agent.  For purposes of this Agreement, the term “agent” of the Company means any person who:  (i) is or was a director, officer, employee or other fiduciary of the Company or a subsidiary of the Company; or (ii) is or was serving at the request or for the convenience of, or representing the interests of, the Company or a subsidiary of the Company, as a director, officer, employee or other fiduciary of a foreign or domestic corporation, partnership,  joint venture, trust or other enterprise. -------------------------------------------------------------------------------- (b)       Expenses.  For purposes of this Agreement, the term “expenses” shall be broadly construed and shall include, without limitation, all direct and indirect costs of any type or nature whatsoever (including, without limitation, all attorneys’, witness, or other professional fees and related disbursements, and other out-of-pocket costs of whatever nature), actually and reasonably incurred by Indemnitee in connection with the investigation, defense or appeal of a proceeding or establishing or enforcing a right to indemnification under this Agreement, the Code or otherwise, and amounts paid in settlement by or on behalf of Indemnitee, but shall not include any judgments, fines or penalties actually levied against Indemnitee for such individual’s violations of law.  The term “expenses” shall also include reasonable compensation for time spent by Indemnitee for which he is not compensated by the Company or any subsidiary or third party (i) for any period during which Indemnitee is not an agent, in the employment of, or providing services for compensation to, the Company or any subsidiary; and (ii) if the rate of compensation and estimated time involved is approved by the directors of the Company who are not parties to any action with respect to which expenses are incurred, for Indemnitee while an agent of, employed by, or providing services for compensation to, the Company or any subsidiary. (c)       Proceedings.  For purposes of this Agreement, the term “proceeding” shall be broadly construed and shall include, without limitation, any threatened, pending, or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative or investigative nature, and whether formal or informal in any case, in which Indemnitee was, is or will be involved as a party or otherwise by reason of:  (i) the fact that Indemnitee is or was a director or officer of the Company; (ii) the fact that any action taken by Indemnitee or of any action on Indemnitee’s part while acting as director, officer, employee or agent of the Company; or (iii) the fact that Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, and in any such case described above, whether or not serving in any such capacity at the time any liability or expense is incurred for which indemnification, reimbursement, or advancement of expenses may be provided under this Agreement. (d)       Subsidiary.  For purposes of this Agreement, the term “subsidiary” means any corporation or limited liability company of which more than 50% of the outstanding voting securities or equity interests are owned, directly or indirectly, by the Company and one or more of its subsidiaries, and any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary. (e)       Independent Counsel.  For purposes of this Agreement, the term “independent counsel” means a law firm, or a partner (or, if applicable, member) of such a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party, or (ii) any other party to the proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “independent counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a 2 -------------------------------------------------------------------------------- conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. 2.             Agreement to Serve.  Indemnitee will serve, or continue to serve, as a director, officer, employee or agent of the Company or any subsidiary, as the case may be, faithfully and to the best of his or her ability, at the will of such corporation (or under separate agreement, if such agreement exists), in the capacity Indemnitee currently serves as an agent of such corporation, so long as Indemnitee is duly appointed or elected and qualified in accordance with the applicable provisions of the bylaws or other applicable charter documents of such corporation, or until such time as Indemnitee tenders his or her resignation in writing; provided, however, that nothing contained in this Agreement is intended as an employment agreement between Indemnitee and the Company or any of its subsidiaries or to create any right to continued employment of Indemnitee with the Company or any of its subsidiaries in any capacity. The Company acknowledges that it has entered into this Agreement and assumes the obligations imposed on it hereby, in addition to and separate from its obligations to Indemnitee under the Bylaws, to induce Indemnitee to serve, or continue to serve, as a director, officer, employee or agent of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director, officer, employee or agent of the Company. 3.             Indemnification. (a)       Indemnification in Third Party Proceedings.  Subject to Section 10 below, the Company shall indemnify Indemnitee to the fullest extent permitted by the Code, as the same may be amended from time to time (but, only to the extent that such amendment permits Indemnitee to broader indemnification rights than the Code permitted prior to adoption of such amendment), if Indemnitee is a party to or threatened to be made a party to or otherwise involved in any proceeding, for any and all expenses, actually and reasonably incurred by Indemnitee in connection with the investigation, defense, settlement or appeal of such proceeding. (b)       Indemnification in Derivative Actions and Direct Actions by the Company.  Subject to Section 10 below, the Company shall indemnify Indemnitee to the fullest extent permitted by the Code, as the same may be amended from time to time (but, only to the extent that such amendment permits Indemnitee to broader indemnification rights than the Code permitted prior to adoption of such amendment), if Indemnitee is a party to or threatened to be made a party to or otherwise involved in any proceeding by or in the right of the Company to procure a judgment in its favor, against any and all expenses actually and reasonably incurred by Indemnitee in connection with the investigation, defense, settlement, or appeal of such proceedings. 4.             Indemnification of Expenses of Successful Party.  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any proceeding or in defense of any claim, issue or matter therein, including the dismissal of any action without prejudice, the Company shall indemnify Indemnitee against all expenses actually and reasonably incurred in connection with the investigation, defense or appeal of such proceeding. 3 -------------------------------------------------------------------------------- 5.             Partial Indemnification.  If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of any expenses actually and reasonably incurred by Indemnitee in the investigation, defense, settlement or appeal of a proceeding, but is precluded by applicable law or the specific terms of this Agreement to indemnification for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled. 6.             Advancement of Expenses.  To the extent not prohibited by law, the Company shall advance  the expenses incurred by Indemnitee in connection with any proceeding, and such advancement shall be made within twenty (20) days after the receipt by the Company of a statement or statements requesting such advances (which shall include invoices received by Indemnitee in connection with such expenses but, in the case of invoices in connection with legal services, any references to legal work performed or to expenditures made that would cause Indemnitee to waive any privilege accorded by applicable law shall not be included with the invoice) and upon request of the Company, an undertaking to repay the advancement of expenses if and to the extent that it is ultimately determined by a court of competent jurisdiction in a final judgment, not subject to appeal, that Indemnitee is not entitled to be indemnified by the Company.  Advances shall be unsecured, interest free and without regard to Indemnitee’s ability to repay the expenses. Advances shall include any and all expenses actually and reasonably incurred by Indemnitee pursuing an action to enforce Indemnitee’s right to indemnification under this Agreement, or otherwise and this right of advancement, including expenses incurred preparing and forwarding statements to the Company to support the advances claimed.  Indemnitee acknowledges that the execution and delivery of this Agreement shall constitute an undertaking providing that Indemnitee shall, to the fullest extent required by law, repay the advance if and to the extent that it is ultimately determined by a court of competent jurisdiction in a final judgment, not subject to appeal, that Indemnitee is not entitled to be indemnified by the Company.  The right to advances under this Section shall continue until final disposition of any proceeding, including any appeal therein.  This Section 6 shall not apply to any claim made by Indemnitee for which indemnity is excluded pursuant to Section 10(b). 7.             Notice and Other Indemnification Procedures. (a)       Notification of Proceeding.  Indemnitee will notify the Company in writing promptly upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any proceeding or matter which may be subject to indemnification or advancement of expenses covered hereunder.  The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise. (b)       Request for Indemnification and Indemnification Payments.  Indemnitee shall notify the Company promptly in writing upon receiving notice of nay demand, judgment or other requirement for payment that Indemnitee reasonably believes to the subject to indemnification under the terms of this Agreement, and shall request payment thereof by the Company.  Indemnification payments requested by Indemnitee under Section 3 hereof shall be made by the Company no later than sixty (60) days after receipt of the written request of Indemnitee.  Claims for advancement of expenses shall be made under the provisions of Section 6 herein. 4 -------------------------------------------------------------------------------- (c)       Application for Enforcement.  In the event the Company fails to make timely payments as set forth in Sections 6 or 7(b) above, Indemnitee shall have the right to apply to any court of competent jurisdiction for the purpose of enforcing Indemnitee’s right to indemnification or advancement of expenses pursuant to this Agreement.  In such an enforcement hearing or proceeding, the burden of proof shall be on the Company to prove by that indemnification or advancement of expenses to Indemnitee is not required under this Agreement or permitted by applicable law.  Any determination by the Company (including its Board of Directors, stockholders or independent counsel) that Indemnitee is not entitled to indemnification hereunder, shall not be a defense by the Company to the action nor create any presumption that Indemnitee is not entitled to indemnification or advancement of expenses hereunder. (d)       Indemnification of Certain Expenses.  The Company shall indemnify Indemnitee against all expenses incurred in connection with any hearing or proceeding under this Section 7 unless the Company prevails in such hearing or proceeding on the merits in all material respects. 8.             Assumption of Defense.  In the event the Company shall be requested by Indemnitee to pay the expenses of any proceeding, the Company, if appropriate, shall be entitled to assume the defense of such proceeding, or to participate to the extent permissible in such proceeding, with counsel reasonably acceptable to Indemnitee.  Upon assumption of the defense by the Company and the retention of such counsel by the Company, the Company shall not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same proceeding, provided that Indemnitee shall have the right to employ separate counsel in such proceeding at Indemnitee’s sole cost and expense.  Notwithstanding the foregoing, if Indemnitee’s counsel delivers a written notice to the Company stating that such counsel has reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense or the Company shall not, in fact, have employed counsel or otherwise actively pursued the defense of such proceeding within a reasonable time, then in any such event the fees and expenses of Indemnitee’s counsel to defend such proceeding shall be subject to the indemnification and advancement of expenses provisions of this Agreement. 9.             Insurance. To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents of the Company or of any subsidiary (“D&O Insurance”), Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies.  If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company has D&O Insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies. 5 -------------------------------------------------------------------------------- 10.          Exceptions. (a)       Certain Matters.  Any provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee on account of any proceeding with respect to (i) remuneration paid to Indemnitee if it is determined by final judgment or other final adjudication that such remuneration was in violation of law (and, in this respect, both the Company and Indemnitee have been advised that the Securities and Exchange Commission believes that indemnification for liabilities arising under the federal securities laws is against public policy and is, therefore, unenforceable and that claims for indemnification should be submitted to appropriate courts for adjudication, as indicated in Section 10(d) below); (ii) a final judgment rendered against Indemnitee for an accounting, disgorgement or repayment of profits made from the purchase or sale by Indemnitee of securities of the Company against Indemnitee or in connection with a settlement by or on behalf of Indemnitee to the extent it is acknowledged by Indemnitee and the Company that such amount paid in settlement resulted from Indemnitee’s conduct from which Indemnitee received monetary personal profit, pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, or other provisions of any federal, state or local statute or rules and regulations thereunder; (iii) a final judgment or other final adjudication that Indemnitee’s conduct was in bad faith, knowingly fraudulent or deliberately dishonest or constituted willful misconduct (but only to the extent of such specific determination); or (iv) on account of conduct that is established by a final judgment as constituting a breach of Indemnitee’s duty of loyalty to the Company or resulting in any personal profit or advantage to which Indemnitee is not legally entitled.  For purposes of the foregoing sentence, a final judgment or other adjudication may be reached in either the underlying proceeding or action in connection with which indemnification is sought or a separate proceeding or action to establish rights and liabilities under this Agreement. (b)       Claims Initiated by Indemnitee.  Any provision herein to the contrary notwithstanding, the Company shall not be obligated to indemnify or advance expenses to Indemnitee with respect to proceedings or claims initiated or brought by Indemnitee against the Company or its directors, officers, employees or other agents and not by way of defense, except (i) with respect to proceedings brought to establish or enforce a right to indemnification under this Agreement or under any other agreement, provision in the Bylaws or Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) or applicable law, or (ii) with respect to any other proceeding initiated by Indemnitee that is either approved by the Board of Directors or Indemnitee’s participation is required by applicable law.  However, indemnification or advancement of expenses may be provided by the Company in specific cases if the Board of Directors determines it to be appropriate. (c)       Unauthorized Settlements.  Any provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee under this Agreement for any amounts paid in settlement of a proceeding effected without the Company’s written consent.  Neither the Company nor Indemnitee shall unreasonably withhold consent to any proposed settlement; provided, however, that the Company may in any event decline to consent to (or to otherwise admit or agree to any liability for indemnification hereunder in respect of) any proposed settlement if the Company is also a party in such proceeding and determines in good faith that such settlement is not in the best interests of the Company and its stockholders. 6 -------------------------------------------------------------------------------- (d)       Securities Act Liabilities. Any provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee or otherwise act in violation of any undertaking appearing in and required by the rules and regulations promulgated under the Securities Act of 1933, as amended (the “Act”), or in any registration statement filed with the SEC under the Act.  Indemnitee acknowledges that paragraph (h) of Item 512 of Regulation S-K currently generally requires the Company to undertake in connection with any registration statement filed under the Act to submit the issue of the enforceability of Indemnitee’s rights under this Agreement in connection with any liability under the Act on public policy grounds to a court of appropriate jurisdiction and to be governed by any final adjudication of such issue.  Indemnitee specifically agrees that any such undertaking shall supersede the provisions of this Agreement and to be bound by any such undertaking. 11.          Nonexclusivity and Survival of Rights.  The provisions for indemnification and advancement of expenses set forth in this Agreement shall not be deemed exclusive of any other rights which Indemnitee may at any time be entitled under any provision of applicable law, the Company’s Certificate of Incorporation, Bylaws or other agreements, both as to action in Indemnitee’s official capacity and Indemnitee’s action as an agent of the Company, in any court in which a proceeding is brought, and Indemnitee’s rights hereunder shall continue after Indemnitee has ceased acting as an agent of the Company and shall inure to the benefit of the heirs, executors, administrators and assigns of Indemnitee.  The obligations and duties of the Company to Indemnitee under this Agreement shall be binding on the Company and its successors and assigns until terminated in accordance with its terms.  The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his or her corporate status prior to such amendment, alteration or repeal.  To the extent that a change in the Code, whether by statute or judicial decision, permits greater indemnification or advancement of expenses than would be afforded currently under the Company’s Certificate of Incorporation, Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, by Indemnitee shall not prevent the concurrent assertion or employment of any other right or remedy by Indemnitee. 12.          Term.  The rights conferred on Indemnitee by this Agreement shall continue after Indemnitee has ceased to be a director, officer, employee or other agent of the Company or to serve at the request of the Company as a director, officer, employee or other agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise and shall inure to the benefit of Indemnitee’s heirs, executors and administrators. 7 -------------------------------------------------------------------------------- No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company against an Indemnitee or an Indemnitee’s estate, spouse, heirs, executors or personal or legal representatives after the expiration of five (5) years from the date of accrual of such cause of action, and any claim or cause of action of the Company shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such five-year period; provided, however, that if any shorter period of limitations is otherwise applicable to such cause of action, such shorter period shall govern. 13.          Subrogation.  In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who, at the request and expense of the Company, shall execute all papers required and shall do everything that may be reasonably necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 14.          Interpretation of Agreement.  It is understood that the parties hereto intend this Agreement to be interpreted and enforced so as to provide indemnification to Indemnitee to the fullest extent now or hereafter permitted by law. 15.          Severability.  If any provision of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever, (a) the validity, legality and enforceability of the remaining provisions of the Agreement (including without limitation, all portions of any paragraphs of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, all portions of any paragraph of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable and to give effect to Section 14 hereof. 16.          Amendment and Waiver.  No supplement, modification, amendment, termination, or cancellation of this Agreement shall be binding unless executed in writing by the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 17.          Notice.  Except as otherwise provided herein, any notice or demand which, by the provisions hereof, is required or which may be given to or served upon the parties hereto shall be in writing and, if by telegram, telecopy or telex, shall be deemed to have been validly served, given or delivered when sent, if by overnight delivery, courier or personal delivery, shall be deemed to have been validly served, given or delivered upon actual delivery and, if mailed, shall be deemed to have been validly served, given or delivered three (3) business days after deposit in the United States mail, as registered or certified mail, with proper postage prepaid and addressed to the party or parties to be notified at the addresses set forth on the signature page of this Agreement (or such other address(es) as a party may designate for itself by like notice).  If to the Company, notices and demands shall be delivered to the attention of the Secretary of the Company. 8 -------------------------------------------------------------------------------- 18.          Governing Law.  This Agreement shall be governed exclusively by and construed according to the laws of the State of California, as applied to contracts between California residents entered into and to be performed entirely within California. 19.          Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute but one and the same Agreement.  Only one such counterpart need be produced to evidence the existence of this Agreement. 20.          Headings.  The headings of the sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction hereof. 21.          Entire Agreement.  This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings and negotiations, written and oral, between the parties with respect to the subject matter of this Agreement, including without limitation, that certain Indemnity Agreement between the parties dated                  ; provided, however, that this Agreement is a supplement to and in furtherance of the Company’s Certificate of Incorporation, Bylaws, the Code and any other applicable law, and shall not be deemed a substitute therefor, and does not diminish or abrogate any rights of Indemnitee thereunder. 9 -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties hereto have entered into this Agreement effective as of the date first above written.   FAVRILLE, INC.                 By:         Name:         Title:                   INDEMNITEE                  Signature of Indemnitee                 Print or Type Name of Indemnitee   10 --------------------------------------------------------------------------------

Exhibit 10.7 THIRD AMENDMENT TO   AGREEMENT AND PLAN OF MERGER   AND REORGANIZATION     BY AND AMONG   EQUITEX, INC.,   EI ACQUISITION CORP.,   AND   HYDROGEN POWER, INC.       December 15, 2005 -------------------------------------------------------------------------------- THIRD AMENDMENT TO AGREEMENT AND PLAN OF MERGER   AND REORGANIZATION     This Third Amendment to Agreement and Plan of Merger and Reorganization (this “Agreement”) is entered into as of December 15, 2005, by and among Hydrogen Power, Inc., a Delaware corporation (the “Company”), Equitex, Inc., a Delaware corporation (“Equitex”), and EI Acquisition Corp., a Delaware corporation that is wholly owned by Equitex (the “Merger Sub”).   INTRODUCTION   A.  The Company, Equitex and Merger Sub have entered into that certain Agreement and Plan of Merger and Reorganization dated September 13, 2005, as amended in that certain First Amendment to Agreement and Plan of Merger and Reorganization dated October 31, 2005 and that certain Second Amendment to Agreement and Plan of Merger and Reorganization Dated November 11, 2005 (as amended, the “Merger Agreement”) whereby the Company and Merger Sub will merge with the surviving corporation being a subsidiary of Equitex (the “Merger”).   B.  The Company, Equitex and Merger Sub have agreed to amend the Merger Agreement by entering into this Agreement in order to reflect an agreement between the parties relating to certain obligations of Equitex under the Merger Agreement.   C.  The parties to this Agreement intend to adopt the Merger Agreement, as amended by this Agreement, as a plan of reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations promulgated thereunder, and intend that the Merger and the transactions contemplated by this Agreement be undertaken pursuant to that plan. Accordingly, the parties to the Merger Agreement, as amended by this Agreement, confirm their intention that the Merger qualify as a “reorganization,” within the meaning of Code Section 368(a) and a “foreign merger” within the meaning of Section 87(8.1) of the Income Tax Act (Canada), and that, with respect to the Merger, Equitex, Merger Sub and the Company will each be a “party to a reorganization,” within the meaning of Code Section 368(b).   AGREEMENT   Now, Therefore, in consideration of the foregoing premises, and the representations, warranties and covenants contained herein, the parties hereto agree as follows:     Article 1   Amendment   1.1  Amendment to Equitex Covenants Relating to Monetization of FastFunds. In order to reflect a change in Equitex’s obligations relating to the monetization of FastFunds Financial Corporation, Section 5.12 of the Merger Agreement is hereby deleted in its entirety and replaced with the following:   “On or after date hereof, Equitex shall commence to monetize its holdings of the capital stock of FastFunds Financial Corporation, a Nevada corporation, in accordance with applicable law. Equitex agrees that it shall use the first $10,000,000 of the net proceeds from such monetization toward the exploitation and commercialization of the Company Intellectual Property, $5,000,000 of which shall be provided to the Company within 45 days of the Closing; provided that, to the extent such monetization of FastFunds Financial Corporation does not occur within 45 days of the Closing, Equitex shall have the option, at its sole discretion, to provide to the Company such $5,000,000 from other sources. Any funds in excess of $10,000,000 (or $5,000,000 if $5,000,000 is received from other sources as specified in the preceding sentence) received by Equitex from such monetization may be used by Equitex in its sole discretion.”   1 --------------------------------------------------------------------------------   Article 2   General Provisions   2.1  Merger Agreement in Full Force and Effect   . The Merger Agreement shall continue in full force and effect without amendment except as expressly provided for in this Agreement.   2.2  Interpretation   . The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. References to Sections and Articles refer to Sections and Articles of this Agreement unless otherwise stated.   2.3  Severability   . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties shall negotiate in good faith to modify this Agreement and to preserve each party’s anticipated benefits under this Agreement.   2.4  Amendment   . This Agreement may not be amended or modified except by an instrument in writing approved by the parties to this Agreement and signed on behalf of each of the parties hereto.   2.5  Miscellaneous   . This Agreement (together with all other documents and instruments referred to herein): (a) constitutes the entire agreement, and supersedes all other prior agreements and undertakings, both written and oral, among the parties, with respect to the subject matter hereof; and (b) shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, but shall not be assignable by either party hereto without the prior written consent of the other party hereto.   2.6  Counterparts; Delivery   . This Agreement may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. In addition, executed counterparts may be delivered by means of facsimile or other electronic transmission; and signatures so delivered shall be fully and validly binding to the same extent as the delivery of original signatures.       2 --------------------------------------------------------------------------------   2.7  Governing Law   . This Agreement is governed by the internal laws of the State of Delaware without regard to its conflicts-of-law principles.     [SIGNATURE PAGE TO FOLLOW.]   3 -------------------------------------------------------------------------------- In Witness Whereof, the parties hereto have caused this Agreement to be executed effective as of the date first written above.   HYDROGEN POWER, INC.:     By:  /s/ James Matkin Name: James Matkin Title: Chairman EQUITEX, INC.:     By:  /s/ Henry Fong Name: Henry Fong Title: President       EI ACQUISITION CORP.:     By:  /s/ Henry Fong Name: Henry Fong Title: President     --------------------------------------------------------------------------------  

--------------------------------------------------------------------------------   Exhibit 10.2   [ex102graphic.jpg] 2006 Ameren Executive Incentive Plan Officer Level --------------------------------------------------------------------------------   SUMMARY The Ameren Executive Incentive Plan (EIP) is intended to reward Officers for their contributions to Ameren’s success. The EIP is funded based on earnings per share (EPS) performance, and rewards leaders on corporate EPS performance and individual performance. The plan is approved by the Human Resources Committee of the Board of Directors. EIP ELIGIBILITY All Officers who are actively employed on December 31, 2006 are eligible to participate in the Executive Incentive Plan pursuant to the terms described herein. Additionally, Officers who retire, decease, become disabled during 2006 (the plan year), or whose employment is involuntarily terminated as a result of a reduction in force, elimination of position, or change in strategic demand are eligible to participate in the EIP pursuant to the terms described herein. Officers who voluntarily terminate employment, for reasons other than retirement, death or disability during the plan year or following the plan year, but before awards are paid, forfeit participation in the EIP. Additionally, Officers who are involuntarily terminated for any reason other than a reduction in force, elimination of a position, or change in strategic demand, during the plan year or following the plan year, but before awards are paid, forfeit participation in the EIP. EIP FUNDING EIP funding is the total amount of incentive money available for award to employees. The EIP is funded based on the achievement of Ameren Corporation’s earnings per share (EPS) for the plan year (achievement levels may be adjusted to reflect refunds and rate changes under regulatory sharing plans or other extraordinary one-time events). Three levels of EPS achievement will be established to reward eligible employees for progress achieved in overall EPS performance. Achievement of EPS falling between the established levels will be interpolated. The three levels are defined as: 1.   Threshold: This is the minimum level of corporate financial achievement for incentive awards to be available. Since the payment of incentives reflects a large cost to the organization, Ameren must achieve this level of EPS to justify the payment given our fiduciary responsibility to our owners - the shareholders. 2.   Target: This is Ameren’s targeted level of financial achievement. This is the level our shareholders and Wall Street expect Ameren to achieve. 3.   Maximum: This level shares higher rewards in years of strong financial performance. This level will be very difficult to achieve, but in years of outstanding performance, officers will share in Ameren’s success. AWARD OPPORTUNITIES Award opportunity percentages are set by the Human Resources Committee of the Board of Directors. Officers will receive specific communications regarding their incentive target opportunity.           People are the Foundation of our Success and the Key to Achieving our Vision Page 1     --------------------------------------------------------------------------------     PERFORMANCE COMPONENT WEIGHTINGS The EIP includes two performance award components: EPS performance and individual performance. The performance award components are the measures used to determine an award payment. Each component is weighted. This weight indicates how much of the available funding will be available for each component. The weightings for the 2006 plan are: EPS                   50% Business Line KPIs/Individual    50% EPS: This component is the corporate level of measurement; Ameren’s earnings per share achievement. Fifty percent of the available bonus funds will be available for payment to each officer based on corporate success. Business Line/Individual: Each officer will have 50% of their available bonus determined by their personal contributions to business performance as assessed by the officer to whom they report. EIP PAYOUT Awards will be paid by March 15th, 2007. The award opportunity is based on the officer’s salary as of December 31, 2006 (or upon the officer’s salary at the time of retirement, death or disability). Awards will be prorated based on the amount of time worked during the plan year for eligible employees who: 1) are hired after the plan year begins; 2) retire during the plan year; 3) decease during the plan year; 4) become disabled during the plan year; or 5) are involuntarily terminated during the plan year as a result of a reduction in force, elimination of position, or change in strategic demand. The Human Resources Committee of the Board of Directors will approve the final amount of payment upon recommendation of the CEO of Ameren Corporation. CONTACT Questions regarding this plan may be directed to the Managing Supervisor, Compensation & Performance at (314) 554-2049.                   People are the Foundation of our Success and the Key to Achieving our Vision Page 2     --------------------------------------------------------------------------------    

  Exhibit 10.2   GUARANTEE AGREEMENT by and between TSB FINANCIAL CORPORATION and WILMINGTON TRUST COMPANY Dated as of December 14, 2006           --------------------------------------------------------------------------------   GUARANTEE AGREEMENT      This GUARANTEE AGREEMENT (this “Guarantee”), dated as of December 14, 2006, is executed and delivered by TSB Financial Corporation, a North Carolina corporation (the “Guarantor”), and Wilmington Trust Company, a Delaware banking corporation, as trustee (the “Guarantee Trustee”), for the benefit of the Holders (as defined herein) from time to time of the Capital Securities (as defined herein) of TSB Statutory Trust I, a Delaware statutory trust (the “Issuer”).      WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the “Declaration”), dated as of the date hereof among Wilmington Trust Company, not in its individual capacity but solely as institutional trustee and Delaware trustee, the administrators of the Issuer named therein, the Guarantor, as sponsor, and the holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer is issuing on the date hereof those undivided beneficial interests, having an aggregate liquidation amount of $3,000,000.00 (the “Capital Securities”); and      WHEREAS, as incentive for the Holders to purchase the Capital Securities, the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth in this Guarantee, to pay to the Holders of Capital Securities the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein;      NOW, THEREFORE, in consideration of the purchase by each Holder of the Capital Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of the Holders. ARTICLE I DEFINITIONS AND INTERPRETATION      Section 1.1. Definitions and Interpretation. In this Guarantee, unless the context otherwise requires:      (a) capitalized terms used in this Guarantee but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1;      (b) a term defined anywhere in this Guarantee has the same meaning throughout;      (c) all references to “the Guarantee” or “this Guarantee” are to this Guarantee as modified, supplemented or amended from time to time;      (d) all references in this Guarantee to “Articles” or “Sections” are to Articles or Sections of this Guarantee, unless otherwise specified;      (e) terms defined in the Declaration as at the date of execution of this Guarantee have the same meanings when used in this Guarantee, unless otherwise defined in this Guarantee or unless the context otherwise requires; and      (f) a reference to the singular includes the plural and vice versa.      “Affiliate” has the same meaning as given to that term in Rule 405 of the Securities Act of 1933, as amended, or any successor rule thereunder.      “Beneficiaries” means any Person to whom the Issuer is or hereafter becomes indebted or liable.   --------------------------------------------------------------------------------        “Capital Securities” has the meaning set forth in the recitals to this Guarantee.      “Common Securities” means the common securities issued by the Issuer to the Guarantor pursuant to the Declaration.      “Corporate Trust Office” means the office of the Guarantee Trustee at which the corporate trust business of the Guarantee Trustee shall, at any particular time, be principally administered, which office at the date of execution of this Guarantee is located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-1600, Attention: Corporate Trust Administration.      “Covered Person” means any Holder of Capital Securities.      “Debentures” means the debt securities of the Guarantor designated the Floating Rate Junior Subordinated Deferrable Interest Debentures due 2036 held by the Institutional Trustee (as defined in the Declaration) of the Issuer.      “Declaration Event of Default” means an “Event of Default” as defined in the Declaration.      “Event of Default” has the meaning set forth in Section 2.4(a).      “Guarantee Payments” means the following payments or distributions, without duplication, with respect to the Capital Securities, to the extent not paid or made by the Issuer: (i) any accrued and unpaid Distributions (as defined in the Declaration) which are required to be paid on such Capital Securities to the extent the Issuer shall have funds available therefor, (ii) the Redemption Price to the extent the Issuer has funds available therefor, with respect to any Capital Securities called for redemption by the Issuer, (iii) the Special Redemption Price to the extent the Issuer has funds available therefor, with respect to Capital Securities redeemed upon the occurrence of a Special Event, and (iv) upon a voluntary or involuntary liquidation, dissolution, winding-up or termination of the Issuer (other than in connection with the distribution of Debentures to the Holders of the Capital Securities in exchange therefor as provided in the Declaration), the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid Distributions on the Capital Securities to the date of payment, to the extent the Issuer shall have funds available therefor, and (b) the amount of assets of the Issuer remaining available for distribution to Holders in liquidation of the Issuer (in either case, the “Liquidation Distribution”).      “Guarantee Trustee” means Wilmington Trust Company, until a Successor Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Guarantee and thereafter means each such Successor Guarantee Trustee.      “Guarantor” means TSB Financial Corporation and each of its successors and assigns.      “Holder” means any holder, as registered on the books and records of the Issuer, of any Capital Securities; provided, however, that, in determining whether the Holders of the requisite percentage of Capital Securities have given any request, notice, consent or waiver hereunder, “Holder” shall not include the Guarantor or any Affiliate of the Guarantor.      “Indemnified Person” means the Guarantee Trustee, any Affiliate of the Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees, representatives, nominees, custodians or agents of the Guarantee Trustee.      “Indenture” means the Indenture dated as of the date hereof between the Guarantor and Wilmington Trust Company, not in its individual capacity but solely as trustee, and any indenture 2 --------------------------------------------------------------------------------   supplemental thereto pursuant to which the Debentures are to be issued to the institutional trustee of the Issuer.      “Issuer” has the meaning set forth in the opening paragraph to this Guarantee.      “Liquidation Distribution” has the meaning set forth in the definition of “Guarantee Payments” herein.      “Majority in liquidation amount of the Capital Securities” means Holder(s) of outstanding Capital Securities, voting together as a class, but separately from the holders of Common Securities, of more than 50% of the aggregate liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) of all Capital Securities then outstanding.      “Obligations” means any costs, expenses or liabilities (but not including liabilities related to taxes) of the Issuer other than obligations of the Issuer to pay to holders of any Trust Securities the amounts due such holders pursuant to the terms of the Trust Securities.      “Officer’s Certificate” means, with respect to any Person, a certificate signed by one Authorized Officer of such Person. Any Officer’s Certificate delivered with respect to compliance with a condition or covenant provided for in this Guarantee shall include:      (a) a statement that the Person signing the Officer’s Certificate has read the covenant or condition and the definitions relating thereto;      (b) a brief statement of the nature and scope of the examination or investigation undertaken by the Person in rendering the Officer’s Certificate;      (c) a statement that the Person has made such examination or investigation as, in such Person’s opinion, is necessary to enable such Person to express an informed opinion as to whether or not such covenant or condition has been complied with; and      (d) a statement as to whether, in the opinion of the Person, such condition or covenant has been complied with.      “Person” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature.      “Redemption Price” has the meaning set forth in the Indenture.      “Responsible Officer” means, with respect to the Guarantee Trustee, any officer within the Corporate Trust Office of the Guarantee Trustee including any Vice President, Assistant Vice President, Secretary, Assistant Secretary or any other officer of the Guarantee Trustee customarily performing functions similar to those performed by any of the above designated officers and also, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer’s knowledge of and familiarity with the particular subject.      “Special Event” has the meaning set forth in the Indenture.      “Special Redemption Price” has the meaning set forth in the Indenture. 3 --------------------------------------------------------------------------------        “Successor Guarantee Trustee” means a successor Guarantee Trustee possessing the qualifications to act as Guarantee Trustee under Section 3.1.      “Trust Securities” means the Common Securities and the Capital Securities. ARTICLE II POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE      Section 2.1. Powers and Duties of the Guarantee Trustee.      (a) This Guarantee shall be held by the Guarantee Trustee for the benefit of the Holders of the Capital Securities, and the Guarantee Trustee shall not transfer this Guarantee to any Person except a Holder of Capital Securities exercising his or her rights pursuant to Section 4.4(b) or to a Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its appointment to act as Successor Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall automatically vest in any Successor Guarantee Trustee, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Guarantee Trustee.      (b) If an Event of Default actually known to a Responsible Officer of the Guarantee Trustee has occurred and is continuing, the Guarantee Trustee shall enforce this Guarantee for the benefit of the Holders of the Capital Securities.      (c) The Guarantee Trustee, before the occurrence of any Event of Default and after curing all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Guarantee, and no implied covenants shall be read into this Guarantee against the Guarantee Trustee. In case an Event of Default has occurred (that has not been waived pursuant to Section 2.4) and is actually known to a Responsible Officer of the Guarantee Trustee, the Guarantee Trustee shall exercise such of the rights and powers vested in it by this Guarantee, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.      (d) No provision of this Guarantee shall be construed to relieve the Guarantee Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:      (i) prior to the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred:      (A) the duties and obligations of the Guarantee Trustee shall be determined solely by the express provisions of this Guarantee, and the Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Guarantee, and no implied covenants or obligations shall be read into this Guarantee against the Guarantee Trustee; and      (B) in the absence of bad faith on the part of the Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Guarantee Trustee and conforming to the requirements of this Guarantee; but in the 4 --------------------------------------------------------------------------------   case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Guarantee Trustee, the Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Guarantee;      (ii) the Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Guarantee Trustee, unless it shall be proved that such Responsible Officer of the Guarantee Trustee or the Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made;      (iii) the Guarantee Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the written direction of the Holders of not less than a Majority in liquidation amount of the Capital Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee, or relating to the exercise of any trust or power conferred upon the Guarantee Trustee under this Guarantee; and      (iv) no provision of this Guarantee shall require the Guarantee Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds is not reasonably assured to it under the terms of this Guarantee or security and indemnity, reasonably satisfactory to the Guarantee Trustee, against such risk or liability is not reasonably assured to it.      Section 2.2. Certain Rights of Guarantee Trustee.      (a) Subject to the provisions of Section 2.1:      (i) The Guarantee Trustee may conclusively rely, and shall be fully protected in acting or refraining from acting upon, any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed, sent or presented by the proper party or parties.      (ii) Any direction or act of the Guarantor contemplated by this Guarantee shall be sufficiently evidenced by an Officer’s Certificate.      (iii) Whenever, in the administration of this Guarantee, the Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officer’s Certificate of the Guarantor which, upon receipt of such request, shall be promptly delivered by the Guarantor.      (iv) The Guarantee Trustee shall have no duty to see to any recording, filing or registration of any instrument (or any re-recording, refiling or re-registration thereof).      (v) The Guarantee Trustee may consult with counsel of its selection, and the advice or opinion of such counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion. Such counsel may be counsel to the Guarantor or any 5 --------------------------------------------------------------------------------   of its Affiliates and may include any of its employees. The Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Guarantee from any court of competent jurisdiction.      (vi) The Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Guarantee at the request or direction of any Holder, unless such Holder shall have provided to the Guarantee Trustee such security and indemnity, reasonably satisfactory to the Guarantee Trustee, against the costs, expenses (including attorneys’ fees and expenses and the expenses of the Guarantee Trustee’s agents, nominees or custodians) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Guarantee Trustee; provided, however, that nothing contained in this Section 2.2(a)(vi) shall relieve the Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Guarantee.      (vii) The Guarantee Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit.      (viii) The Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, nominees, custodians or attorneys, and the Guarantee Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder.      (ix) Any action taken by the Guarantee Trustee or its agents hereunder shall bind the Holders of the Capital Securities, and the signature of the Guarantee Trustee or its agents alone shall be sufficient and effective to perform any such action. No third party shall be required to inquire as to the authority of the Guarantee Trustee to so act or as to its compliance with any of the terms and provisions of this Guarantee, both of which shall be conclusively evidenced by the Guarantee Trustee’s or its agent’s taking such action.      (x) Whenever in the administration of this Guarantee the Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Guarantee Trustee (i) may request instructions from the Holders of a Majority in liquidation amount of the Capital Securities, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be protected in conclusively relying on or acting in accordance with such instructions.      (xi) The Guarantee Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith, without negligence, and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Guarantee.      (b) No provision of this Guarantee shall be deemed to impose any duty or obligation on the Guarantee Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal or in which the Guarantee Trustee shall be unqualified or incompetent in accordance with applicable law to perform any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Guarantee Trustee shall be construed to be a duty. 6 --------------------------------------------------------------------------------        Section 2.3. Not Responsible for Recitals or Issuance of Guarantee. The recitals contained in this Guarantee shall be taken as the statements of the Guarantor, and the Guarantee Trustee does not assume any responsibility for their correctness. The Guarantee Trustee makes no representation as to the validity or sufficiency of this Guarantee.      Section 2.4. Events of Default; Waiver.      (a) An Event of Default under this Guarantee will occur upon the failure of the Guarantor to perform any of its payment or other obligations hereunder.      (b) The Holders of a Majority in liquidation amount of the Capital Securities may, voting or consenting as a class, on behalf of the Holders of all of the Capital Securities, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and shall be deemed to have been cured, for every purpose of this Guarantee, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon.      Section 2.5. Events of Default; Notice.      (a) The Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default, transmit by mail, first class postage prepaid, to the Holders of the Capital Securities and the Guarantor, notices of all Events of Default actually known to a Responsible Officer of the Guarantee Trustee, unless such defaults have been cured before the giving of such notice, provided, however, that the Guarantee Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Capital Securities.      (b) The Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless the Guarantee Trustee shall have received written notice from the Guarantor or a Holder of the Capital Securities (except in the case of a payment default), or a Responsible Officer of the Guarantee Trustee charged with the administration of this Guarantee shall have obtained actual knowledge thereof. ARTICLE III GUARANTEE TRUSTEE      Section 3.1. Guarantee Trustee; Eligibility.      (a) There shall at all times be a Guarantee Trustee which shall:      (i) not be an Affiliate of the Guarantor, and      (ii) be a corporation organized and doing business under the laws of the United States of America or any State or Territory thereof or of the District of Columbia, or Person authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by Federal, State, Territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then, for the purposes of this Section 3.1(a)(ii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. 7 --------------------------------------------------------------------------------        (b) If at any time the Guarantee Trustee shall cease to be eligible to so act under Section 3.1(a), the Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 3.2(c).      (c) If the Guarantee Trustee has or shall acquire any “conflicting interest” within the meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee shall either eliminate such interest or resign to the extent and in the manner provided by, and subject to this Guarantee.      Section 3.2. Appointment, Removal and Resignation of Guarantee Trustee.      (a) Subject to Section 3.2(b), the Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor except during an Event of Default.      (b) The Guarantee Trustee shall not be removed in accordance with Section 3.2(a) until a Successor Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Guarantee Trustee and delivered to the Guarantor.      (c) The Guarantee Trustee appointed to office shall hold office until a Successor Guarantee Trustee shall have been appointed or until its removal or resignation. The Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Guarantee Trustee has been appointed and has accepted such appointment by an instrument in writing executed by such Successor Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee Trustee.      (d) If no Successor Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 3.2 within 60 days after delivery of an instrument of removal or resignation, the Guarantee Trustee resigning or being removed may petition any court of competent jurisdiction for appointment of a Successor Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee.      (e) No Guarantee Trustee shall be liable for the acts or omissions to act of any Successor Guarantee Trustee.      (f) Upon termination of this Guarantee or removal or resignation of the Guarantee Trustee pursuant to this Section 3.2, the Guarantor shall pay to the Guarantee Trustee all amounts owing to the Guarantee Trustee under Sections 7.2 and 7.3 accrued to the date of such termination, removal or resignation. 8 --------------------------------------------------------------------------------   ARTICLE IV GUARANTEE      Section 4.1. Guarantee.      (a) The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by the Issuer), as and when due, regardless of any defense (except the defense of payment by the Issuer), right of set-off or counterclaim that the Issuer may have or assert. The Guarantor’s obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Issuer to pay such amounts to the Holders.      (b) The Guarantor hereby also agrees to assume any and all Obligations of the Issuer and in the event any such Obligation is not so assumed, subject to the terms and conditions hereof, the Guarantor hereby irrevocably and unconditionally guarantees to each Beneficiary the full payment, when and as due, of any and all Obligations to such Beneficiaries. This Guarantee is intended to be for the benefit of, and to be enforceable by, all such Beneficiaries, whether or not such Beneficiaries have received notice hereof.      Section 4.2. Waiver of Notice and Demand. The Guarantor hereby waives notice of acceptance of this Guarantee and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Issuer or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands.      Section 4.3. Obligations Not Affected. The obligations, covenants, agreements and duties of the Guarantor under this Guarantee shall in no way be affected or impaired by reason of the happening from time to time of any of the following:      (a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Issuer of any express or implied agreement, covenant, term or condition relating to the Capital Securities to be performed or observed by the Issuer;      (b) the extension of time for the payment by the Issuer of all or any portion of the Distributions, Redemption Price, Special Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Capital Securities or the extension of time for the performance of any other obligation under, arising out of or in connection with, the Capital Securities (other than an extension of time for payment of Distributions, Redemption Price, Special Redemption Price, Liquidation Distribution or other sum payable that results from the extension of any interest payment period on the Debentures or any extension of the maturity date of the Debentures permitted by the Indenture);      (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Capital Securities, or any action on the part of the Issuer granting indulgence or extension of any kind;      (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Issuer or any of the assets of the Issuer; 9 --------------------------------------------------------------------------------        (e) any invalidity of, or defect or deficiency in, the Capital Securities;      (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or      (g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 4.3 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances.      There shall be no obligation of the Holders to give notice to, or obtain consent of, the Guarantor with respect to the happening of any of the foregoing.      Section 4.4. Rights of Holders.      (a) The Holders of a Majority in liquidation amount of the Capital Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of this Guarantee or to direct the exercise of any trust or power conferred upon the Guarantee Trustee under this Guarantee; provided, however, that (subject to Section 2.1) the Guarantee Trustee shall have the right to decline to follow any such direction if the Guarantee Trustee being advised by counsel determines that the action or proceeding so directed may not lawfully be taken or if the Guarantee Trustee in good faith by its board of directors or trustees, executive committees or a trust committee of directors or trustees and/or Responsible Officers shall determine that the action or proceedings so directed would involve the Guarantee Trustee in personal liability.      (b) Any Holder of Capital Securities may institute a legal proceeding directly against the Guarantor to enforce the Guarantee Trustee’s rights under this Guarantee, without first instituting a legal proceeding against the Issuer, the Guarantee Trustee or any other Person. The Guarantor waives any right or remedy to require that any such action be brought first against the Issuer, the Guarantee Trustee or any other Person before so proceeding directly against the Guarantor.      Section 4.5. Guarantee of Payment. This Guarantee creates a guarantee of payment and not of collection.      Section 4.6. Subrogation. The Guarantor shall be subrogated to all (if any) rights of the Holders of Capital Securities against the Issuer in respect of any amounts paid to such Holders by the Guarantor under this Guarantee; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any right that it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Guarantee, if, after giving effect to any such payment, any amounts are due and unpaid under this Guarantee. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders.      Section 4.7. Independent Obligations. The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Issuer with respect to the Capital Securities and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 4.3 hereof.      Section 4.8. Enforcement by a Beneficiary. A Beneficiary may enforce the obligations of the Guarantor contained in Section 4.1(b) directly against the Guarantor and the Guarantor waives any right or remedy to require that any action be brought against the Issuer or any other person or entity 10 --------------------------------------------------------------------------------   before proceeding against the Guarantor. The Guarantor shall be subrogated to all rights (if any) of any Beneficiary against the Issuer in respect of any amounts paid to the Beneficiaries by the Guarantor under this Guarantee; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any rights that it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Guarantee, if at the time of any such payment, and after giving effect to such payment, any amounts are due and unpaid under this Guarantee. ARTICLE V LIMITATION OF TRANSACTIONS; SUBORDINATION      Section 5.1. Limitation of Transactions. So long as any Capital Securities remain outstanding, if (a) there shall have occurred and be continuing an Event of Default or a Declaration Event of Default or (b) the Guarantor shall have selected an Extension Period as provided in the Declaration and such period, or any extension thereof, shall have commenced and be continuing, then the Guarantor shall not and shall not permit any Affiliate to (x) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Guarantor’s or such Affiliate’s capital stock (other than payments of dividends or distributions to the Guarantor) or make any guarantee payments with respect to the foregoing or (y) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Guarantor or any Affiliate that rank pari passu in all respects with or junior in interest to the Debentures (other than, with respect to clauses (x) and (y) above, (i) repurchases, redemptions or other acquisitions of shares of capital stock of the Guarantor in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Guarantor (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the occurrence of the Event of Default, Declaration Event of Default or Extension Period, as applicable, (ii) as a result of any exchange or conversion of any class or series of the Guarantor’s capital stock (or any capital stock of a subsidiary of the Guarantor) for any class or series of the Guarantor’s capital stock or of any class or series of the Guarantor’s indebtedness for any class or series of the Guarantor’s capital stock, (iii) the purchase of fractional interests in shares of the Guarantor’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (iv) any declaration of a dividend in connection with any stockholders’ rights plan, or the issuance of rights, stock or other property under any stockholders’ rights plan, or the redemption or repurchase of rights pursuant thereto, (v) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any cash payments in lieu of fractional shares issued in connection therewith, or (vi) payments under this Guarantee).      Section 5.2. Ranking. This Guarantee will constitute an unsecured obligation of the Guarantor and will rank subordinate and junior in right of payment to all present and future Senior Indebtedness (as defined in the Indenture) of the Guarantor. By their acceptance thereof, each Holder of Capital Securities agrees to the foregoing provisions of this Guarantee and the other terms set forth herein.      The right of the Guarantor to participate in any distribution of assets of any of its subsidiaries upon any such subsidiary’s liquidation or reorganization or otherwise is subject to the prior claims of creditors of that subsidiary, except to the extent the Guarantor may itself be recognized as a creditor of that subsidiary. Accordingly, the Guarantor’s obligations under this Guarantee will be effectively 11 --------------------------------------------------------------------------------   subordinated to all existing and future liabilities of the Guarantor’s subsidiaries, and claimants should look only to the assets of the Guarantor for payments hereunder. This Guarantee does not limit the incurrence or issuance of other secured or unsecured debt of the Guarantor, including Senior Indebtedness of the Guarantor, under any indenture that the Guarantor may enter into in the future or otherwise. ARTICLE VI TERMINATION      Section 6.1. Termination. This Guarantee shall terminate as to the Capital Securities (i) upon full payment of the Redemption Price or Special Redemption Price of all Capital Securities then outstanding, (ii) upon the distribution of all of the Debentures to the Holders of all of the Capital Securities or (iii) upon full payment of the amounts payable in accordance with the Declaration upon dissolution of the Issuer. This Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any Holder of Capital Securities must restore payment of any sums paid under the Capital Securities or under this Guarantee. ARTICLE VII INDEMNIFICATION      Section 7.1. Exculpation.      (a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Guarantor or any Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Indemnified Person in good faith in accordance with this Guarantee and in a manner that such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Guarantee or by law, except that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified Person’s negligence or willful misconduct with respect to such acts or omissions.      (b) An Indemnified Person shall be fully protected in relying in good faith upon the records of the Issuer or the Guarantor and upon such information, opinions, reports or statements presented to the Issuer or the Guarantor by any Person as to matters the Indemnified Person reasonably believes are within such other Person’s professional or expert competence and who, if selected by such Indemnified Person, has been selected with reasonable care by such Indemnified Person, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which Distributions to Holders of Capital Securities might properly be paid.      Section 7.2. Indemnification.      (a) The Guarantor agrees to indemnify each Indemnified Person for, and to hold each Indemnified Person harmless against, any and all loss, liability, damage, claim or expense incurred without negligence or willful misconduct on the part of the Indemnified Person, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including, but not limited to, the costs and expenses (including reasonable legal fees and expenses) of the Indemnified Person defending itself against, or investigating, any claim or liability in connection with the exercise or performance of any of the Indemnified Person’s powers or duties hereunder. The obligation to indemnify as set forth in this Section 7.2 shall survive the resignation or removal of the Guarantee Trustee and the termination of this Guarantee. 12 --------------------------------------------------------------------------------        (b) Promptly after receipt by an Indemnified Person under this Section 7.2 of notice of the commencement of any action, such Indemnified Person will, if a claim in respect thereof is to be made against the Guarantor under this Section 7.2, notify the Guarantor in writing of the commencement thereof; but the failure so to notify the Guarantor (i) will not relieve the Guarantor from liability under paragraph (a) above unless and to the extent that the Guarantor did not otherwise learn of such action and such failure results in the forfeiture by the Guarantor of substantial rights and defenses and (ii) will not, in any event, relieve the Guarantor from any obligations to any Indemnified Person other than the indemnification obligation provided in paragraph (a) above. The Guarantor shall be entitled to appoint counsel of the Guarantor’s choice at the Guarantor’s expense to represent the Indemnified Person in any action for which indemnification is sought (in which case the Guarantor shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the Indemnified Person or Persons except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the Indemnified Person. Notwithstanding the Guarantor’s election to appoint counsel to represent the Guarantor in an action, the Indemnified Person shall have the right to employ separate counsel (including local counsel), and the Guarantor shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the Guarantor to represent the Indemnified Person would present such counsel with a conflict of interest, (ii) the actual or potential defendants in, or targets of, any such action include both the Indemnified Person and the Guarantor and the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it and/or other Indemnified Person(s) which are different from or additional to those available to the Guarantor, (iii) the Guarantor shall not have employed counsel satisfactory to the Indemnified Person to represent the Indemnified Person within a reasonable time after notice of the institution of such action or (iv) the Guarantor shall authorize the Indemnified Person to employ separate counsel at the expense of the Guarantor. The Guarantor will not, without the prior written consent of the Indemnified Persons, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the Indemnified Persons are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each Indemnified Person from all liability arising out of such claim, action, suit or proceeding.      Section 7.3. Compensation; Reimbursement of Expenses. The Guarantor agrees:      (a) to pay to the Guarantee Trustee from time to time such compensation for all services rendered by it hereunder as the parties shall agree to from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); and      (b) except as otherwise expressly provided herein, to reimburse the Guarantee Trustee upon request for all reasonable documented expenses, disbursements and advances incurred or made by it in accordance with any provision of this Guarantee (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or willful misconduct.      For purposes of clarification, this Section 7.3 does not contemplate the payment by the Guarantor of acceptance or annual administration fees owing to the Guarantee Trustee for services to be provided by the Guarantee Trustee under this Guarantee or the fees and expenses of the Guarantee Trustee’s counsel in connection with the closing of the transactions contemplated by this Guarantee. The provisions of this Section 7.3 shall survive the resignation or removal of the Guarantee Trustee and the termination of this Guarantee. 13 --------------------------------------------------------------------------------   ARTICLE VIII MISCELLANEOUS      Section 8.1. Successors and Assigns. All guarantees and agreements contained in this Guarantee shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the Capital Securities then outstanding. Except in connection with any merger or consolidation of the Guarantor with or into another entity or any sale, transfer or lease of the Guarantor’s assets to another entity, in each case, to the extent permitted under the Indenture, the Guarantor may not assign its rights or delegate its obligations under this Guarantee without the prior approval of the Holders of at least a Majority in liquidation amount of the Capital Securities.      Section 8.2. Amendments. Except with respect to any changes that do not adversely affect the rights of Holders of the Capital Securities in any material respect (in which case no consent of Holders will be required), this Guarantee may be amended only with the prior approval of the Holders of not less than a Majority in liquidation amount of the Capital Securities. The provisions of the Declaration with respect to amendments thereof apply to the giving of such approval.      Section 8.3. Notices. All notices provided for in this Guarantee shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by first class mail, as follows:      (a) If given to the Guarantee Trustee, at the Guarantee Trustee’s mailing address set forth below (or such other address as the Guarantee Trustee may give notice of to the Holders of the Capital Securities and the Guarantor): Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890-1600 Attention: Corporate Trust Administration Telecopy: 302-636-4140      (b) If given to the Guarantor, at the Guarantor’s mailing address set forth below (or such other address as the Guarantor may give notice of to the Holders of the Capital Securities and to the Guarantee Trustee): TSB Financial Corporation 1057 Providence Road Charlotte, North Carolina 28207 Attention: Jan H. Hollar Telecopy: 704-331-9695      (c) If given to any Holder of the Capital Securities, at the address set forth on the books and records of the Issuer.      All such notices shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid, except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver. 14 --------------------------------------------------------------------------------        Section 8.4. Benefit. This Guarantee is solely for the benefit of the Beneficiaries and, subject to Section 2.1(a), is not separately transferable from the Capital Securities.      Section 8.5. Governing Law. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).      Section 8.6. Counterparts. This Guarantee may be executed in one or more counterparts, each of which shall be an original, but all of which taken together shall constitute one and the same instrument.      Section 8.7 Separability. In case one or more of the provisions contained in this Guarantee shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Guarantee, but this Guarantee shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. Signatures appear on the following page 15 --------------------------------------------------------------------------------        THIS GUARANTEE is executed as of the day and year first above written.               TSB FINANCIAL CORPORATION, as Guarantor               By:   /s/ Jan H. Hollar                        Name: Jan H. Hollar      Title: CFO               WILMINGTON TRUST COMPANY, as Guarantee Trustee               By:   /s/ Christopher J. Monigle                        Name: Christopher J. Monigle      Title: Vice President 16

  Exhibit 10.36 THIRD AMENDMENT TO RIGHTS AGREEMENT      THIS THIRD AMENDMENT TO RIGHTS AGREEMENT (“Amendment”), dated as of September 8, 2006, is by and between Performance Food Group Company, a Tennessee corporation (the “Company”), and Bank of New York, a New York trust company (“Bank of New York”), and amends the Rights Agreement dated May 16, 1997, as amended by that certain First Amendment to Rights Agreement dated as of June 30, 1999 and Second Amendment to Rights Agreement dated as of November 22, 2000 (the “Rights Agreement”), between the Company and American Stock Transfer & Trust Company, as successor Rights Agent (“AST”). WITNESSETH:      WHEREAS, the Board of Directors of the Company has determined it to be advisable and in the best interest of the Company to amend the Rights Agreement to provide for a new Rights Agent; and      WHEREAS, pursuant to Section 21 of the Rights Agreement, the Board of Directors of the Company has appointed Bank of New York as the new Rights Agent effective as of September 8, 2006, and Bank of New York has agreed to act as such;      NOW THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:      1. The Company hereby appoints Bank of New York as Rights Agent to act as agent to the Company in accordance with the terms and conditions of the Rights Agreement, and Bank of New York hereby accepts such appointment.      2. Section 3(c) of the Rights Agreement is hereby amended in its entirety to read as follows:      "(c) Rights shall, without any further action, be issued in respect of all shares of Common Stock which are issued (including any shares of Common Stock held in treasury) after the Record Date but prior to the earlier of the Exercisability Date and the Expiration Date. Certificates representing such shares of Common Stock issued after the Record Date shall bear the following legend: This certificate also evidences and entitles the holder hereof to certain rights as set forth in the Rights Agreement between Performance Food Group Company (the “Company”) and Bank of New York (as successor “Rights Agent”) dated as of May 16, 1997, as amended (the “Rights Agreement”), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal office of the stock transfer administration office of the Rights Agent. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this 1 --------------------------------------------------------------------------------   certificate. The Company will mail to the holder of this certificate a copy of the Rights Agreement, as in effect on the date of mailing, without charge promptly after receipt of a written request therefor. Under certain circumstances set forth in the Rights Agreement, Rights issued to, or held by, any Person who is, was or becomes an Acquiring Person or any Affiliate or Associate thereof (as such terms are defined in the Rights Agreement), whether currently held by or on behalf of such Person or by any subsequent holder, may become null and void. With respect to certificates representing shares of Common Stock (whether or not such certificates include the foregoing legend), until the earlier of the Exercisability Date and the Expiration Date, (i) the Rights associated with the shares of Common Stock represented by such certificates shall be evidenced by such certificates alone, (ii) registered holders of the shares of Common Stock shall also be the registered holders of the associated Rights, and (iii) the transfer of any of such certificates shall also constitute the transfer of the Rights associated with the shares of Common Stock represented by such certificates.”      3. This Amendment shall be governed by an construed in accordance with the laws of the State of Tennessee.      4. This Amendment may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same instrument. (Next Page is Signature Page) 2 --------------------------------------------------------------------------------        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed, all as of the date first above written.             PERFORMANCE FOOD GROUP COMPANY       By:   /s/ Jeffrey W. Fender         Name:   Jeffrey W. Fender       Title:   VP & Treasurer                 BANK OF NEW YORK       By:   /s/ Douglas Ditoro         Name:  Douglas Ditoro       Title:   Assistant Vice President     3

Exhibit 10.2   THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.   [FACE OF NOTE]   COVAD COMMUNICATIONS GROUP, INC.   12% Senior Secured Convertible Note due 2011   $40,000,000.00   No.         COVAD COMMUNICATIONS GROUP, INC., a Delaware corporation (“Group”), and COVAD COMMUNICATIONS COMPANY, a California corporation (“Operating”; individually and collectively with Group, the “Company,” which term includes any successor), for value received, jointly and severally, promise to pay to EarthLink, Inc., or its registered assigns or successors, the principal sum of Forty Million Dollars and No Cents ($40,000,000.00) on March 15, 2011.   Interest Payment Dates:  March  15 and September 15 of each year, commencing September 15, 2006.   Regular Record Dates:  March  1 and September  1 of each year.   Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.   --------------------------------------------------------------------------------   IN WITNESS WHEREOF, the Company has caused this Note to be signed by its duly authorized officers.     COVAD COMMUNICATIONS GROUP, INC.           By:         Name:     Title: Chief Executive Officer       By:         Name:     Title: Chief Financial Officer         Date: March      , 2006             COVAD COMMUNICATIONS COMPANY           By:         Name:     Title: Chief Executive Officer       By:         Name:     Title: Chief Financial Officer         Date: March      , 2006     2 --------------------------------------------------------------------------------   [REVERSE SIDE OF NOTE]   COVAD COMMUNICATIONS GROUP, INC. COVAD COMMUNICATIONS COMPANY   12% Senior Secured Convertible Note due 2011   SECTION 1.               PRINCIPAL AND INTEREST.   (A)               SUBJECT TO SECTION 1(D), THE COMPANY WILL PAY THE PRINCIPAL OF THIS NOTE ON MARCH  15, 2011 (THE “FINAL MATURITY”). THE COMPANY, JOINTLY AND SEVERALLY, PROMISES TO PAY INTEREST ON THE PRINCIPAL AMOUNT OF THIS NOTE ON EACH INTEREST PAYMENT DATE, AS SET FORTH BELOW, AT THE RATE PER ANNUM SHOWN ABOVE.   (B)              INTEREST WILL BE PAYABLE SEMIANNUALLY (TO THE HOLDERS OF RECORD OF THE NOTES AT THE CLOSE OF BUSINESS ON THE MARCH  1 OR SEPTEMBER 1 IMMEDIATELY PRECEDING THE INTEREST PAYMENT DATE) ON EACH INTEREST PAYMENT DATE, COMMENCING SEPTEMBER 15, 2006. INTEREST ON THE NOTES WILL ACCRUE FROM THE MOST RECENT DATE TO WHICH INTEREST HAS BEEN PAID OR, IF NO INTEREST HAS BEEN PAID, FROM MARCH      , 2006 (THE “ISSUE DATE”). INTEREST WILL BE COMPUTED ON THE BASIS OF A 360-DAY YEAR COMPRISED OF TWELVE 30-DAY MONTHS. THE COMPANY SHALL PAY INTEREST ON OVERDUE PRINCIPAL AND PREMIUM, IF ANY, AND INTEREST ON OVERDUE INSTALLMENTS OF INTEREST, TO THE EXTENT LAWFUL, AT A RATE PER ANNUM THAT IS 2% IN EXCESS OF THE RATE OTHERWISE PAYABLE.   (C)               THE COMPANY WILL HAVE THE OPTION TO PAY INTEREST IN CASH OR THROUGH THE ISSUANCE OF NOTES, OTHER THAN THE NOTES COMPRISING THE FIRST $40,000,000.00 PRINCIPAL AMOUNT OF NOTES ISSUED ON THE DATE HEREOF (THE “INITIAL NOTES”), WHICH SHALL BE ISSUED AS PART OF THE SAME SERIES AS THE INITIAL NOTES (THE “ADDITIONAL NOTES” AND, TOGETHER WITH THE INITIAL NOTES, THE “NOTES”). THE ADDITIONAL NOTES WILL BE IDENTICAL TO THE INITIAL NOTES, EXCEPT THAT INTEREST WILL BEGIN TO ACCRUE FROM THE DATE THEY ARE ISSUED RATHER THAN THE ISSUE DATE. THE COMPANY SHALL PROVIDE WRITTEN OR ORAL NOTICE TO THE HOLDERS FIVE BUSINESS DAYS PRIOR TO AN INTEREST PAYMENT DATE OF WHETHER SUCH INTEREST PAYMENT WILL BE MADE IN CASH, BY THE ISSUANCE OF ADDITIONAL NOTES OR BY A COMBINATION THEREOF. IF THE COMPANY FAILS TO DELIVER SUCH NOTICE IN SUCH TIME PERIOD, INTEREST FOR THE PERIOD FOR WHICH THE NOTICE WAS NOT PROPERLY GIVEN SHALL BE PAID BY THE ISSUANCE OF ADDITIONAL NOTES. ANY CASH INTEREST PAYMENT WILL BE IN SUCH COIN OR CURRENCY OF THE UNITED STATES OF AMERICA AS AT THE TIME OF PAYMENT IS LEGAL TENDER FOR PAYMENT OF PUBLIC AND PRIVATE DEBTS.   (D)              NOTWITHSTANDING, THE FIRST SENTENCE OF SECTION 1(A), IN THE EVENT THAT: (I) (A) OPERATING ELECTS UNDER SECTION 9.2.4 OF THAT CERTAIN AGREEMENT FOR XGDSL SERVICES, DATED OF EVEN DATE HEREWITH, BETWEEN OPERATING AND EARTHLINK, INC. (“EARTHLINK”) (THE “SERVICES AGREEMENT”) NOT TO PROCEED WITH THE PHASE II BUILD OUT (AS DEFINED IN THE SERVICES AGREEMENT) BY WRITTEN NOTICE TO EARTHLINK (“PHASE II NOTICE”), OR (B) OPERATING RECEIVES FROM EARTHLINK NOTICE OF A SUBSTANTIAL PERFORMANCE FAILURE, AS DEFINED IN AND IN ACCORDANCE WITH THE TERMS OF, SECTION 4.5 OF THE SERVICES AGREEMENT AND EXHIBIT 2 OF THE SERVICES AGREEMENT (THE “SUBSTANTIAL PERFORMANCE NOTICE’) AND (II) WITH RESPECT TO SUBSECTION (D)(I)(A), ON THE DATE OF THE PHASE II NOTICE EARTHLINK HOLDS AT LEAST TWO-THIRDS OF THE OUTSTANDING AGGREGATE PRINCIPAL AMOUNT OF THE NOTES AND OF THE PRIMARY SHARES, THEN EARTHLINK MAY, IN EITHER CASE AND AT ITS OPTION, AT ANY TIME   3 --------------------------------------------------------------------------------   DURING THE 30-DAY PERIOD FOLLOWING RECEIPT OF THE PHASE II NOTICE OR THE SUBSTANTIAL PERFORMANCE NOTICE, AS APPLICABLE, BY WRITTEN NOTICE TO THE COMPANY (THE “ELECTION NOTICE”), REQUIRE THE COMPANY TO PAY THE REMAINING PRINCIPAL AMOUNT OF THE NOTES HELD BY EARTHLINK ON THE DATE OF THE ELECTION NOTICE (“AMORTIZED NOTES”) IN FOUR EQUAL ANNUAL INSTALLMENTS DUE MARCH 15 OF EACH YEAR, COMMENCING ON MARCH 15, 2007 AND ENDING ON MARCH 15, 2010 (THE “PRINCIPAL INSTALLMENTS”); PROVIDED, HOWEVER, THAT IF SUCH ELECTION NOTICE IS MADE AFTER ANY OF SUCH DATES THE PRINCIPAL ON THE AMORTIZED NOTES WILL BE PAID RATABLY ON THE REMAINING DATES. ACCRUED INTEREST, IF ANY, ON THE PRINCIPAL INSTALLMENTS SHALL BE PAID IN ACCORDANCE WITH SECTION 1(B). FROM AND AFTER THE DATE OF THE ELECTION NOTICE, THE AMORTIZED NOTES SHALL CONTINUE TO BE GOVERNED BY THIS SECTION 1(D), REGARDLESS OF ANY SUBSEQUENT TRANSFER BY EARTHLINK OF ALL OR ANY PORTION OF THE AMORTIZED NOTES.   SECTION 2.               METHOD OF PAYMENT. THE COMPANY WILL PAY INTEREST (EXCEPT DEFAULTED INTEREST) ON THE PRINCIPAL AMOUNT OF THE NOTES AS PROVIDED ABOVE ON EACH MARCH  15 AND SEPTEMBER 15, COMMENCING SEPTEMBER  15, 2006, TO EACH PERSON IN WHOSE NAMES THE NOTES ARE REGISTERED (A “HOLDER”) ON THE MARCH 1 OR SEPTEMBER 1 IMMEDIATELY PRECEDING THE INTEREST PAYMENT DATE, IN EACH CASE, EVEN IF THE NOTE IS CANCELLED ON REGISTRATION OF TRANSFER OR REGISTRATION OF EXCHANGE AFTER SUCH RECORD DATE. IF A PAYMENT DATE IS A DATE OTHER THAN A BUSINESS DAY, PAYMENT MAY BE MADE ON THE NEXT SUCCEEDING DAY THAT IS A BUSINESS DAY AND NO INTEREST SHALL ACCRUE FOR THE INTERVENING PERIOD. “BUSINESS DAY” SHALL MEAN ANY DAY EXCEPT SATURDAY, SUNDAY OR ANY OTHER DAY ON WHICH COMMERCIAL BANKS IN THE STATE OF CALIFORNIA ARE AUTHORIZED BY LAW OR OTHER GOVERNMENTAL ACTION TO CLOSE.   SECTION 3.               LIMITATIONS. THE NOTES ARE GENERAL SECURED OBLIGATIONS OF EACH OF GROUP AND OPERATING, WILL RANK PARI PASSU IN RIGHT OF PAYMENT WITH ALL EXISTING AND FUTURE SECURED, UNSUBORDINATED INDEBTEDNESS OF EACH OF GROUP AND OPERATING AND WILL BE SENIOR IN RIGHT OF PAYMENT TO ALL UNSECURED INDEBTEDNESS AND SUBORDINATED INDEBTEDNESS OF EACH OF GROUP AND OPERATING.   SECTION 4.               CONVERSION OF NOTE BY HOLDER.   (A)               SUBJECT TO THE FURTHER PROVISIONS OF THIS SECTION 4(A), A HOLDER OF A NOTE MAY CONVERT SUCH NOTE (OR PORTION THEREOF) AT ANY TIME BEGINNING MARCH 15, 2008, THROUGH THE CLOSE OF BUSINESS ON THE FINAL MATURITY AT THE CONVERSION PRICE THEN IN EFFECT INTO SHARES OF THE COMMON STOCK OF GROUP (THE “COMMON STOCK”); PROVIDED HOWEVER, THAT IN THE EVENT OF A CHANGE IN CONTROL, A HOLDER MAY CONVERT SUCH NOTE IMMEDIATELY PRIOR TO THE CHANGE OF CONTROL IRRESPECTIVE OF WHETHER CONVERSION WERE TO OCCUR PRIOR TO MARCH 15, 2008. FOR PURPOSES OF THIS SECTION 4, THE COMPANY SHALL MAIL NOTICE TO THE HOLDERS NOT LESS THAN FIVE BUSINESS DAYS PRIOR TO THE OCCURRENCE OF ANY CHANGE OF CONTROL, PROVIDED THAT THE COMPANY HAS KNOWLEDGE OF SUCH CHANGE IN CONTROL. THE NUMBER OF SHARES OF GROUP’S COMMON STOCK ISSUABLE UPON CONVERSION OF A NOTE SHALL BE DETERMINED BY DIVIDING THE OUTSTANDING PRINCIPAL AMOUNT (EXCLUDING ACCRUED AND UNPAID INTEREST) OF THE NOTE (OR PORTION THEREOF) SURRENDERED FOR CONVERSION BY THE CONVERSION PRICE IN EFFECT ON THE CONVERSION DATE (AS DEFINED IN SECTION 4(B)). IN CONNECTION WITH ANY SUCH CONVERSION, SUCH HOLDER ALSO SHALL HAVE THE RIGHT TO RECEIVE A PAYMENT (EACH, A “CONVERSION INTEREST PAYMENT”), AT THE TIME AND IN THE MANNER PROVIDED IN SECTION 4(B), OF THE ACCRUED AND UNPAID INTEREST WITH RESPECT TO THE OUTSTANDING PRINCIPAL AMOUNT OF THE NOTE (OR PORTION THEREOF) SO CONVERTED, WHICH PAYMENT SHALL BE MADE, AT THE ELECTION OF THE COMPANY, IN CASH, COMMON   4 --------------------------------------------------------------------------------   STOCK, OR A COMBINATION THEREOF. SUBJECT TO ADJUSTMENT OR VOLUNTARY REDUCTION AS PROVIDED IN THIS SECTION 4, THE CONVERSION PRICE INITIALLY SHALL BE $1.86 PER SHARE OF GROUP’S COMMON STOCK.   A Holder of Notes is not entitled to any rights of a holder of Group’s Common Stock until such Holder has converted its Notes to Group’s Common Stock.   (B)              CONVERSION PROCEDURE. TO CONVERT A NOTE, A HOLDER MUST (I) COMPLETE AND MANUALLY SIGN THE CONVERSION NOTICE ON THE BACK OF THE NOTE (OR COMPLETE AND MANUALLY SIGN A FACSIMILE OF SUCH NOTICE) AND DELIVER SUCH NOTICE TO THE COMPANY, (II) SURRENDER THE NOTE TO THE COMPANY, (III) HAVE SATISFIED ANY NECESSARY FILING REQUIREMENTS UNDER THE HART-SCOTT-RODINO ACT OF 1976, AS AMENDED (THE “HSR ACT”), IN RESPECT OF ITS ACQUISITION OF THE SHARES OF GROUP’S COMMON STOCK UPON SUCH CONVERSION AND THE WAITING PERIOD UNDER SUCH HSR ACT SHALL HAVE EXPIRED OR BEEN TERMINATED WITHOUT OBJECTION TO SUCH ACQUISITION, (IV) HAVE RECEIVED ANY OTHER NECESSARY REGULATORY CONSENTS TO ITS ACQUISITION OF THE SHARES OF GROUP’S COMMON STOCK UPON SUCH CONVERSION AND (V) PAY ANY TRANSFER OR SIMILAR TAX IF REQUIRED PURSUANT TO SECTION 4(D) HEREOF. THE DATE ON WHICH THE HOLDER SATISFIES ALL OF THOSE REQUIREMENTS IS THE “CONVERSION DATE.”  THE NOTICE OF CONVERSION SHALL STATE THAT THE HOLDER HAS SATISFIED OR WILL HAVE SATISFIED PRIOR TO THE ISSUANCE OF SHARES OF THE GROUP’S COMMON STOCK UPON CONVERSION OF SUCH PRINCIPAL AMOUNT, AND PRIOR TO THE PAYMENT OF THE CONVERSION INTEREST PAYMENT, ANY AND ALL LEGAL OR REGULATORY REQUIREMENTS FOR CONVERSION, INCLUDING COMPLIANCE WITH THE SECURITIES ACT, THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE “EXCHANGE ACT”) AND THE HSR ACT. THE COMPANY SHALL USE ITS REASONABLE BEST EFFORTS IN COOPERATING IN A TIMELY MANNER WITH SUCH HOLDER TO OBTAIN SUCH LEGAL OR REGULATORY APPROVALS TO THE EXTENT ITS COOPERATION IS NECESSARY.   As soon as practicable after the Conversion Date and in no event later than five Business Days following the Conversion Date, Group shall deliver to the Holder (i) a certificate for the number of whole shares of Group’s Common Stock issuable upon the conversion of the Note or portion thereof as determined in accordance with this Section 4, (ii) cash in lieu of any fractional shares pursuant to Section 4(c) hereof and (iii) cash, Common Stock, or a combination thereof, in an amount equal to the Conversion Interest Payment.   The individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust or other entity organization, including a government or political subdivision or an agency or instrumentality thereof (each a “Person” or “Persons”) in whose name the certificate is registered shall be deemed to be a stockholder of record on and after the Conversion Date, as the case may be; provided that no surrender of a Note on any date when the stock transfer books of Group shall be closed shall be effective to constitute the Person or Persons entitled to receive the shares of Group’s Common Stock upon such conversion as the record holder or holders of such shares of Group’s Common Stock on such date, but such surrender shall be effective to constitute the Person or Persons entitled to receive such shares of Group’s Common Stock as the record holder or holders thereof for all purposes at the close of business on the next succeeding day on which such stock transfer books are open; and provided further, that such conversion shall be at the Conversion Price in effect on the Conversion Date as if the stock transfer books of Group had not been closed. Upon conversion of a Note (in whole and not in part), such Person shall no longer be a Holder of such Note.   5 --------------------------------------------------------------------------------   If any Holder surrenders a Note for conversion after the close of business on the Regular Record Date for the payment of an installment of interest and before the close of business on the related Interest Payment Date, the Company shall pay accrued interest, if any, through the Conversion Date to the Holder of such Note on such Regular Record Date.   Upon surrender of a Note that is converted in part, as soon as practicable after the Conversion Date and in no event later than five Business Days following the Conversion Date, the Company shall execute and deliver to the Holder, a new Note equal in principal amount to the unconverted portion of the Note surrendered.   If the last day on which a Note may be converted is not a Business Day, the Note may be surrendered to the Company on the next succeeding day that is a Business Day.   (C)               FRACTIONAL SHARES. GROUP SHALL NOT ISSUE FRACTIONAL SHARES OF ITS COMMON STOCK UPON CONVERSION OF ANY NOTES. IN LIEU THEREOF, THE COMPANY SHALL, AT THE COMPANY’S OPTION, PAY AN AMOUNT IN CASH BASED UPON THE CURRENT MARKET PRICE ON THE BUSINESS DAY IMMEDIATELY PRIOR TO THE CONVERSION DATE OR ROUND UP THE NUMBER OF SHARES OF GROUP’S COMMON STOCK ISSUABLE UPON SUCH CONVERSION TO THE NEXT HIGHEST WHOLE NUMBER OF SHARES.   (D)              TAXES ON CONVERSION. IF A HOLDER CONVERTS A NOTE, THE COMPANY SHALL PAY ANY DOCUMENTARY, STAMP OR SIMILAR ISSUE OR TRANSFER TAX DUE ON THE ISSUE OF SHARES OF ITS COMMON STOCK UPON SUCH CONVERSION. HOWEVER, THE HOLDER SHALL PAY ANY SUCH TAX THAT IS DUE BECAUSE THE HOLDER REQUESTS THE SHARES TO BE ISSUED IN A NAME OTHER THAN THE HOLDER’S NAME. GROUP MAY REFUSE TO DELIVER THE CERTIFICATE REPRESENTING THE SHARES OF GROUP’S COMMON STOCK BEING ISSUED IN A NAME OTHER THAN THE HOLDER’S NAME UNTIL THE COMPANY RECEIVES A SUM SUFFICIENT TO PAY ANY TAX WHICH WILL BE DUE BECAUSE THE SHARES ARE TO BE ISSUED IN A NAME OTHER THAN THE HOLDER’S NAME. NOTHING HEREIN SHALL PRECLUDE ANY TAX WITHHOLDING REQUIRED BY LAW OR REGULATION.   (E)               ADJUSTMENT OF CONVERSION PRICE. THE CONVERSION PRICE SHALL BE ADJUSTED FROM TIME TO TIME BY THE COMPANY AS FOLLOWS:   (I)            IN CASE GROUP SHALL (A) PAY A DIVIDEND IN SHARES OF ITS COMMON STOCK TO ALL HOLDERS OF ITS COMMON STOCK, (B) MAKE A DISTRIBUTION IN SHARES OF ITS COMMON STOCK TO ALL HOLDERS OF ITS COMMON STOCK, (C) SUBDIVIDE OR SPLIT ITS OUTSTANDING COMMON STOCK INTO A LARGER NUMBER OF SHARES, OR (D) COMBINE ITS OUTSTANDING COMMON STOCK INTO A SMALLER NUMBER OF SHARES, THE CONVERSION PRICE IN EFFECT IMMEDIATELY PRIOR THERETO SHALL BE ADJUSTED SO THAT THE HOLDER OF ANY NOTE THEREAFTER SURRENDERED FOR CONVERSION SHALL BE ENTITLED TO RECEIVE THAT NUMBER OF SHARES OF GROUP’S COMMON STOCK THAT IT WOULD HAVE OWNED OR BEEN ENTITLED TO RECEIVE HAD SUCH NOTE BEEN CONVERTED IMMEDIATELY PRIOR TO THE HAPPENING OF SUCH EVENT. AN ADJUSTMENT MADE PURSUANT TO THIS SECTION 4(E)(I) SHALL BECOME EFFECTIVE AS OF THE CLOSE OF BUSINESS ON THE RECORD DATE FIXED FOR THE DETERMINATION OF STOCKHOLDERS ENTITLED TO RECEIVE SUCH DIVIDEND OR DISTRIBUTION IN THE CASE OF A DIVIDEND IN SHARES OR DISTRIBUTION IN SHARES AND SHALL BECOME EFFECTIVE AS OF THE CLOSE OF BUSINESS ON THE EFFECTIVE DATE IN THE CASE OF A SUBDIVISION, SPLIT OR COMBINATION. IF ANY DIVIDEND OR DISTRIBUTION OF THE TYPE DESCRIBED IN THIS SECTION 4(E)(I) IS DECLARED BUT NOT SO PAID OR MADE, THE CONVERSION PRICE SHALL AGAIN BE ADJUSTED TO THE CONVERSION PRICE THAT WOULD THEN BE IN EFFECT IF SUCH DIVIDEND OR DISTRIBUTION HAD NOT BEEN DECLARED.   6 --------------------------------------------------------------------------------   (II)           IN CASE (A) GROUP SHALL ISSUE RIGHTS, OPTIONS OR WARRANTS TO ALL OR SUBSTANTIALLY ALL HOLDERS OF ITS COMMON STOCK ENTITLING THEM (FOR A PERIOD COMMENCING NO EARLIER THAN THE RECORD DATE DESCRIBED BELOW AND EXPIRING NOT MORE THAN 60 DAYS AFTER SUCH RECORD DATE) TO SUBSCRIBE FOR OR PURCHASE SHARES OF ITS COMMON STOCK (OR SECURITIES CONVERTIBLE INTO ITS COMMON STOCK) AT A PRICE PER SHARE LESS THAN THE CURRENT MARKET PRICE AT THE RECORD DATE FIXED FOR THE DETERMINATION OF STOCKHOLDERS ENTITLED TO RECEIVE SUCH RIGHTS OR WARRANTS OR (B) GROUP SHALL SELL OR ISSUE ANY SHARES OF ITS COMMON STOCK AND THE CONSIDERATION PER SHARE OF GROUP’S COMMON STOCK TO BE PAID UPON SUCH SALE OR ISSUANCE IS LESS THAN THE CURRENT MARKET PRICE OR GROUP SHALL SELL OR ISSUE WARRANTS, OPTIONS, RIGHTS OR OTHER CONVERTIBLE SECURITIES TO SUBSCRIBE FOR OR PURCHASE SHARES OF ITS COMMON STOCK AT A PRICE PER SHARE LESS THAN THE CURRENT MARKET PRICE ON THE DATE OF SUCH SALE OR ISSUANCE, THE CONVERSION PRICE IN EFFECT IMMEDIATELY PRIOR TO THE CLOSE OF BUSINESS ON THE RECORD DATE OR ISSUE DATE THERETO SHALL BE REDUCED SO THAT THE SAME SHALL EQUAL THE PRICE DETERMINED BY MULTIPLYING THE CONVERSION PRICE IN EFFECT IMMEDIATELY PRIOR TO THE CLOSE OF BUSINESS ON SUCH RECORD DATE OR ISSUE DATE (AS THE CASE MAY BE) BY A FRACTION, THE NUMERATOR OF WHICH SHALL BE THE NUMBER OF SHARES OF GROUP’S COMMON STOCK OUTSTANDING AT THE CLOSE OF BUSINESS ON SUCH RECORD DATE OR ISSUE DATE (AS THE CASE MAY BE), PLUS THE NUMBER OF SHARES THAT THE AGGREGATE OFFERING PRICE OF THE TOTAL NUMBER OF SHARES OF GROUP’S COMMON STOCK SO OFFERED (OR THE AGGREGATE CONVERSION PRICE OF THE CONVERTIBLE SECURITIES SO OFFERED) WOULD PURCHASE AT SUCH CURRENT MARKET PRICE, AND THE DENOMINATOR OF WHICH SHALL BE THE NUMBER OF SHARES OF GROUP’S COMMON STOCK OUTSTANDING AT THE CLOSE OF BUSINESS ON SUCH RECORD DATE OR ISSUE DATE (AS THE CASE MAY BE) PLUS THE NUMBER OF ADDITIONAL SHARES OF GROUP’S COMMON STOCK OFFERED (OR INTO WHICH THE CONVERTIBLE SECURITIES SO OFFERED ARE CONVERTIBLE). SUCH ADJUSTMENT SHALL BE MADE SUCCESSIVELY WHENEVER ANY SUCH RIGHTS, OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES ARE ISSUED, AND SHALL BECOME EFFECTIVE AS OF THE CLOSE OF BUSINESS ON SUCH RECORD DATE OR ISSUE DATE (AS THE CASE MAY BE). TO THE EXTENT THAT SHARES OF GROUP’S COMMON STOCK ARE NOT DELIVERED AFTER THE EXPIRATION OF SUCH RIGHTS, OPTIONS OR WARRANTS, THE CONVERSION PRICE SHALL BE ADJUSTED TO THE CONVERSION PRICE THAT WOULD THEN BE IN EFFECT HAD THE REDUCTION MADE UPON THE ISSUANCE OF SUCH RIGHTS, OPTIONS OR WARRANTS BEEN MADE ON THE BASIS OF DELIVERY OF ONLY THE NUMBER OF SHARES OF GROUP’S COMMON STOCK ACTUALLY DELIVERED. IN THE EVENT THAT SUCH RIGHTS, OPTIONS OR WARRANTS ARE NOT SO ISSUED, THE CONVERSION PRICE SHALL AGAIN BE ADJUSTED TO BE THE CONVERSION PRICE THAT WOULD THEN BE IN EFFECT IF SUCH RECORD DATE HAD NOT BEEN FIXED. IN DETERMINING WHETHER ANY RIGHTS, OPTIONS OR WARRANTS ENTITLE THE HOLDERS TO SUBSCRIBE FOR OR PURCHASE SHARES OF GROUP’S COMMON STOCK AT LESS THAN SUCH CURRENT MARKET PRICE, AND IN DETERMINING THE AGGREGATE OFFERING PRICE OF SUCH SHARES OF GROUP’S COMMON STOCK, THERE SHALL BE TAKEN INTO ACCOUNT THE FAIR MARKET VALUE OF ANY CONSIDERATION RECEIVED BY GROUP FOR SUCH RIGHTS, OPTIONS OR WARRANTS AND ANY AMOUNT PAYABLE ON EXERCISE OR CONVERSION THEREOF.   (III)          IN CASE GROUP SHALL, BY DIVIDEND OR OTHERWISE, DISTRIBUTE TO ALL HOLDERS OF ITS COMMON STOCK, CASH, THEN, IN SUCH CASE, THE CONVERSION PRICE SHALL BE REDUCED SO THAT THE SAME SHALL EQUAL THE PRICE DETERMINED BY MULTIPLYING THE CONVERSION PRICE IN EFFECT IMMEDIATELY PRIOR TO THE CLOSE OF BUSINESS ON THE RECORD DATE FIXED FOR THE DETERMINATION OF STOCKHOLDERS ENTITLED TO RECEIVE SUCH DISTRIBUTION BY A FRACTION, THE NUMERATOR OF WHICH SHALL BE CURRENT MARKET PRICE ON SUCH RECORD DATE LESS THE AMOUNT OF CASH SO DISTRIBUTED (AND NOT EXCLUDED AS PROVIDED ABOVE) APPLICABLE TO ONE SHARE OF GROUP’S COMMON STOCK AND THE DENOMINATOR SHALL BE THE CURRENT MARKET PRICE ON SUCH RECORD DATE. SUCH REDUCTION SHALL BECOME EFFECTIVE AS OF THE CLOSE OF BUSINESS ON SUCH RECORD DATE; PROVIDED THAT, IN THE EVENT THE PORTION OF THE CASH SO DISTRIBUTED APPLICABLE TO ONE SHARE OF GROUP’S COMMON STOCK IS EQUAL TO   7 --------------------------------------------------------------------------------   OR GREATER THAN THE CURRENT MARKET PRICE ON SUCH RECORD DATE, IN LIEU OF THE FOREGOING ADJUSTMENT, ADEQUATE PROVISION SHALL BE MADE SO THAT EACH HOLDER SHALL HAVE THE RIGHT TO RECEIVE UPON CONVERSION, IN ADDITION TO THE SHARES OF GROUP’S COMMON STOCK ISSUABLE UPON SUCH CONVERSION, THE AMOUNT OF CASH SUCH HOLDER WOULD HAVE RECEIVED HAD SUCH HOLDER CONVERTED SUCH NOTE ON SUCH RECORD DATE. IN THE EVENT THAT SUCH DIVIDEND OR DISTRIBUTION IS NOT SO PAID OR MADE, THE CONVERSION PRICE SHALL AGAIN BE ADJUSTED TO BE THE CONVERSION PRICE THAT WOULD THEN BE IN EFFECT IF SUCH DIVIDEND OR DISTRIBUTION HAD NOT BEEN DECLARED. IF ANY ADJUSTMENT IS REQUIRED TO BE MADE AS SET FORTH IN THIS SECTION 4(E)(III) AS A RESULT OF A DISTRIBUTION THAT IS A REGULAR DIVIDEND, SUCH ADJUSTMENT SHALL BE BASED UPON THE AMOUNT BY WHICH SUCH DISTRIBUTION EXCEEDS THE AMOUNT OF THE REGULAR CASH DIVIDEND PERMITTED TO BE EXCLUDED PURSUANT HERETO. IF AN ADJUSTMENT IS REQUIRED TO BE MADE AS SET FORTH IN THIS SECTION 4(E)(III) AS A RESULT OF A DISTRIBUTION THAT IS NOT A REGULAR DIVIDEND, SUCH ADJUSTMENT SHALL BE BASED UPON THE FULL AMOUNT OF THE DISTRIBUTION.   (IV)          IN CASE GROUP SHALL DISTRIBUTE TO ALL OR SUBSTANTIALLY ALL HOLDERS OF ITS COMMON STOCK ANY OF GROUP’S SHARES, INTERESTS, PARTICIPATIONS OR OTHER EQUIVALENTS (HOWEVER DESIGNATED, WHETHER VOTING OR NON-VOTING) IN EQUITY, WHETHER OUTSTANDING ON THE ISSUE DATE OR ISSUED THEREAFTER, INCLUDING ALL PREFERRED STOCK OF GROUP (THE “CAPITAL STOCK”) (OTHER THAN GROUP’S COMMON STOCK), EVIDENCES OF INDEBTEDNESS OR OTHER NON-CASH ASSETS (INCLUDING SECURITIES OF ANY PERSON), OR SHALL DISTRIBUTE TO ALL HOLDERS OF ITS COMMON STOCK RIGHTS, OPTIONS OR WARRANTS TO SUBSCRIBE FOR OR PURCHASE ANY OF ITS SECURITIES (EXCLUDING THOSE REFERRED TO IN SECTION 4(E)(II)) (ANY OF THE FOREGOING HEREINAFTER REFERRED TO AS THE “DISTRIBUTED SECURITIES”), THEN IN EACH SUCH CASE THE CONVERSION PRICE IN EFFECT IMMEDIATELY PRIOR TO THE CLOSE OF BUSINESS ON THE RECORD DATE FOR THE DETERMINATION OF STOCKHOLDERS ENTITLED TO RECEIVE SUCH DISTRIBUTED SECURITIES SHALL BE REDUCED SO THAT THE SAME SHALL EQUAL THE PRICE DETERMINED BY MULTIPLYING THE CONVERSION PRICE IN EFFECT AS OF THE CLOSE OF BUSINESS ON SUCH RECORD DATE BY A FRACTION, THE NUMERATOR OF WHICH SHALL BE THE CURRENT MARKET PRICE ON SUCH RECORD DATE LESS THE FAIR MARKET VALUE ON SUCH RECORD DATE OF THE PORTION OF THE DISTRIBUTED SECURITIES APPLICABLE TO ONE SHARE OF GROUP’S COMMON STOCK (DETERMINED ON THE BASIS OF THE NUMBER OF SHARES OF GROUP’S COMMON STOCK OUTSTANDING ON THE RECORD DATE), AND THE DENOMINATOR OF WHICH SHALL BE THE CURRENT MARKET PRICE ON SUCH RECORD DATE. SUCH REDUCTION SHALL BECOME EFFECTIVE AS OF THE CLOSE OF BUSINESS ON SUCH RECORD DATE; PROVIDED, THAT THE THEN FAIR MARKET VALUE OF THE PORTION OF THE DISTRIBUTABLE SECURITIES SO DISTRIBUTED APPLICABLE TO ONE SHARE OF GROUP’S COMMON STOCK IS EQUAL TO OR GREATER THAN THE CURRENT MARKET PRICE ON SUCH RECORD DATE, IN LIEU OF MAKING THE FOREGOING REDUCTION, ADEQUATE PROVISION SHALL BE MADE SO THAT EACH HOLDER OF A NOTE RECEIVES AT SUCH TIME, OR SHALL HAVE THE RIGHT TO RECEIVE UPON SUCH CONVERSION, IN ADDITION TO THE SHARES OF GROUP’S COMMON STOCK ISSUABLE UPON SUCH CONVERSION, THE AMOUNT OF DISTRIBUTED SECURITIES SUCH HOLDER WOULD HAVE RECEIVED HAD SUCH HOLDER CONVERTED SUCH NOTE ON SUCH RECORD DATE. IN THE EVENT THAT SUCH DISTRIBUTION IS NOT SO MADE, THE CONVERSION PRICE SHALL AGAIN BE ADJUSTED TO BE THE CONVERSION PRICE THAT WOULD THEN BE IN EFFECT IF SUCH DIVIDEND OR DISTRIBUTION HAD NOT BEEN DECLARED. IF THE BOARD OF DIRECTORS DETERMINES THE FAIR MARKET VALUE OF ANY DISTRIBUTION FOR PURPOSES OF THIS SECTION 4(E)(IV) BY REFERENCE TO THE ACTUAL OR WHEN ISSUED TRADING MARKET FOR ANY SECURITIES, IT MUST IN DOING SO CONSIDER THE PRICES IN SUCH MARKET OVER THE SAME PERIOD USED IN COMPUTING THE CURRENT MARKET PRICE.   Rights, options or warrants distributed by Group to all holders of Group’s Common Stock entitling the holders thereof to subscribe for or purchase shares of Group’s Capital Stock (either initially or under certain circumstances), which rights or warrants, until the occurrence of a   8 --------------------------------------------------------------------------------   specified event or events (each a “Trigger Event”):  (A) are deemed to be transferred with such shares of Group’s Common Stock, (B) are not immediately exercisable and (C) are also issued in respect of future issuances of Group’s Common Stock, shall be deemed not to have been distributed for purposes of this Section 4(e) (and no adjustment to the Conversion Price under this Section 4(e) shall be required) until the occurrence of the earliest Trigger Event, whereupon such rights and warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Conversion Price shall be made under this Section 4(e)(iv).   If any such right, option or warrant, including any such existing right, option or warrant distributed prior to the Issue Date, is subject to events, upon the occurrence of which such right, option or warrant becomes exercisable to purchase different securities, evidences of indebtedness or other non-cash assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and record date with respect to new rights, options or warrants with such rights (and a termination or expiration of the existing rights, options or warrants without exercise by any of the holders thereof). In addition, in the event of any distribution (or deemed distribution) of rights, options or warrants, or any Trigger Event or other event (of the type described in the preceding sentence) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Price under this Section 4(e) was made, (A) in the case of any such rights, options or warrants that shall all have been redeemed or repurchased without exercise by any holders thereof, the Conversion Price shall be readjusted upon such final redemption or repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or repurchase price received by a holder or holders of Group’s Common Stock with respect to such rights, options or warrants (assuming such holder had retained such rights, options or warrants), made to all holders of Group’s Common Stock as of the date of such redemption or repurchase and (B) in the case of such rights, options or warrants that shall have expired or been terminated without exercise by any holders thereof, the Conversion Price shall be readjusted as if such rights, options and warrants had not been issued.   No adjustment of the Conversion Price shall be made pursuant to this Section 4(e)(iv) in respect of rights, options or warrants distributed or deemed distributed on any Trigger Event to the extent that such rights, options or warrants are actually distributed, or reserved by Group for distribution, to any Holder upon conversion by such Holder of a Note to shares of Group’s Common Stock. For purposes of this Section 4(e)(iv) and Sections 4(e)(i) and (ii), any dividend or distribution to which this Section 4(e)(iv) is applicable that also includes shares of Group’s Common Stock, or rights, options or warrants to subscribe for or purchase shares of Group’s Common Stock (or both), shall be deemed instead to be (A) a dividend or distribution of the evidences of indebtedness, non-cash assets or shares of Group’s Capital Stock other than such shares of Group’s Common Stock (and any Conversion Price reduction required by this Section 4(e)(iv) with respect to such dividend or distribution shall then be made) immediately followed by (B) a dividend or distribution of such shares of Group’s Common Stock or such rights, options or warrants (and any further Conversion Price reduction required by Sections 4(e)(i) and (ii) with respect to such dividend or distribution shall then be made), except “the record date for the determination of stockholders entitled to receive such Distributed Securities” shall be substituted as “the record date fixed for the determination of stockholders entitled to receive such dividend or distribution” and “the record date fixed for the determination of   9 --------------------------------------------------------------------------------   stockholders entitled to receive such rights, options or warrants” within the meaning of Sections 4(e)(i) and (ii).   (V)           IN CASE A TENDER OR EXCHANGE OFFER MADE BY GROUP OR ANY SUBSIDIARY OF GROUP FOR ALL OR ANY PORTION OF GROUP’S COMMON STOCK SHALL EXPIRE AND SUCH TENDER OR EXCHANGE OFFER (AS AMENDED UPON THE EXPIRATION THEREOF) SHALL INVOLVE THE PAYMENT BY GROUP OR SUCH SUBSIDIARY TO STOCKHOLDERS OF CONSIDERATION PER SHARE OF GROUP’S COMMON STOCK HAVING A FAIR MARKET VALUE (AT THE LAST TIME (THE “EXPIRATION TIME”) TENDERS OR EXCHANGES MAY BE MADE PURSUANT TO SUCH TENDER OR EXCHANGE OFFER (AS IT SHALL HAVE BEEN AMENDED)) THAT EXCEEDS THE CURRENT MARKET PRICE ON THE TRADING DAY NEXT SUCCEEDING THE EXPIRATION TIME, THE CONVERSION PRICE SHALL BE REDUCED SO THAT THE SAME SHALL EQUAL THE CONVERSION PRICE DETERMINED BY MULTIPLYING THE CONVERSION PRICE IN EFFECT IMMEDIATELY PRIOR TO THE EXPIRATION TIME BY A FRACTION, THE NUMERATOR OF WHICH SHALL BE THE NUMBER OF SHARES OF GROUP’S COMMON STOCK OUTSTANDING (INCLUDING ANY TENDERED OR EXCHANGED SHARES) AT THE EXPIRATION TIME MULTIPLIED BY THE CURRENT MARKET PRICE ON THE TRADING DAY NEXT SUCCEEDING THE EXPIRATION TIME, AND THE DENOMINATOR OF WHICH SHALL BE THE SUM OF (A) THE FAIR MARKET VALUE OF THE AGGREGATE CONSIDERATION PAYABLE TO STOCKHOLDERS BASED ON THE ACCEPTANCE (UP TO ANY MAXIMUM SPECIFIED IN THE TERMS OF THE TENDER OR EXCHANGE OFFER) OF ALL SHARES VALIDLY TENDERED OR EXCHANGED AND NOT WITHDRAWN AS OF THE EXPIRATION TIME (THE SHARES DEEMED SO ACCEPTED UP TO ANY SUCH MAXIMUM, BEING REFERRED TO AS THE “PURCHASED SHARES”) AND (B) THE PRODUCT OF THE NUMBER OF SHARES OF GROUP’S COMMON STOCK OUTSTANDING (LESS ANY PURCHASED SHARES) AT THE EXPIRATION TIME AND THE CURRENT MARKET PRICE ON THE TRADING DAY NEXT SUCCEEDING THE EXPIRATION TIME, SUCH REDUCTION TO BECOME EFFECTIVE IMMEDIATELY PRIOR TO THE OPENING OF BUSINESS ON THE TRADING DAY NEXT SUCCEEDING THE EXPIRATION TIME. IN THE EVENT THAT GROUP OR SUCH SUBSIDIARY IS OBLIGATED TO PURCHASE SHARES OF GROUP’S COMMON STOCK PURSUANT TO ANY SUCH TENDER OR EXCHANGE OFFER, BUT GROUP OR SUCH SUBSIDIARY IS PERMANENTLY PREVENTED BY APPLICABLE LAW FROM EFFECTING ANY SUCH PURCHASES OR ALL SUCH PURCHASES ARE RESCINDED, THE CONVERSION PRICE SHALL AGAIN BE ADJUSTED TO BE THE CONVERSION PRICE THAT WOULD THEN BE EFFECT IF SUCH TENDER OR EXCHANGE OFFER HAD NOT BEEN MADE.   (VI)          THE FOLLOWING TERMS SHALL HAVE THE MEANING INDICATED:   “Closing Price” means, with respect to any securities on any date, the closing sale price, regular way, on such day or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices, regular way, in each case on the New York Stock Exchange, or, if such security is not listed or admitted to trading on such Exchange, on the principal security exchange or automated quotation system in the United States on which such security is quoted or listed or admitted to trading, or, the average of the closing bid and asked prices of such security on the over the counter market on the day in question as reported by The Nasdaq National Market or a similar generally accepted reporting service, or if not so available, in such manner as furnished by any New York Stock Exchange member firm selected from time to time by the Board of Directors for that purpose.   “Current Market Price” means the average of the daily Closing Prices per share of Group’s Common Stock for the ten consecutive Trading Days immediately prior to the date in question or, if Group’s Common Stock is not listed or quoted or admitted to trading on any   10 --------------------------------------------------------------------------------   national security exchange or automated quotation system in the United States, the fair market value of Group’s Common Stock immediately prior to the date in question.   “fair market value” means the price that would be paid in an arm’s-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy, as determined in good faith by the Board of Directors; provided that with respect to any transaction or series of related transactions having a value in excess of $10 million, such determination is made by disinterested members of the Board of Directors (it being acknowledged and agreed that no such member shall be deemed interested in any such transaction by reason of the fact that such member or any of its affiliates owns or controls securities of Group).   “Trading Day” means a day on which the principal national securities exchange or automated quotation system in the United States on which Group’s Common Stock is listed or quoted or admitted to trading is open for the transaction of business or, if Group’s Common Stock is not listed or quoted or admitted to trading on any national securities exchange or automated quotation system in the United States, any Business Day.   (VII)         IN ANY CASE IN WHICH THIS SECTION 4(E) SHALL REQUIRE THAT AN ADJUSTMENT BE MADE ON A RECORD DATE ESTABLISHED FOR PURPOSES OF THIS SECTION 4(E), THE COMPANY MAY ELECT TO DEFER (BUT ONLY UNTIL FIVE BUSINESS DAYS FOLLOWING THE MAILING BY THE COMPANY TO THE HOLDERS OF THE CERTIFICATE DESCRIBED IN SECTION 4(I) HEREOF) ISSUING TO THE HOLDER OF ANY NOTE CONVERTED AFTER SUCH RECORD DATE BUT PRIOR TO THE ISSUE DATE, THE SHARES OF GROUP’S COMMON STOCK AND OTHER CAPITAL STOCK OF GROUP ISSUABLE UPON SUCH CONVERSION OVER AND ABOVE THE SHARES OF GROUP’S COMMON STOCK AND OTHER CAPITAL STOCK OF GROUP ISSUABLE UPON SUCH CONVERSION ONLY ON THE BASIS OF THE CONVERSION PRICE PRIOR TO ADJUSTMENT AND, IN LIEU OF THE SHARES THE ISSUANCE OF WHICH IS SO DEFERRED, GROUP SHALL ISSUE OR CAUSE ITS TRANSFER AGENTS TO ISSUE DUE BILLS OR OTHER APPROPRIATE EVIDENCE PREPARED BY GROUP OF THE RIGHT TO RECEIVE SUCH SHARES.   (VIII)        IF ANY OF THE FOLLOWING SHALL OCCUR, NAMELY:  (A) ANY RECLASSIFICATION OR CHANGE OF SHARES OF GROUP’S COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES (OTHER THAN A CHANGE IN PAR VALUE, OR FROM PAR VALUE TO NO PAR VALUE, OR FROM NO PAR VALUE TO PAR VALUE, OR AS A RESULT OF A SUBDIVISION OR COMBINATION, OR ANY OTHER CHANGE FOR WHICH AN ADJUSTMENT IS PROVIDED IN THIS SECTION 4(E)); (B) ANY CONSOLIDATION, MERGER OR COMBINATION TO WHICH GROUP IS A PARTY OTHER THAN A MERGER IN WHICH GROUP IS THE CONTINUING CORPORATION AND WHICH DOES NOT RESULT IN ANY RECLASSIFICATION OF, OR CHANGE (OTHER THAN A CHANGE IN NAME, OR IN PAR VALUE, OR FROM PAR VALUE TO NO PAR VALUE, OR FROM NO PAR VALUE TO PAR VALUE, OR AS A RESULT OF A SUBDIVISION OR COMBINATION) IN, OUTSTANDING SHARES OF GROUP’S COMMON STOCK; OR (C) ANY SALE, TRANSFER OR CONVEYANCE OF ALL OR SUBSTANTIALLY ALL OF THE PROPERTY AND ASSETS OF GROUP TO ANY PERSON, THEN GROUP, OR SUCH SUCCESSOR OR PURCHASING CORPORATION OR, IF APPLICABLE, THE PARENT ENTITY OF SUCH SUCCESSOR OR PURCHASING CORPORATION, AS THE CASE MAY BE, SHALL, AS A CONDITION PRECEDENT TO SUCH RECLASSIFICATION, CHANGE, CONSOLIDATION, MERGER, COMBINATION, SALE, TRANSFER OR CONVEYANCE, EXECUTE AND DELIVER TO THE HOLDERS AN AMENDMENT TO THE NOTES PROVIDING THAT THE HOLDER OF EACH NOTE THEN OUTSTANDING SHALL HAVE THE RIGHT TO CONVERT SUCH NOTE INTO THE KIND AND AMOUNT OF SHARES OF STOCK AND OTHER SECURITIES AND PROPERTY (INCLUDING CASH) RECEIVABLE UPON SUCH RECLASSIFICATION, CHANGE, CONSOLIDATION, MERGER, COMBINATION, SALE, TRANSFER OR CONVEYANCE BY A HOLDER OF THE NUMBER OF SHARES OF GROUP’S COMMON STOCK DELIVERABLE UPON CONVERSION OF   11 --------------------------------------------------------------------------------   SUCH NOTE IMMEDIATELY PRIOR TO SUCH RECLASSIFICATION, CHANGE, CONSOLIDATION, MERGER, SALE, TRANSFER OR CONVEYANCE.   (F)               NO ADJUSTMENT. NO ADJUSTMENT IN THE CONVERSION PRICE SHALL BE REQUIRED UNLESS THE ADJUSTMENT WOULD REQUIRE AN INCREASE OR DECREASE OF AT LEAST 1% IN THE CONVERSION PRICE AS LAST ADJUSTED; PROVIDED THAT ANY ADJUSTMENTS WHICH BY REASON OF THIS SECTION 4(F) ARE NOT REQUIRED TO BE MADE SHALL BE CARRIED FORWARD AND TAKEN INTO ACCOUNT IN ANY SUBSEQUENT ADJUSTMENT. ALL CALCULATIONS UNDER THIS SECTION 4 SHALL BE MADE TO THE NEAREST CENT OR TO THE NEAREST ONE HUNDREDTH OF A SHARE, AS THE CASE MAY BE. NO ADJUSTMENT NEED BE MADE FOR (I) THE ISSUANCE OF OPTIONS OR RIGHTS TO PURCHASE COMMON STOCK PURSUANT TO ANY PRESENT OR FUTURE EMPLOYEE, DIRECTOR OR CONSULTANT BENEFIT PLAN OR PROGRAM OF OR ASSUMED BY GROUP OR ANY SUBSIDIARY SO LONG AS THE EXERCISE PRICE OF SUCH OPTIONS OR RIGHTS IS NOT LESS THAN THE CURRENT MARKET PRICE PER SHARE OF COMMON STOCK ON SUCH ISSUE DATE, (II) THE ISSUANCE OF COMMON STOCK PURSUANT TO AND IN ACCORDANCE WITH THE TERMS OF GROUP’S EMPLOYEE STOCK PURCHASE PLAN, OR (III) THE ISSUANCE OF COMMON STOCK PURSUANT TO ANY OPTION, WARRANT, RIGHT OR EXERCISABLE, EXCHANGEABLE OR CONVERTIBLE SECURITY OUTSTANDING AS OF THE ISSUE DATE. NO ADJUSTMENT NEED BE MADE FOR A CHANGE IN THE PAR VALUE OR A CHANGE TO NO PAR VALUE OF GROUP’S COMMON STOCK. TO THE EXTENT THAT THE NOTES BECOME CONVERTIBLE INTO THE RIGHT TO RECEIVE CASH, NO ADJUSTMENT NEED BE MADE THEREAFTER AS TO THE CASH. INTEREST WILL NOT ACCRUE ON THE CASH. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN OR IN ANY ADDITIONAL NOTE, IN NO EVENT SHALL THE CONVERSION OF THIS NOTE AND ANY ADDITIONAL NOTES (AS DEFINED IN THIS NOTE AND IN THE REGISTRATION RIGHTS AGREEMENT OF EVEN DATE HEREWITH BETWEEN GROUP AND EARTHLINK), TAKING INTO ACCOUNT ALL PRIOR CONVERSIONS, BE CONVERTED IN AN AGGREGATE NUMBER OF SHARES OF COMMON STOCK WHICH IN THE AGGREGATE EXCEEDS 19.9% OF THE THEN OUTSTANDING SHARES OF COMMON STOCK.   (G)              ADJUSTMENT FOR TAX PURPOSES. GROUP SHALL BE ENTITLED TO MAKE SUCH REDUCTIONS IN THE CONVERSION PRICE, IN ADDITION TO THOSE REQUIRED BY SECTION 4(E), AS IT IN ITS DISCRETION SHALL DETERMINE TO BE ADVISABLE IN ORDER THAT ANY STOCK DIVIDENDS, SUBDIVISIONS OF SHARES, DISTRIBUTIONS OF RIGHTS TO PURCHASE STOCK OR NOTES OR DISTRIBUTIONS OF NOTES CONVERTIBLE INTO OR EXCHANGEABLE FOR CAPITAL STOCK HEREAFTER MADE BY GROUP TO ITS STOCKHOLDERS SHALL NOT BE TAXABLE, PROVIDED THAT SUCH REDUCTION DOES NOT HAVE AN ADVERSE EFFECT FOR TAX PURPOSES, OR OTHERWISE, ON HOLDERS OF THE NOTES.   (H)              NOTICE OF ADJUSTMENT. WHENEVER THE CONVERSION PRICE IS ADJUSTED, THE COMPANY SHALL PROMPTLY MAIL TO HOLDERS A NOTICE OF THE ADJUSTMENT AND AN OFFICERS’ CERTIFICATE (AS DEFINED IN SECTION 9(I)) BRIEFLY STATING THE FACTS REQUIRING THE ADJUSTMENT, THE MANNER OF COMPUTING IT, THE NEW CONVERSION PRICE AND THE DATE ON WHICH THE ADJUSTMENT BECOMES EFFECTIVE.   (I)                NOTICE OF CERTAIN TRANSACTIONS. IN THE EVENT THAT (I) GROUP TAKES ANY ACTION THAT WOULD REQUIRE AN ADJUSTMENT IN THE CONVERSION PRICE, (II) GROUP CONSOLIDATES, MERGES OR COMBINES WITH, OR TRANSFERS ALL OR SUBSTANTIALLY ALL OF ITS PROPERTY AND ASSETS TO, ANOTHER PERSON AND STOCKHOLDERS OF GROUP MUST APPROVE THE TRANSACTION, OR (III) THERE IS A DISSOLUTION, LIQUIDATION OR WINDING UP OF GROUP, THE COMPANY SHALL MAIL TO HOLDERS A NOTICE STATING THE PROPOSED RECORD OR EFFECTIVE DATE, AS THE CASE MAY BE. THE COMPANY SHALL MAIL THE NOTICE AT LEAST 15 DAYS BEFORE SUCH DATE.   12 --------------------------------------------------------------------------------   SECTION 5.               REDEMPTION OF NOTES.   (A)               UPON THE OCCURRENCE OF ANY CHANGE OF CONTROL, THE HOLDER OR HOLDERS, AS THE CASE MAY BE, SHALL HAVE THE RIGHT TO REQUIRE THE COMPANY TO REPURCHASE ALL NOTES THEN OUTSTANDING, AT A PURCHASE PRICE EQUAL TO 100% OF THE PRINCIPAL AMOUNT THEREOF PLUS ACCRUED AND UNPAID INTEREST, IF ANY, TO THE DATE OF PURCHASE (THE “CHANGE OF CONTROL REDEMPTION PRICE”). A NOTICE OF A CHANGE OF CONTROL WILL BE MAILED WITHIN 30 DAYS AFTER THE DATE ANY CHANGE OF CONTROL OCCURS TO EACH HOLDER. IF ANY HOLDER ELECTS TO EXERCISE THE RIGHT TO RECEIVE THE CHANGE OF CONTROL REDEMPTION PRICE UNDER THIS SECTION 5(A), SUCH HOLDER WILL MAIL TO THE COMPANY A NOTICE OF SUCH ELECTION. PAYMENT OF THE CHANGE OF CONTROL REDEMPTION PRICE BY THE COMPANY TO THE HOLDER SHALL BE MADE IN CASH IN IMMEDIATELY AVAILABLE FUNDS WITHIN 30 DAYS AFTER THE COMPANY RECEIVES SUCH NOTICE OF THE HOLDER’S ELECTION TO RECEIVE THE CHANGE OF CONTROL REDEMPTION PRICE.   (B)              THE FOLLOWING TERMS SHALL HAVE THE MEANING INDICATED:   “Change of Control” means the occurrence of one or more of the following events:  (i) the acquisition by any person, including any syndicate or group deemed to be a “person” under Section 13(d)(3) of the Exchange Act, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchase, merger or other acquisition transactions, of shares of Group’s Capital Stock entitling that person to exercise 50% or more of the total voting power of all shares of Group’s Capital Stock entitled to vote generally in elections of directors, other than any acquisition by Group, any of Group’s subsidiaries or any of Group’s employee benefit plans (except that any of those persons shall be deemed to have beneficial ownership of all securities it has the right to acquire, whether the right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); (ii) the first day on which a majority of the members of the Group’s Board of Directors are not Continuing Directors; or (iii) Group consolidates or merges with or into any other person, any merger of another person into Group, or any conveyance, transfer, sale, lease or other disposition, of all or substantially all of Group’s properties and assets to another person, other than:  (A) any transaction:  (x) that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Group’s Capital Stock; and (y) pursuant to which holders of Group’s Capital Stock immediately prior to the transaction have the entitlement to exercise, directly or indirectly, 50% or more of the total voting power of all shares of Capital Stock entitled to vote generally in elections of directors of the continuing or surviving Person immediately after giving effect to such issuance; and (B) any merger, share exchange, transfer of assets or similar transaction solely for the purpose of changing Group’s jurisdiction of incorporation and resulting in a reclassification, conversion or exchange of outstanding shares of Common Stock, if at all, solely into shares of common stock, ordinary shares or American Depositary Shares of the surviving entity or a direct or indirect parent of the surviving corporation.   “Continuing Director” means, as of any date of determination, any member of Group’s Board of Directors who (i) was a member of such Board of Directors on the Issue Date or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election.   13 --------------------------------------------------------------------------------   SECTION 6.               PERSONS DEEMED OWNERS. A HOLDER SHALL BE TREATED AS THE OWNER OF A NOTE FOR ALL PURPOSES.   SECTION 7.               SECURITY AGREEMENT. THE COMPANY’S OBLIGATIONS TO THE HOLDERS UNDER THIS NOTE ARE SECURED BY A LIEN ON AND SECURITY INTEREST IN CERTAIN ASSETS OF GROUP AND OPERATING (INCLUDING, WITHOUT LIMITATION, THE EQUIPMENT ACQUIRED WITH THE PROCEEDS OF THIS NOTE), ALL AS MORE PARTICULARLY DESCRIBED IN THAT CERTAIN SECURITY AGREEMENT DATED OF EVEN DATE HEREWITH MADE BY EACH OF GROUP AND OPERATING FOR THE BENEFIT OF THE HOLDERS (THE “SECURITY AGREEMENT”). EACH HOLDER OF ANY NOTES, BY ITS ACCEPTANCE THEREOF, CONSENTS AND AGREES TO THE TERMS OF THE SECURITY AGREEMENT AS THE SAME MAY BE IN EFFECT FROM TIME TO TIME IN ACCORDANCE WITH ITS TERMS AND DIRECTS EARTHLINK (OR ITS ASSIGNEE), AS COLLATERAL AGENT (THE “COLLATERAL AGENT”), TO ENTER INTO THE SECURITY AGREEMENT AND TO PERFORM ITS OBLIGATIONS AND EXERCISE ITS RIGHTS THEREUNDER IN ACCORDANCE THEREWITH. THE COLLATERAL AGENT SHALL HAVE ALL OF THE POWERS AND DUTIES OF THE SECURED PARTY (AS DEFINED IN THE SECURITY AGREEMENT) UNDER THE SECURITY AGREEMENT AND SHALL EXERCISE SUCH POWERS AND DUTIES ON ITS OWN BEHALF AND ON BEHALF OF THE OTHER HOLDERS. IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT NO HOLDER OTHER THAN THE COLLATERAL AGENT SHALL HAVE ANY RIGHTS OR DUTIES UNDER THE SECURITY AGREEMENT EXCEPT AS PROVIDED IN THIS SECTION 7; PROVIDED, HOWEVER THAT THE COLLATERAL AGENT SHALL TAKE ANY ACTION WITH RESPECT TO THE SECURITY AGREEMENT AS IS DIRECTED IN WRITING BY A MAJORITY OF THE HOLDERS OF OUTSTANDING AGGREGATE PRINCIPAL AMOUNT OF THE NOTES. IN NO EVENT SHALL THE COLLATERAL AGENT BE LIABLE TO ANY OTHER HOLDER FOR ANY ACTION TAKEN, OR FOR THE FAILURE TO TAKE ANY ACTION, AS THE COLLATERAL AGENT, EXCEPT FOR SUCH ACTIONS OR INACTIONS CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. IF AT ANY TIME EARTHLINK CEASES TO HOLD THE GREATEST PERCENTAGE OF THE OUTSTANDING AGGREGATE PRINCIPAL AMOUNT OF THE NOTES, THEN EARTHLINK (OR ANY ASSIGNEE), WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY, NOT TO BE UNREASONABLY WITHHELD, SHALL BE ENTITLED, BUT SHALL NOT BE REQUIRED, TO ASSIGN ITS RIGHTS TO ACT AS COLLATERAL AGENT TO THE HOLDER OF THE GREATEST PERCENTAGE OF THE OUTSTANDING AGGREGATE PRINCIPAL AMOUNT OF THE NOTES. SUCH ASSIGNMENT SHALL BE EFFECTIVE UPON ACCEPTANCE BY SUCH HOLDER AND SUCH HOLDER SHALL BECOME THE “COLLATERAL AGENT” FOR ALL PURPOSES UNDER THIS NOTE AND THE SECURITY AGREEMENT.   SECTION 8.               AMENDMENT; SUPPLEMENT; WAIVER. SUBJECT TO CERTAIN EXCEPTIONS, THE NOTES MAY BE AMENDED OR SUPPLEMENTED WITH THE CONSENT OF THE HOLDERS OF AT LEAST A MAJORITY IN PRINCIPAL AMOUNT OF THE NOTES THEN OUTSTANDING AND ANY EXISTING DEFAULT OR COMPLIANCE WITH ANY PROVISION MAY BE WAIVED WITH THE CONSENT OF THE HOLDERS OF AT LEAST A MAJORITY IN PRINCIPAL AMOUNT OF THE NOTES THEN OUTSTANDING.   SECTION 9.               COVENANTS.   (A)               PAYMENT OF NOTES. GROUP AND OPERATING SHALL, JOINTLY AND SEVERALLY, PAY THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE NOTES ON THE DATES AND IN THE MANNER PROVIDED IN THE NOTES. GROUP AND OPERATING SHALL, JOINTLY AND SEVERALLY, PAY INTEREST ON OVERDUE PRINCIPAL AND PREMIUM, IF ANY, AND INTEREST ON OVERDUE INSTALLMENTS OF INTEREST, TO THE EXTENT LAWFUL, AT THE RATE PER ANNUM SPECIFIED IN THE NOTES.   (B)              USE OF PROCEEDS. GROUP AND OPERATING SHALL USE THE PROCEEDS FROM THE SALE OF THE NOTES IN THE MANNER PROVIDED FOR IN THE SERVICES AGREEMENT.   14 --------------------------------------------------------------------------------   (C)               LIMITATION ON INDEBTEDNESS. THE COMPANY SHALL NOT, AND SHALL NOT PERMIT ANY SUBSIDIARY TO, CONTRACT, CREATE, INCUR, ASSUME OR PERMIT TO EXIST ANY SECURED INDEBTEDNESS, EXCEPT (I) INDEBTEDNESS ARISING OR EXISTING UNDER THE NOTE, (II) INDEBTEDNESS OF THE COMPANY EXISTING AS OF THE ISSUE DATE, (III) INDEBTEDNESS OWING TO EARTHLINK, (IV)  INDEBTEDNESS RELATED TO THE PHASE II ALTERNATIVE FINANCING (AS DEFINED IN THE SERVICES AGREEMENT) NOT TO EXCEED $45,000,000 OUTSTANDING AT ANY TIME, (V) PURCHASE MONEY INDEBTEDNESS IN AN AGGREGATE AMOUNT NOT TO EXCEED $25,000,000 OUTSTANDING AT ANY TIME, AND (VI) OTHER INDEBTEDNESS NOT TO EXCEED $75,000,000 OUTSTANDING AT ANY TIME (INCLUDING ASSET BASED LOAN FINANCING).   (D)              NEGATIVE PLEDGE. THE COMPANY SHALL NOT, AND SHALL NOT PERMIT ANY SUBSIDIARY TO, ENTER INTO, ASSUME OR BECOME SUBJECT TO ANY AGREEMENT PROHIBITING OR OTHERWISE RESTRICTING THE CREATION OR ASSUMPTION OF ANY LIEN UPON ITS ASSETS CONSTITUTING PP&E, WHETHER NOW OWNED OR HEREAFTER ACQUIRED, OR REQUIRING THE GRANT OF ANY SECURITY FOR SUCH OBLIGATION IF SECURITY IS GIVEN FOR SOME OTHER OBLIGATION, EXCEPT (I) PURSUANT TO THIS AGREEMENT AND THE NOTE, (II) PURSUANT TO ANY DOCUMENT OR INSTRUMENT GOVERNING INDEBTEDNESS INCURRED PURSUANT TO SECTION 9(C), PROVIDED THAT ANY SUCH AGREEMENT, IN THE CASE OF INDEBTEDNESS PERMITTED UNDER CLAUSES (C)(III), (IV) AND (V) ABOVE, RELATES ONLY TO THE ASSET OR ASSETS CONSTRUCTED OR ACQUIRED IN CONNECTION THEREWITH, AND (III) IN CONNECTION WITH ANY PERMITTED LIEN OR ANY DOCUMENT OR INSTRUMENT GOVERNING ANY PERMITTED LIEN; PROVIDED THAT ANY SUCH RESTRICTION CONTAINED THEREIN RELATES ONLY TO THE ASSET OR ASSETS SUBJECT TO SUCH PERMITTED LIEN.   (I)            THE FOLLOWING TERMS SHALL HAVE THE MEANING INDICATED:   “Indebtedness” shall mean, with respect to any Person, without duplication any liability of such Person (i) for borrowed money; (ii) evidenced by bonds, debentures, notes or similar instruments; (iii) in respect of letters of credit or bankers acceptances or similar instruments (or reimbursement obligations with respect thereto); (iv) to pay the deferred purchase price of property or services, except trade accounts payable or accrued expenses arising in the ordinary course of business; (v) as lessee, the obligations of which are capitalized in accordance with generally accepted accounting principles; (vi) secured by a lien on any asset of such Person, whether or not the obligation giving rise to such lien is assumed by such Person; and (vii) for indebtedness of others guaranteed by such Person or for which such Person is legally responsible or liable (whether by agreement to purchase indebtedness of, or to supply funds or to invest in, others).   “Permitted Lien” shall mean (i) the lien on and security interest in substantially all of the Company’s assets in favor of SBC Communications Inc. (the “SBC Lien”), (ii) liens for taxes and special assessments not then delinquent, (iii) liens of taxes and assessments which are delinquent but the validity of which is being contested in good faith and with respect to which the Company has set aside adequate reserves for payment, (iv) mechanics’ and materialmen’s liens arising or incurred in the ordinary course of business and which are being contested in good faith and have not proceeded to judgment, provided the Company has set aside adequate reserves for payment, and (v) such other imperfections in title, charges, easements, restrictions and encumbrances which could not, individually or when taken as a whole, result in a Material Adverse Effect (as defined in the Purchase Agreement).   15 --------------------------------------------------------------------------------   “PP&E” shall mean equipment, fixed assets, real property or improvements that have been or should be, in accordance with GAAP, reflected as additions to property, plant and equipment on a balance sheet of the Company or have a useful life of more than one year.   (E)               EXISTENCE. THE COMPANY SHALL DO OR CAUSE TO BE DONE ALL THINGS NECESSARY TO PRESERVE AND KEEP IN FULL FORCE AND EFFECT ITS EXISTENCE AND THE EXISTENCE OF EACH SUBSIDIARY IN ACCORDANCE WITH THE RESPECTIVE ORGANIZATIONAL DOCUMENTS OF THE COMPANY AND EACH SUCH SUBSIDIARY AND THE RIGHTS (WHETHER PURSUANT TO CHARTER, PARTNERSHIP CERTIFICATE, AGREEMENT, STATUTE OR OTHERWISE), LICENSES AND FRANCHISES OF THE COMPANY AND EACH SUCH SUBSIDIARY; PROVIDED THAT THE COMPANY SHALL NOT BE REQUIRED TO PRESERVE ANY SUCH RIGHT, LICENSE OR FRANCHISE, OR THE EXISTENCE OF ANY SUBSIDIARY, IF THE MAINTENANCE OR PRESERVATION THEREOF IS NO LONGER DESIRABLE IN THE CONDUCT OF THE BUSINESS OF THE COMPANY AND ITS SUBSIDIARIES, TAKEN AS A WHOLE.   (F)               PAYMENT OF TAXES AND OTHER CLAIMS. THE COMPANY SHALL PAY OR DISCHARGE AND SHALL CAUSE EACH OF ITS SUBSIDIARIES TO PAY OR DISCHARGE, OR CAUSE TO BE PAID OR DISCHARGED, BEFORE THE SAME SHALL BECOME DELINQUENT (I) ALL MATERIAL TAXES, ASSESSMENTS AND GOVERNMENTAL CHARGES LEVIED OR IMPOSED UPON (A) THE COMPANY OR ANY SUCH SUBSIDIARY, (B) THE INCOME OR PROFITS OF THE COMPANY OR ANY SUCH SUBSIDIARY WHICH IS A CORPORATION OR (C) THE PROPERTY OF THE COMPANY OR ANY SUCH SUBSIDIARY AND (II) ALL MATERIAL LAWFUL CLAIMS FOR LABOR, MATERIALS AND SUPPLIES THAT, IF UNPAID, MIGHT BY LAW BECOME A LIEN UPON THE PROPERTY OF THE COMPANY OR ANY SUCH SUBSIDIARY; PROVIDED THAT THE COMPANY SHALL NOT BE REQUIRED TO PAY OR DISCHARGE, OR CAUSE TO BE PAID OR DISCHARGED, ANY SUCH TAX, ASSESSMENT, CHARGE OR CLAIM THE AMOUNT, APPLICABILITY OR VALIDITY OF WHICH IS BEING CONTESTED IN GOOD FAITH BY APPROPRIATE PROCEEDINGS AND FOR WHICH ADEQUATE RESERVES HAVE BEEN ESTABLISHED.   (G)              NOTICE OF DEFAULTS. IN THE EVENT THAT THE COMPANY OR ANY SUBSIDIARY BECOMES AWARE OF ANY DEFAULT OR EVENT OF DEFAULT, THE COMPANY SHALL PROMPTLY DELIVER TO THE HOLDERS AN OFFICERS’ CERTIFICATE SPECIFYING SUCH DEFAULT OR EVENT OF DEFAULT.   (H)              SEC AND OTHER REPORTS. GROUP SHALL PROVIDE TO EACH HOLDER, WITHIN 15 DAYS AFTER IT FILES ITS ANNUAL AND QUARTERLY REPORTS, INFORMATION, DOCUMENTS AND OTHER REPORTS WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”), COPIES OF SUCH ANNUAL REPORT AND OF THE INFORMATION, DOCUMENTS AND OTHER REPORTS (OR COPIES OF SUCH PORTIONS OF ANY OF THE FOREGOING AS THE SEC MAY BY RULES AND REGULATIONS PRESCRIBE) WHICH GROUP IS REQUIRED TO FILE WITH THE SEC PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE ACT PROVIDED THAT ANY SUCH REPORTS, INFORMATION OR DOCUMENTS FILED WITH THE SEC PURSUANT TO ITS ELECTRONIC DATA AND GATHERING ANALYSIS AND RETRIEVAL SYSTEM SHALL BE DEEMED PROVIDED TO EACH HOLDER. DELIVERY OF SUCH REPORTS, INFORMATION AND DOCUMENTS TO EACH HOLDER IS FOR INFORMATIONAL PURPOSES ONLY AND EACH HOLDER’S RECEIPT OF SUCH SHALL NOT CONSTITUTE CONSTRUCTIVE NOTICE OF ANY INFORMATION CONTAINED THEREIN OR DETERMINABLE FROM INFORMATION CONTAINED THEREIN, INCLUDING GROUP’S COMPLIANCE WITH ANY OF ITS COVENANTS HEREUNDER (AS TO WHICH EACH HOLDER IS ENTITLED TO RELY CONCLUSIVELY ON OFFICERS’ CERTIFICATES).   (I)                COMPLIANCE CERTIFICATE. THE COMPANY SHALL DELIVER TO EACH HOLDER WITHIN 60 DAYS AFTER THE END OF EACH FISCAL QUARTER OF THE COMPANY AND 120 DAYS AFTER THE END OF EACH FISCAL YEAR OF THE COMPANY, A CERTIFICATE SIGNED BY ONE OFFICER LISTED IN CLAUSE (I) OF THE DEFINITION THEREOF AND ONE OFFICER LISTED IN CLAUSE (II) OF THE DEFINITION THEREOF; PROVIDED THAT ANY   16 --------------------------------------------------------------------------------   SUCH CERTIFICATE MAY BE SIGNED BY ANY TWO OF THE OFFICERS LISTED IN CLAUSE (I) OF THE DEFINITION THEREOF IN LIEU OF BEING SIGNED BY ONE OFFICER LISTED IN CLAUSE (I) OF THE DEFINITION THEREOF AND ONE OFFICER LISTED IN CLAUSE (II) OF THE DEFINITION THEREOF (AN “OFFICERS’ CERTIFICATE”), STATING WHETHER OR NOT TO THE KNOWLEDGE OF THE SIGNERS THEREOF, THE COMPANY IS IN DEFAULT IN THE PERFORMANCE AND OBSERVANCE OF ANY OF THE TERMS, PROVISIONS AND CONDITIONS OF THIS NOTE (WITHOUT REGARD TO ANY PERIOD OF GRACE OR REQUIREMENT OF NOTICE PROVIDED HEREUNDER) AND IF THE COMPANY SHALL BE IN DEFAULT, SPECIFYING ALL SUCH DEFAULTS AND THE NATURE AND STATUS THEREOF OF WHICH THEY MAY HAVE KNOWLEDGE. “OFFICER” MEANS, WITH RESPECT TO THE COMPANY, (I) THE CHAIRMAN OF THE BOARD OF DIRECTORS, ANY VICE CHAIRMAN OF THE BOARD OF DIRECTORS, THE CHIEF EXECUTIVE OFFICER, THE PRESIDENT OR ANY VICE PRESIDENT, AND (II) THE CHIEF FINANCIAL OFFICER, THE TREASURER OR ANY ASSISTANT TREASURER, OR THE SECRETARY OR ANY ASSISTANT SECRETARY.   (J)                TRANSFER OF COLLATERAL. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THE COMPANY MAY TRANSFER TITLE TO ALL OR ANY PART OF THE COLLATERAL (AS DEFINED IN THE SECURITY AGREEMENT) TO ONE OR MORE DIRECT OR INDIRECT WHOLLY-OWNED SUBSIDIARIES OF THE COMPANY (A “PERMITTED TRANSFEREE”), PROVIDED, HOWEVER, THAT PRIOR TO ANY SUCH TRANSFER (I) SUCH PERMITTED TRANSFEREE SHALL EXECUTE A JOINDER AGREEMENT OR GUARANTY IN FORM AND SUBSTANCE SATISFACTORY TO THE COLLATERAL AGENT (A) AGREEING TO BE BOUND AS A CO-MAKER OR GUARANTOR UNDER THIS NOTE AND AS A DEBTOR UNDER THE SECURITY AGREEMENT AND (B) ACKNOWLEDGING AND CONFIRMING THE COLLATERAL AGENT’S CONTINUING SECURITY INTEREST IN AND LIEN ON THE COLLATERAL, (II) THE COMPANY SHALL PROVIDE THE COLLATERAL AGENT WITH WRITTEN EVIDENCE THAT ALL FEDERAL AND STATE REGULATORY APPROVALS AND OTHER THIRD PARTY CONSENTS, IF ANY, REQUIRED FOR SUCH TRANSFER AND JOINDER OR GUARANTY HAVE BEEN OBTAINED (THE “REQUIRED APPROVALS”) AND (III) THE COLLATERAL AGENT SHALL INDICATE IN WRITING THAT IT IS SATISFIED THAT ALL REQUIRED APPROVALS FOR SUCH TRANSFER AND JOINDER OR GUARANTY HAVE BEEN OBTAINED; PROVIDED, FURTHER, HOWEVER, THAT NOTWITHSTANDING ANY TRANSFER OF ANY COLLATERAL TO THE PERMITTED TRANSFEREE, NEITHER GROUP NOR OPERATING SHALL BE RELEASED FROM ITS OBLIGATIONS UNDER THE SECURITY AGREEMENT OR UNDER THIS NOTE.   (K)               FURTHER INSTRUMENTS AND ACTS. UPON REQUEST OF ANY HOLDER, THE COMPANY WILL EXECUTE AND DELIVER SUCH FURTHER INSTRUMENTS AND DO SUCH FURTHER ACTS AS MAY BE REASONABLY NECESSARY OR PROPER TO CARRY OUT MORE EFFECTIVELY THE PURPOSES OF THIS NOTE.   SECTION 10.             SUCCESSOR PERSONS. WHEN A SUCCESSOR PERSON OR OTHER ENTITY ASSUMES ALL THE OBLIGATIONS OF ITS PREDECESSOR UNDER THE NOTES, THE PREDECESSOR PERSON WILL BE RELEASED FROM THOSE OBLIGATIONS.   SECTION 11.             WHEN COMPANY MAY MERGE OR TRANSFER ASSETS. NEITHER GROUP NOR OPERATING SHALL CONSOLIDATE WITH OR MERGE WITH OR INTO ANY OTHER PERSON OR CONVEY, TRANSFER, SELL, LEASE OR OTHERWISE DISPOSE OF ALL OR SUBSTANTIALLY ALL OF ITS PROPERTIES AND ASSETS TO ANY PERSON, UNLESS:   (A)             EITHER (I) GROUP OR OPERATING, AS APPLICABLE, SHALL BE THE CONTINUING CORPORATION OR (II) THE PERSON (IF OTHER THAN GROUP OR OPERATING) FORMED BY SUCH CONSOLIDATION OR INTO WHICH GROUP OR OPERATING, AS APPLICABLE, IS MERGED OR THE PERSON THAT ACQUIRES BY CONVEYANCE, TRANSFER OR LEASE ALL OR SUBSTANTIALLY ALL OF THE PROPERTIES AND ASSETS OF GROUP OR OPERATING, AS APPLICABLE (A) SHALL BE A CORPORATION ORGANIZED AND VALIDLY EXISTING UNDER THE LAWS OF THE UNITED STATES OR ANY STATE THEREOF OR THE DISTRICT OF COLUMBIA AND (B) SHALL EXPRESSLY   17 --------------------------------------------------------------------------------   ASSUME, BY AN AMENDED NOTE HERETO, EXECUTED AND DELIVERED TO THE HOLDERS, IN FORM REASONABLY SATISFACTORY TO THE HOLDERS, ALL OF THE OBLIGATIONS OF GROUP OR OPERATING, AS APPLICABLE, UNDER THE NOTES;   (B)             IMMEDIATELY PRIOR TO AND AFTER GIVING EFFECT TO SUCH TRANSACTION, NO EVENT OF DEFAULT, AND NO EVENT THAT, AFTER NOTICE OR LAPSE OF TIME OR BOTH, WOULD BECOME AN EVENT OF DEFAULT, SHALL HAVE OCCURRED AND BE CONTINUING; AND   (C)             GROUP OR OPERATING, AS APPLICABLE, SHALL HAVE DELIVERED TO THE HOLDERS AN OFFICERS’ CERTIFICATE AND A WRITTEN OPINION FROM LEGAL COUNSEL, AND, WHO MAY BE AN EMPLOYEE OF, OR COUNSEL TO, THE COMPANY OR THE HOLDERS, CONTAINING (I) A STATEMENT THAT EACH PERSON MAKING SUCH OPINION OF COUNSEL HAS READ SUCH COVENANT OR CONDITION, (II) A BRIEF STATEMENT AS TO THE NATURE AND SCOPE OF THE EXAMINATION OR INVESTIGATION UPON WHICH THE STATEMENTS OR OPINIONS CONTAINED IN SUCH OPINION OF COUNSEL ARE BASED, (III) A STATEMENT THAT, IN THE OPINION OF EACH SUCH PERSON, HE HAS MADE SUCH EXAMINATION OR INVESTIGATION AS IS NECESSARY TO ENABLE SUCH PERSON TO EXPRESS AN INFORMED OPINION AS TO WHETHER OR NOT SUCH COVENANT OR CONDITION HAS BEEN COMPLIED WITH AND (IV) A STATEMENT THAT, IN THE OPINION OF SUCH PERSON, SUCH COVENANT OR CONDITION HAS BEEN COMPLIED WITH, EACH STATING THAT SUCH CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE AND, IF AN AMENDMENT TO THE NOTES IS REQUIRED IN CONNECTION WITH SUCH TRANSACTION, SUCH AMENDED NOTES, COMPLY WITH THIS SECTION 11 AND THAT ALL CONDITIONS PRECEDENT HEREIN PROVIDED FOR RELATING TO SUCH TRANSACTION HAVE BEEN SATISFIED.   For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise) of the properties and assets of one or more subsidiaries (other than to the Company or another subsidiary), which, if such assets were owned by the Company, would constitute substantially all of the properties and assets of the Company, shall be deemed to be the transfer of substantially all of the properties and assets of the Company.   The successor Person formed by such consolidation or into which Group or Operating, as applicable, is merged or the successor Person to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of Group or Operating, as applicable, under the Notes with the same effect as if such successor had been named as Group or Operating, as applicable, herein; and thereafter, except in the case of a lease and obligations that Group or Operating, as applicable, may have under an amended Note, Group or Operating, as applicable, shall be discharged from all obligations and covenants under the Notes. Group, Operating, the Holders and the successor Person shall enter into a amendment to the Notes to evidence the succession and substitution of such successor Person and such discharge and release of Group or Operating, as applicable.   SECTION 12.             DEFAULTS AND REMEDIES. EACH OF THE FOLLOWING EVENTS CONSTITUTES AN “EVENT OF DEFAULT”:   (A)             DEFAULT IN THE PAYMENT OF PRINCIPAL OF (OR PREMIUM, IF ANY, ON) ANY NOTE, INCLUDING THE REDEMPTION AMOUNT, WHEN THE SAME BECOMES DUE AND PAYABLE AT MATURITY, UPON ACCELERATION, REDEMPTION OR OTHERWISE;   (B)             DEFAULT IN THE PAYMENT OF INTEREST ON ANY NOTES WHEN THE SAME BECOMES   18 --------------------------------------------------------------------------------   DUE AND PAYABLE, AND SUCH DEFAULT CONTINUES FOR A PERIOD OF 30 DAYS;   (C)             DEFAULT IN THE PERFORMANCE OR BREACH OF THE PROVISIONS OF THE NOTES APPLICABLE TO MERGERS, CONSOLIDATIONS AND TRANSFERS OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF GROUP OR OPERATING OR THE FAILURE TO MAKE OR CONSUMMATE AN OFFER TO PURCHASE IN ACCORDANCE WITH SECTION 5 HEREOF;   (D)             GROUP OR OPERATING DEFAULTS IN THE PERFORMANCE OF OR BREACHES ANY OTHER COVENANT OR AGREEMENT OF THE COMPANY UNDER THE NOTES (OTHER THAN A DEFAULT SPECIFIED IN CLAUSE (A), (B) OR (C) ABOVE), AND SUCH DEFAULT OR BREACH CONTINUES FOR A PERIOD OF 30 CONSECUTIVE DAYS AFTER WRITTEN NOTICE BY THE HOLDERS OF 25% OR MORE IN AGGREGATE PRINCIPAL AMOUNT OF THE NOTES;   (E)             THE FAILURE OF GROUP’S COMMON STOCK TO BE QUOTED OR LISTED ON A NATIONAL SECURITY EXCHANGE OR AUTOMATED QUOTATION SYSTEM IN THE UNITED STATES FOR MORE THAN THREE DAYS, OR IF QUOTED ON THE OTC BULLETIN BOARD (“BULLETIN BOARD”), FAILURE TO COMPLY WITH THE REQUIREMENTS FOR CONTINUED LISTING ON THE BULLETIN BOARD FOR A PERIOD OF SEVEN CONSECUTIVE TRADING DAYS OR NOTIFICATION FROM THE BULLETIN BOARD OR FROM THE APPLICABLE NATIONAL SECURITY EXCHANGE OR AUTOMATED QUOTATION SYSTEM THAT THE COMPANY IS NOT IN COMPLIANCE WITH THE CONDITIONS FOR SUCH CONTINUED QUOTATION ON THE BULLETIN BOARD;   (F)              THERE OCCURS WITH RESPECT TO ANY ISSUE OR ISSUES OF INDEBTEDNESS FOR BORROWED MONEY OF GROUP OR ANY EXISTING OR FUTURE, DIRECT OR INDIRECT, SUBSIDIARY OF GROUP WHOSE ASSETS CONSTITUTE 15% OR MORE OF THE TOTAL ASSETS OF GROUP ON A CONSOLIDATED BASIS (A “DESIGNATED SUBSIDIARY”) HAVING AN OUTSTANDING PRINCIPAL AMOUNT OF $15 MILLION OR MORE IN THE AGGREGATE FOR ALL SUCH ISSUES OF ALL SUCH PERSONS, WHETHER SUCH INDEBTEDNESS NOW EXISTS OR SHALL HEREAFTER BE CREATED, (I) AN EVENT OF DEFAULT THAT HAS CAUSED THE HOLDER THEREOF TO DECLARE SUCH INDEBTEDNESS TO BE DUE AND PAYABLE PRIOR TO ITS STATED MATURITY AND SUCH INDEBTEDNESS HAS NOT BEEN DISCHARGED IN FULL OR SUCH ACCELERATION HAS NOT BEEN RESCINDED OR ANNULLED WITHIN 30 DAYS OF SUCH ACCELERATION AND/OR (II) THE FAILURE TO MAKE A PRINCIPAL PAYMENT AT THE FINAL (BUT NOT ANY INTERIM) FIXED MATURITY AND SUCH DEFAULTED PAYMENT SHALL NOT HAVE BEEN MADE, WAIVED OR EXTENDED WITHIN 30 DAYS OF SUCH PAYMENT DEFAULT;   (G)             A COURT HAVING JURISDICTION IN THE PREMISES ENTERS A DECREE OR ORDER FOR (I) RELIEF IN RESPECT OF GROUP, OPERATING OR ANY DESIGNATED SUBSIDIARY IN AN INVOLUNTARY CASE UNDER ANY APPLICABLE BANKRUPTCY, INSOLVENCY OR OTHER SIMILAR LAW NOW OR HEREAFTER IN EFFECT, (II) APPOINTMENT OF A RECEIVER, LIQUIDATOR, ASSIGNEE, CUSTODIAN, TRUSTEE, SEQUESTRATOR OR SIMILAR OFFICIAL OF GROUP, OPERATING OR ANY DESIGNATED SUBSIDIARY OR FOR ALL OR SUBSTANTIALLY ALL OF THE PROPERTY AND ASSETS OF GROUP, OPERATING OR ANY DESIGNATED SUBSIDIARY OR (III) THE WINDING UP OR LIQUIDATION OF THE AFFAIRS OF GROUP, OPERATING OR ANY DESIGNATED SUBSIDIARY AND, IN EACH CASE, SUCH DECREE OR ORDER SHALL REMAIN UNSTAYED AND IN EFFECT FOR A PERIOD OF 60 CONSECUTIVE DAYS; OR   (H)             GROUP, OPERATING OR ANY DESIGNATED SUBSIDIARY (I) COMMENCES A VOLUNTARY CASE UNDER ANY APPLICABLE BANKRUPTCY, INSOLVENCY OR OTHER SIMILAR LAW NOW OR HEREAFTER IN EFFECT, OR CONSENTS TO THE ENTRY OF AN ORDER FOR RELIEF IN AN INVOLUNTARY CASE UNDER ANY SUCH LAW, (II) CONSENTS TO THE APPOINTMENT OF OR TAKING POSSESSION BY A RECEIVER, LIQUIDATOR, ASSIGNEE, CUSTODIAN, TRUSTEE, SEQUESTRATOR OR SIMILAR OFFICIAL OF GROUP, OPERATING OR ANY DESIGNATED   19 --------------------------------------------------------------------------------   SUBSIDIARY OR FOR ALL OR SUBSTANTIALLY ALL OF THE PROPERTY AND ASSETS OF GROUP, OPERATING OR ANY DESIGNATED SUBSIDIARY OR (III) EFFECTS ANY GENERAL ASSIGNMENT FOR THE BENEFIT OF CREDITORS.   SECTION 13.             COSTS OF COLLECTION. IN THE EVENT THAT EITHER GROUP OR OPERATING FAILS TO PAY WHEN DUE (INCLUDING, WITHOUT LIMITATION UPON ACCELERATION IN CONNECTION WITH AN EVENT OF DEFAULT) THE FULL AMOUNT OF PRINCIPAL AND/OR INTEREST HEREUNDER, EACH OF GROUP AND OPERATING SHALL INDEMNIFY AND HOLD HARMLESS THE HOLDER OF ANY PORTION OF THIS NOTE FROM AND AGAINST ALL REASONABLE COSTS AND EXPENSES INCURRED IN CONNECTION WITH THE ENFORCEMENT OF THIS PROVISION OR COLLECTION OF SUCH PRINCIPAL AND INTEREST, INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS’ FEES AND EXPENSES.   SECTION 14.             NO RECOURSE AGAINST OTHERS. NO INCORPORATOR OR ANY PAST, PRESENT OR FUTURE PARTNER, STOCKHOLDER, OTHER EQUITYHOLDER, OFFICER, DIRECTOR, EMPLOYEE OR CONTROLLING PERSON, AS SUCH, OF THE COMPANY OR OF ANY SUCCESSOR PERSON SHALL HAVE ANY LIABILITY FOR ANY OBLIGATIONS OF THE COMPANY UNDER THE NOTES FOR ANY CLAIM BASED ON, IN RESPECT OF OR BY REASON OF, SUCH OBLIGATIONS OR THEIR CREATION. EACH HOLDER BY ACCEPTING A NOTE WAIVES AND RELEASES ALL SUCH LIABILITY. THE WAIVER AND RELEASE ARE PART OF THE CONSIDERATION FOR THE ISSUANCE OF THE NOTES.   SECTION 15.             GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. EACH OF GROUP AND OPERATING HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO ITS ADDRESS FOR NOTICES AND COMMUNICATIONS SPECIFIED IN SECTION 16 HEREIN AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. EACH OF GROUP AND OPERATING HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE NOTES OR THE TRANSACTIONS CONTEMPLATED HEREBY.   SECTION 16.             NOTICES. ANY AND ALL NOTICES OR OTHER COMMUNICATIONS OR DELIVERIES REQUIRED OR PERMITTED TO BE PROVIDED HEREUNDER SHALL BE IN WRITING AND SHALL BE DEEMED GIVEN AND EFFECTIVE ON THE EARLIEST OF (I) THE DATE OF TRANSMISSION, IF SUCH NOTICE OR COMMUNICATION IS DELIVERED VIA FACSIMILE AT THE FACSIMILE TELEPHONE NUMBER SPECIFIED IN THIS SECTION 16 PRIOR TO 5:30 P.M. (NEW YORK CITY TIME) ON A TRADING DAY, (II) THE TRADING DAY AFTER THE DATE OF TRANSMISSION, IF SUCH NOTICE OR COMMUNICATION IS DELIVERED VIA FACSIMILE AT THE FACSIMILE TELEPHONE NUMBER SPECIFIED IN THIS SECTION 16 LATER THAN 5:30 P.M. (NEW YORK CITY TIME) ON ANY DATE AND EARLIER THAN 11:59 P.M. (NEW YORK CITY TIME) ON SUCH DATE, (III) THE TRADING DAY FOLLOWING THE DATE OF MAILING, IF SENT BY NATIONALLY RECOGNIZED OVERNIGHT COURIER SERVICE, OR (IV) UPON ACTUAL RECEIPT BY THE PARTY TO WHOM SUCH NOTICE IS REQUIRED TO BE GIVEN. THE ADDRESS FOR SUCH NOTICES AND COMMUNICATIONS SHALL BE AS FOLLOWS:   20 --------------------------------------------------------------------------------   If to the Company:   Covad Communications Group, Inc.     Covad Communications Company     110 Rio Robles     San Jose, CA 95134     Attn: General Counsel     Fax: (408) 952-7539       With a copy to:   Weil, Gotshal and Manges LLP     200 Crescent Court, Suite 300     Dallas, Texas 75201     Attention: Michael A. Saslaw     Fax: 214-746-8417   The Company by notice to the Holders may designate additional or different addresses for subsequent notices or communications.   Any notice or communication mailed to a Holder shall be mailed to it at its address as it appears on the security register maintained by the Company by first-class mail and shall be sufficiently given to him if so mailed within the time prescribed.   Failure to mail a notice or communication to a Holder as provided herein or any defect in any such notice or communication shall not affect its sufficiency with respect to other Holders. Except as otherwise provided in the Notes, if a notice or communication is mailed in the manner provided in this Section 16, it is duly given, whether or not the addressee receives it.   Where this Note provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice.   In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Holders shall constitute a sufficient notification for every purpose hereunder.   The Holders shall be entitled to rely and act upon any notices purportedly given by Group and/or Operating.   SECTION 17.             MISCELLANEOUS.   (A)             GROUP SHALL KEEP A REGISTER OF THE NOTES AND OF THEIR TRANSFER, EXCHANGE OR CONVERSION. THE TRANSFER OF THIS NOTE IS REGISTRABLE ON THE REGISTER MAINTAINED BY THE COMPANY UPON SURRENDER OF THIS NOTE FOR REGISTRATION OF TRANSFER AT THE OFFICE OF THE COMPANY SPECIFIED IN SECTION 16, DULY ENDORSED BY, OR ACCOMPANIED BY A WRITTEN INSTRUMENT OF TRANSFER IN FORM SATISFACTORY TO THE COMPANY DULY EXECUTED BY, THE HOLDER HEREOF OF SUCH HOLDER’S ATTORNEY DULY AUTHORIZED IN WRITING, AND THEREUPON ONE OR MORE NEW NOTES, OF AUTHORIZED DENOMINATIONS AND FOR THE SAME AGGREGATE PRINCIPAL AMOUNT, WILL BE ISSUED TO THE DESIGNATED TRANSFEREE OR TRANSFEREES. SUCH NOTES ARE ISSUABLE ONLY IN REGISTERED FORM WITHOUT COUPONS IN DENOMINATIONS OF $2,000,000   21 --------------------------------------------------------------------------------   (OR ANY INTEGRAL MULTIPLE OF $100,000 IN EXCESS THEREOF). NO SERVICE CHARGE SHALL BE MADE FOR ANY SUCH REGISTRATION OF TRANSFER, EXCHANGE OR CONVERSION, BUT THE COMPANY MAY REQUIRE PAYMENT OF A SUM SUFFICIENT TO RECOVER ANY TAX OR OTHER GOVERNMENTAL CHARGE PAYABLE IN CONNECTION THEREWITH. PRIOR TO DUE PRESENTATION OF THIS NOTE FOR REGISTRATION OF TRANSFER, THE COMPANY AND ANY AGENT OF THE COMPANY MAY TREAT THE PERSON IN WHOSE NAME THIS NOTE IS REGISTERED AS THE OWNER THEREOF FOR ALL PURPOSES, WHETHER OR NOT THIS NOTE MAY BE OVERDUE, AND NEITHER THE COMPANY NOR ANY SUCH AGENT SHALL BE AFFECTED BY NOTICE TO THE CONTRARY.   (B)             THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS NOTE NOR THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE MAY BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN EXEMPTION FROM, OR NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT. THE HOLDER BY ITS ACCEPTANCE OF THIS NOTE OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE AGREES THAT IT SHALL NOT OFFER, SELL, ASSIGN, TRANSFER, PLEDGE, ENCUMBER OR OTHERWISE DISPOSE OF THIS NOTE OR ANY PORTION HEREOF OR INTEREST HEREIN OTHER THAT IN A MINIMUM DENOMINATION OF $2,000,000 PRINCIPAL AMOUNT (OR ANY INTEGRAL MULTIPLE OF $100,000 IN EXCESS THEREOF) AND THEN (OTHER THAN WITH RESPECT TO A TRANSFER PURSUANT TO A REGISTRATION STATEMENT THAT IS EFFECTIVE AT THE TIME OF SUCH TRANSFER) ONLY (I) TO THE COMPANY, (II) TO A PERSON IT REASONABLY BELIEVES TO BE AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501(A) UNDER THE SECURITIES ACT OR A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), OR (III) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND IN THE CASE OF CLAUSES (II)-(III) ABOVE IN WHICH THE TRANSFEROR FURNISHES THE COMPANY WITH SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY MAY REASONABLY REQUEST TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.   (C)             UPON PRESENTATION OF THIS NOTE FOR REGISTRATION OF TRANSFER AT THE OFFICE OF GROUP SPECIFIED HEREIN ACCOMPANIED BY (I) CERTIFICATION BY THE TRANSFEROR THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE TERMS HEREOF AND (II) BY A WRITTEN INSTRUMENT OF TRANSFER IN FORM APPROVED BY THE COMPANY, IN ITS REASONABLE DISCRETION, EXECUTED BY THE REGISTERED HOLDER, IN PERSON OR BY SUCH HOLDER’S ATTORNEY THEREUNTO DULY AUTHORIZED IN WRITING, AND INCLUDING THE NAME, ADDRESS AND TELEPHONE AND FAX NUMBERS OF THE TRANSFEREE AND NAME OF THE CONTACT PERSON OF THE TRANSFEREE, SUCH NOTE SHALL BE TRANSFERRED ON THE NOTE REGISTER, AND A NEW NOTE OF LIKE TENOR AND BEARING THE SAME LEGENDS SHALL BE ISSUED IN THE NAME OF THE TRANSFEREE AND SENT TO THE TRANSFEREE AT THE ADDRESS AND C/O THE CONTACT PERSON SO INDICATED. TRANSFERS AND EXCHANGES OF NOTES SHALL BE SUBJECT TO SUCH RESTRICTIONS AS ARE SET FORTH IN THE LEGENDS ON THE NOTES AND TO SUCH REASONABLE REGULATIONS AS MAY BE PRESCRIBED BY THE COMPANY AS SPECIFIED IN SECTION 17(B) HEREOF. SUCCESSIVE REGISTRATIONS OF TRANSFERS AS AFORESAID MAY BE MADE FROM TIME TO TIME AS DESIRED, AND EACH SUCH REGISTRATION SHALL BE NOTED ON THE NOTE REGISTER.   (D)             UPON RECEIPT BY THE COMPANY OF EVIDENCE REASONABLY SATISFACTORY TO IT OF THE LOSS, THEFT, DESTRUCTION OR MUTILATION OF THIS NOTE, AND IN THE CASE OF LOSS, THEFT OR DESTRUCTION, RECEIPT OF INDEMNITY OR SECURITY REASONABLY SATISFACTORY TO THE COMPANY, AND UPON REIMBURSEMENT TO THE COMPANY OF ALL REASONABLE EXPENSES INCIDENTAL THERETO, AND UPON SURRENDER AND CANCELLATION OF SUCH NOTE, IF MUTILATED, THE COMPANY WILL DELIVER A NEW NOTE OF LIKE TENOR AND DATED AS OF SUCH   22 --------------------------------------------------------------------------------   CANCELLATION, IN LIEU OF SUCH NOTE.   (E)             EACH OF GROUP AND OPERATING IS ACCEPTING JOINT AND SEVERAL LIABILITY UNDER THIS NOTE IN CONSIDERATION OF THE FINANCIAL ACCOMMODATION TO BE PROVIDED BY THE HOLDERS UNDER THIS NOTE, FOR THE MUTUAL BENEFIT, DIRECTLY AND INDIRECTLY, OF EACH OF GROUP AND OPERATING AND IN CONSIDERATION OF THE UNDERTAKINGS OF GROUP AND OPERATING TO ACCEPT JOINT AND SEVERAL LIABILITY FOR THE OBLIGATIONS OF EACH OF THEM.   23 --------------------------------------------------------------------------------

Exhibit 10.1 FIRST AMENDMENT TO AMENDED AND RESTATED LEASE AGREEMENT THIS FIRST AMENDMENT TO AMENDED AND RESTATED LEASE AGREEMENT (“Amendment”) is made and entered into as of the 25th day of October, 2006, by and between WOOD COUNTY DEVELOPMENT AUTHORITY, a West Virginia public corporation, having its office at 409  1/2 Market Street, Suite A, Parkersburg, West Virginia 26102 (the “Lessor”), and COLDWATER CREEK INC., a corporation duly organized and validly existing under the laws of the State of Delaware and authorized to do business in the State of West Virginia, having its principal office at One Coldwater Creek Drive, Sandpoint, Idaho 83864 (the “Lessee”), and amends the Amended and Restated Lease Agreement by and between Lessor and Lessee dated as of January 10, 2006, covering approximately 60 acres of real property located in the Parkersburg Business Park, Parkersburg, Wood County, West Virginia, (the “Lease Agreement”); WHEREAS, the parties hereto wish to further amend the Lease Agreement to substitute Exhibit E (BASIC RENT) under the Lease Agreement; NOW, THEREFORE, in consideration of the mutual promises and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows: 1. Exhibit E (BASIC RENT) to the Lease Agreement is deleted in its entirety and new Exhibit E attached hereto is substituted therefor. 2. Except as amended hereby, all other provisions of the Lease Agreement will remain in full force and effect. 3. All of the terms and conditions of this Amendment shall be binding on and inure to the benefit of the parties, and the respective successors and assigns of the parties. IN WITNESS WHEREOF, each party to this First Amendment to Amended and Restated Lease Agreement has caused it to be executed on the date indicated below.   WOOD COUNTY DEVELOPMENT AUTHORITY By:   /s/ J. Fred Earley II           J. Fred Earley II           Its: Chairman COLDWATER CREEK INC. By:   /s/ Melvin Dick           Melvin Dick           Its: Executive Vice President and CFO -------------------------------------------------------------------------------- EXHIBIT E BASIC RENT The Basic Rent payable to Lessor for the Lease of the Existing Campus is payable as calculated from the Commencement Date to the Expiration Date as follows:   LEASE YEARS*    ANNUAL RENT**    MONTHLY RENT Years 1 (commencing January 21) - 3 (adjustment year)    $ 2,225,947.04    $ 185,495.58 Years 3 (commencing June 21) - 8 (adjustment year)    $ 2,230,947.04    $ 185,912.25 Years 8 (commencing June 21) - 13    $ 2,235,947.04    $ 186,328.92 Years 13 (commencing June 21) - 20    $ 2,235,947.04    $ 186,328.92   * Rent for Lease Years 3 and 8 adjusts commencing June 21 of each Lease Year 3 and 8.   ** This Basic Rent payment schedule is calculated in substantial part upon the Total Project Cost as defined in the Original Lease. Effective as of July 1, 2004, ANNUAL RENT attributable to the Total Project Cost of the Existing Campus has been calculated utilizing a Rent Factor of 6.16%.   ***   This Basic Rent payment schedule is subject to change and shall be agreed to by the Lessor and the Lessee effective for Years 3-8 and Years 8-13 in the event adjustments to the Rent Factor applied against a portion ($15,791,412.28) of the Total Project Cost of the Existing Campus shall be required for Years 3-8 and Years 8-13 due to interest rate adjustments on the Notes.   ****   This Basic Rent payment schedule for the lease of the Existing Campus is subject to change and shall be agreed to by the Lessor and the Lessee effective for Years 13-20 in the event adjustments to the Fair Market Rate are required in keeping with Section 5.8 of the Lease Agreement.   -------------------------------------------------------------------------------- The Basic Rent payable to Lessor for the lease of the Expansion is payable as calculated from the Delivery Date to the Expiration Date as follows:   LEASE YEARS+    ANNUAL RENT++    MONTHLY RENT Years 1 - 20    $ 1,804,560    $ 150,380   + Rent for Lease Years 4-8, 9-13, 14-18 and 19-20 adjusts commencing November 21 of each Lease Year 4, 9, 14 and 19.   ++ This Basic Rent payment schedule is subject to change and shall be agreed to by the Lessor and the Lessee effective for Years 4-8, Years 9-13, Years 14-18 and Years 19-20 in the event adjustments to the Rent Factor applied against a portion of the outstanding indebtedness for the Cost of the Project (i.e. the Expansion) shall be required for Years 4-8, Years 9-13, Years 14-18 or Years 19-20 due to interest rate adjustments on the Notes.   +++ This Basic Rent payment schedule for the lease of the Expansion is subject to change and shall be agreed to by the Lessor and the Lessee effective for Years 4-20 in the event adjustments to the Fair Market Rate are required in keeping with Section 5.8 of the Lease Agreement.

Exhibit 10.1 SECOND AMENDMENT TO TRANSITION AND SEPARATION AGREEMENT This Amendment is entered into as of June 30, 2006 (the “Second Amendment”), by and between Polycom, Inc. (the “Company”) and Kim Niederman (“Employee”). Unless otherwise defined herein, capitalized terms used in this Second Amendment shall have the same meaning as in the Transition and Separation Agreement between the Company and Employee dated August 25, 2005, as further amended on January 25, 2006. WHEREAS, Employee and the Company entered into a Transition and Separation Agreement dated August 25, 2005, as further amended on January 25, 2006 (the “Separation Agreement”); and WHEREAS, Employee and the Company hereby desire to amend the Separation Agreement in the manner described below. NOW, THEREFORE, for the consideration set forth herein, the Company and the Employee agree to amend the Separation Agreement, effective as of June 30, 2006, as follows:     1. The preamble containing the definition of the term “Termination Date” shall be amended to read in its entirety as follows: “WHEREAS, Employee will tender his resignation from employment with the Company to be effective on September 30, 2006 (the “Termination Date”);”     2. Section 1(a) shall be amended to read in its entirety as follows: “Transition Period. Except as provided otherwise in this Agreement, the Company agrees to pay Employee his normal standard compensation and benefits package as extended to him in his January 2, 2003 offer letter until June 30, 2006. On June 30, 2006, Employee’s transition status shall be converted to that of a part-time employee of the Company, reporting to Robert Hagerty. As a part-time employee of the Company, Employee shall be required to work twenty (20) hours per week and shall be eligible to continue to receive benefits in accordance with the terms of the Company’s benefits programs. From July 1, 2006 until the Termination Date, Employee shall receive compensation of $12,000 per month, paid semi-monthly, provided that Employee has not been terminated for Cause (as defined in Section 6(c) below). Employee acknowledges that, as of June 30, 2006, Employee shall be a “non-executive” corporate officer who does not have policy-making functions and who shall no longer be subject to the reporting requirements of Section 16 of the Securities Exchange Act of 1934, as amended.” --------------------------------------------------------------------------------   3. Section 4 shall be amended to add the following penultimate sentences: “Employee acknowledges and consents to the reductions in Employee’s duties, base pay and the kind or level of benefits and acknowledges and consents that such reductions do not trigger a voluntary resignation for Good Reason under any applicable Stock Agreements. In addition, Employee acknowledges that all options will terminate and no longer be exercisable after December 31, 2006.”     4. Section 6(a) shall be amended to read in its entirety as follows: “Termination Without Cause or Termination for Good Reason prior to September 30, 2006. If Employee’s employment is terminated by the Company prior to September 30, 2006 without Cause, Employee will receive all compensation and benefits as contemplated under this Agreement and the Supplemental Agreement until the Termination Date; provided, however, Employee must comply with this Agreement, including signing and not revoking the Supplemental Agreement.”     5. Section 6(d) entitled “Good Reason” shall be deleted in its entirety.     6. To the extent not expressly amended hereby, the Separation Agreement remains in full force and effect.     7. This Second Amendment and the Separation Agreement, including without limitation Section 24 thereof, represent the entire agreement and understanding between the Company and Employee concerning Employee’s employment relationship with the Company and subsequent termination of employment with the Company, and supersede and replace any and all prior agreements and understandings concerning Employee’s employment relationship with the Company. IN WITNESS WHEREOF, this amendment has been entered into as of the date first set forth above.   EMPLOYEE:     POLYCOM, INC. /s/ Kim Niederman     /s/ Robert C. Hagerty Kim Niederman     By:   Robert C. Hagerty     Title:   CEO   -2-

EXECUTION COPY ASSIGNMENT AND ASSUMPTION AGREEMENT ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of May 5, 2006, between Residential Funding Corporation, a Delaware corporation ("RFC") and Residential Asset Mortgage Products, Inc., a Delaware corporation (the "Company"). Recitals A. RFC has entered into seller contracts ("Seller Contracts") with the seller/servicers pursuant to which such seller/servicers sell mortgage loans to RFC. B. The Company wishes to purchase from RFC certain Mortgage Loans (as hereinafter defined) originated pursuant to the Seller Contracts. C. The Company, RFC, as master servicer, and JPMorgan Chase Bank, N.A., as trustee (the "Trustee"), are entering into a Pooling and Servicing Agreement dated as of April 1, 2006 (the "Pooling and Servicing Agreement"), pursuant to which the Trust will issue Mortgage Asset-Backed Pass-Through Certificates, Series 2006-RZ2 (the "Certificates") consisting of sixteen classes designated as Class A-1, Class A-2, Class A-3, Class M-1, Class M-2, Class M-3, Class M-4, Class M-5, Class M-6, Class M-7, Class M-8, Class M-9, Class M-10, Class SB, Class R-I and Class R-II, representing beneficial ownership interests in a trust fund consisting primarily of a pool of fixed and adjustable rate one- to four-family mortgage loans identified on Exhibit F to the Pooling and Servicing Agreement (the "Mortgage Loans"). D. In connection with the purchase of the Mortgage Loans, the Company will assign to RFC a de minimis portion of the Class R-I and Class R-II Certificates (the "Retained Certificates"). E. In connection with the purchase of the Mortgage Loans and the issuance of the Certificates, RFC wishes to make certain representations and warranties to the Company. F. The Company and RFC intend that the conveyance by RFC to the Company of all its right, title and interest in and to the Mortgage Loans pursuant to this Agreement shall constitute a purchase and sale and not a loan. NOW THEREFORE, in consideration of the recitals and the mutual promises herein and other good and valuable consideration, the parties agree as follows: 1. All capitalized terms used but not defined herein shall have the meanings assigned thereto in the Pooling and Servicing Agreement. 2. Concurrently with the execution and delivery hereof, RFC hereby assigns to the Company without recourse all of its right, title and interest in and to the Mortgage Loans, including all interest and principal received on or with respect to the Mortgage Loans after the Cut-off Date (other than payments of principal and interest due on the Mortgage Loans in the month of the Cut-off Date). In consideration of such assignment, RFC will receive from the Company, in immediately available funds, an amount equal to $363,357,194.00, including accrued interest, and the Retained Certificates. In connection with such assignment and at the Company's direction, RFC has in respect of each Mortgage Loan endorsed the related Mortgage Note (other than any Destroyed Mortgage Note, as defined in the following sentence) to the order of the Trustee and delivered an assignment of mortgage in recordable form to the Trustee or its agent. A Destroyed Mortgage Note means a Mortgage Note the original of which was permanently lost or destroyed. The Company and RFC intend that the conveyance by RFC to the Company of all its right, title and interest in and to the Mortgage Loans pursuant to this Section 2 shall be, and be construed as, a sale of the Mortgage Loans by RFC to the Company. It is, further, not intended that such conveyance be deemed to be a pledge of the Mortgage Loans by RFC to the Company to secure a debt or other obligation of RFC. Nonetheless, (a) this Agreement is intended to be and hereby is deemed to be a security agreement within the meaning of Articles 8 and 9 of the Minnesota Uniform Commercial Code and the Uniform Commercial Code of any other applicable jurisdiction; (b) the conveyance provided for in this Section shall be deemed to be a grant by RFC to the Company of a security interest in all of RFC's right (including the power to convey title thereto), title and interest, whether now owned or hereafter acquired, in and to (A) the Mortgage Loans, including the Mortgage Notes, the Mortgages, any related insurance policies and all other documents in the related Mortgage Files, (B) all amounts payable pursuant to the Mortgage Loans in accordance with the terms thereof and (C) any and all general intangibles consisting of, arising from or relating to any of the foregoing, and all proceeds of the conversion, voluntary or involuntary, of the foregoing into cash, instruments, securities or other property, including, without limitation, all amounts from time to time held or invested in the Certificate Account or the Custodial Account, whether in the form of cash, instruments, securities or other property; (c) the possession by the Trustee, the Custodian or any other agent of the Trustee of Mortgage Notes or such other items of property as constitute instruments, money, payment intangibles, negotiable documents, goods, deposit accounts, letters of credit, advices of credit, investment property, certificated securities or chattel paper shall be deemed to be "possession by the secured party", or possession by a purchaser or a person designated by such secured party, for purposes of perfecting the security interest pursuant to the Minnesota Uniform Commercial Code and the Uniform Commercial Code of any other applicable jurisdiction (including, without limitation, Sections 8-106, 9-313 and 9-106 thereof); and (d) notifications to persons holding such property, and acknowledgments, receipts or confirmations from persons holding such property, shall be deemed notifications to, or acknowledgments, receipts or confirmations from, financial intermediaries, bailees or agents (as applicable) of the Trustee for the purpose of perfecting such security interest under applicable law. RFC shall, to the extent consistent with this Agreement, take such reasonable actions as may be necessary to ensure that, if this Agreement were deemed to create a security interest in the Mortgage Loans and the other property described above, such security interest would be deemed to be a perfected security interest of first priority under applicable law and will be maintained as such throughout the term of this Agreement. Without limiting the generality of the foregoing, RFC shall prepare and deliver to the Company not less than 15 days prior to any filing date, and the Company shall file, or shall cause to be filed, at the expense of RFC, all filings necessary to maintain the effectiveness of any original filings necessary under the Uniform Commercial Code as in effect in any jurisdiction to perfect the Company's security interest in or lien on the Mortgage Loans including without limitation (x) continuation statements, and (y) such other statements as may be occasioned by (1) any change of name of RFC or the Company, (2) any change of location of the place of business, state of formation or the chief executive office of RFC, or (3) any transfer of any interest of RFC in any Mortgage Loan. 3. Concurrently with the execution and delivery hereof, the Company hereby assigns to RFC without recourse all of its right, title and interest in and to the Retained Certificates as part of the consideration payable to RFC by the Company pursuant to this Agreement. 4. RFC represents and warrants to the Company that on the date of execution hereof (or, if otherwise specified below, as of the date so specified): (a) The information set forth in the Mortgage Loan Schedule for such Mortgage Loans is true and correct in all material respects as of the date or dates respecting which such information is furnished; (b) Each Mortgage Loan constitutes a qualified mortgage under Section 860G(a)(3)(A) of the Code and Treasury Regulations Section 1.860G-2(a)(1); (c) Immediately prior to the conveyance of the Mortgage Loans to the Company, RFC had good title to, and was the sole owner of, each Mortgage Loan free and clear of any pledge, lien, encumbrance or security interest (other than rights to servicing and related compensation) and such conveyance validly transfers ownership of the Mortgage Loans to the Company free and clear of any pledge, lien, encumbrance or security interest; (d) Each Mortgage Note constitutes a legal, valid and binding obligation of the Mortgagor enforceable in accordance with its terms except as limited by bankruptcy, insolvency or other similar laws affecting generally the enforcement of creditors' rights; (e) To the best of RFC's knowledge as of the Cut-off Date, there is no default, breach, violation or event of acceleration existing under the terms of any Mortgage Note or Mortgage and no event which, with notice and expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration under the terms of any Mortgage Note or Mortgage, and no such default, breach, violation or event of acceleration has been waived by RFC or by any other entity involved in servicing a Mortgage Loan; (f) As of the Cut-off Date, none of the Mortgage Loans are 30 days or more delinquent in payment of principal and interest; (g) None of the Mortgage Loans are buydown Mortgage Loans; (h) To the best of RFC's knowledge, there is no delinquent tax or assessment lien against any related Mortgaged Property; (i) No Mortgagor has any valid right of offset, defense or counterclaim as to the related Mortgage Note or Mortgage, except as may be provided under the Relief Act; (j) No Mortgage Loan provides for payments that are subject to reduction by withholding taxes levied by any foreign (non-United States) sovereign government; (k) (1) The proceeds of each Mortgage Loan have been fully disbursed and (2) to the best of Seller's knowledge, there is no requirement for future advances thereunder and any and all requirements as to completion of any on-site or off-site improvements and as to disbursements of any escrow funds therefor (including any escrow funds held to make Monthly Payments pending completion of such improvements) have been complied with. All costs, fees and expenses incurred in making, closing or recording the Mortgage Loans were paid; (l) To the best of RFC's knowledge, with respect to each Mortgage Loan, there are no mechanics' liens or claims for work, labor or material affecting any Mortgaged Property which are or may be a lien prior to, or equal with, the lien of the related Mortgage, except such liens that are insured or indemnified against by a title insurance policy; (m) With respect to each Mortgage Loan, a policy of title insurance was effective as of the closing of each Mortgage Loan, is valid and binding, and remains in full force and effect, unless the Mortgaged Properties are located in the State of Iowa and an attorney's certificate has been provided; (n) To the best of RFC's knowledge, each Mortgaged Property is free of damage and in good repair and no notice of condemnation has been given with respect thereto and RFC knows of nothing involving any Mortgaged Property that could reasonably be expected to materially adversely affect the value or marketability of any Mortgaged Property; (o) Each Mortgage contains customary and enforceable provisions which render the rights and remedies of the holder adequate to realize the benefits of the security against the Mortgaged Property, including (i) in the case of a Mortgage that is a deed of trust, by trustee's sale, or (ii) by judicial foreclosure or, if applicable, non-judicial foreclosure, and to the best of RFC's knowledge, there is no homestead or other exemption available to the Mortgagor that would interfere with such right to sell at a trustee's sale or right to foreclosure, subject in each case to applicable federal and state laws and judicial precedents with respect to bankruptcy and right of redemption; (p) To the best of RFC's knowledge, with respect to each Mortgage that is a deed of trust, a trustee duly qualified under applicable law to serve as such is properly named, designated and serving, and except in connection with a trustee's sale after default by a Mortgagor, no fees or expenses are payable by the seller or RFC to the trustee under any Mortgage that is a deed of trust; (q) If the improvements securing a Mortgage Loan are located in a federal designated special flood hazard area, flood insurance in the amount required under the Program Guide covers such Mortgaged Property (either by coverage under the federal flood insurance program or by coverage from private insurers); (r) With respect to each Mortgage Loan, any appraisal made in connection with the origination of the Mortgage Loan was made by an appraiser who meets the minimum qualifications for appraisers as specified in the Program Guide; (s) Each Mortgage Loan is covered by a standard hazard insurance policy; (t) To the best of RFC's knowledge, any escrow arrangements established with respect to any Mortgage Loan are in compliance with all applicable local, state and federal laws and are in compliance with the terms of the related Mortgage Note; (u) No Mortgage Loan was originated on or after October 1, 2002 and before March 7, 2003, which is secured by property located in the State of Georgia; (v) As of the Cut-off Date, approximately 0.1% of the Mortgage Loans are secured by a leasehold estate. In connection with any Mortgage Loan secured by a leasehold interest, with respect to each leasehold interest: the use of leasehold estates for residential properties is an accepted practice in the area where the related Mortgaged Property is located; residential property in such area consisting of leasehold estates is readily marketable; the lease is recorded and no party is in any way in breach of any provision of such lease; the leasehold is in full force and effect and is not subject to any prior lien or encumbrance by which the leasehold could be terminated or subject to any charge or penalty; and the remaining term of the lease does not terminate less than ten years after the maturity date of such Mortgage Loan; (w) Each Mortgage Loan as of the time of its origination complied in all material respects with all applicable local, state and federal laws, including, but not limited to, all applicable predatory lending laws; (x) None of the Mortgage Loans are subject to the Home Ownership and Equity Protection Act of 1994. None of the Mortgage Loans are loans that, under applicable state or local law in effect at the time of origination of the loan, are referred to as (1) "high cost" or "covered" loans or (2) any other similar designation if the law imposes greater restrictions or additional legal liability for residential mortgage loans with high interest rates, points and/or fees; (y) To the best of RFC's knowledge, the Subservicer for each Mortgage Loan has accurately and fully reported its borrower credit files to each of the Credit Repositories in a timely manner; (z) None of the proceeds of any Mortgage Loan were used to finance the purchase of single premium credit insurance policies; (aa) No Mortgage Loan is a High Cost Loan or Covered Loan, as applicable (as such terms are defined in the then current Standard & Poor's LEVELS(R)Glossary which is now Version 5.6c Revised, Appendix E) (attached hereto as Exhibit A)); provided that no representation and warranty is made in this clause (aa) with respect to any Mortgage Loan secured by a Mortgaged Property located in the States of Kansas or West Virginia; and provided further that no Qualified Substitute Mortgage Loan shall be a High Cost Loan or Covered Loan (as such terms are defined in Appendix E of the Standard & Poor's Glossary For File Format For LEVELS(R)in effect on the date of substitution, with such exceptions thereto as the Company and Standard & Poor's may reasonably agree); (bb) No Mortgaged Property consists of a mobile home or a manufactured housing unit that is not permanently affixed to its foundation; (cc) The proceeds of the Mortgage Loan have been fully disbursed, there is no requirement for future advances thereunder; (dd) With respect to each Mortgage Loan, either (i) each Mortgage Loan contains a customary provision for the acceleration of the payment of the unpaid principal balance of the Mortgage Loan in the event the related Mortgaged Property is sold without the prior consent of the mortgagee thereunder or (ii) the Mortgage Loan is assumable pursuant to the terms of the Mortgage Note; (ee) No Mortgage Loan has a prepayment penalty term that extends beyond five years after the date of origination; (ff) No Mortgage Loan provides for deferred interest or negative amortization; and (gg) Each Mortgage Loan listed on the attached Exhibit B has an original term to maturity of 360 months and an original amortization term of 480 months. Upon discovery by RFC or upon notice from the Company or the Trustee of a breach of the foregoing representations and warranties in respect of any Mortgage Loan, or upon the occurrence of a Repurchase Event as described in Section 5 below, which materially and adversely affects the interests of any holders of the Certificates or the Company in such Mortgage Loan (notice of which breach or occurrence shall be given to the Company by RFC, if it discovers the same), RFC shall, within 90 days after the earlier of its discovery or receipt of notice thereof, either cure such breach or Repurchase Event in all material respects or, except as otherwise provided in Section 2.04 of the Pooling and Servicing Agreement, either (i) purchase such Mortgage Loan from the Trustee or the Company, as the case may be, at a price equal to the Purchase Price for such Mortgage Loan or (ii) substitute a Qualified Substitute Mortgage Loan or Loans for such Mortgage Loan in the manner and subject to the limitations set forth in Section 2.04 of the Pooling and Servicing Agreement. If the breach of representation and warranty that gave rise to the obligation to repurchase or substitute a Mortgage Loan pursuant to this Section 4 was the representation set forth in clause (w) of this Section 4, then RFC shall pay to the Trust Fund, concurrently with and in addition to the remedies provided in the preceding sentence, an amount equal to any liability, penalty or expense that was actually incurred and paid out of or on behalf of the Trust Fund, and that directly resulted from such breach, or if incurred and paid by the Trust Fund thereafter, concurrently with such payment. 5. With respect to each Mortgage Loan, a repurchase event ("Repurchase Event") shall have occurred if it is discovered that, as of the date hereof, the related Mortgage was not a valid first lien on the related Mortgaged Property subject only to (i) the lien of real property taxes and assessments not yet due and payable, (ii) covenants, conditions, and restrictions, rights of way, easements and other matters of public record as of the date of recording of such Mortgage and such other permissible title exceptions as are listed in the Program Guide and (iii) other matters to which like properties are commonly subject which do not materially adversely affect the value, use, enjoyment or marketability of the Mortgaged Property. In addition, with respect to any Mortgage Loan as to which the Company delivers to the Trustee or the Custodian an affidavit certifying that the original Mortgage Note has been lost or destroyed, if such Mortgage Loan subsequently is in default and the enforcement thereof or of the related Mortgage is materially adversely affected by the absence of the original Mortgage Note, a Repurchase Event shall be deemed to have occurred and RFC will be obligated to repurchase or substitute for such Mortgage Loan in the manner set forth in Section 4 above. 6. RFC hereby represents and warrants to the Company that with respect to each Mortgage Loan, the REMIC's tax basis in each Mortgage Loan as of the Closing Date is equal to or greater than 100% of the Stated Principal Balance thereof. 7. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns, and no other person shall have any right or obligation hereunder. 8. RFC, as master servicer under the Pooling and Servicing Agreement (the "Master Servicer"), shall not waive (or permit a sub-servicer to waive) any prepayment charge on a Mortgage Loan (a "Prepayment Charge") unless: (i) the enforceability thereof shall have been limited by bankruptcy, insolvency, moratorium, receivership and other similar laws relating to creditors' rights generally, (ii) the enforcement thereof is illegal, or any local, state or federal agency has threatened legal action if the Prepayment Charge is enforced, (iii) the collectability thereof shall have been limited due to acceleration in connection with a foreclosure or other involuntary payment or (iv) such waiver is standard and customary in servicing similar Mortgage Loans and relates to a default or a reasonably foreseeable default and would, in the reasonable judgment of the Master Servicer, maximize recovery of total proceeds taking into account the value of such Prepayment Charge and the related Mortgage Loan. In no event will the Master Servicer waive a Prepayment Charge in connection with a refinancing of a Mortgage Loan that is not related to a default or a reasonably foreseeable default. If a Prepayment Charge is waived, but does not meet the standards described above, then the Master Servicer is required to pay the amount of such waived Prepayment Charge to the holder of the Class SB Certificates at the time that the amount prepaid on the related Mortgage Loan is required to be deposited into the Custodial Account. Notwithstanding any other provisions of this Agreement, any payments made by the Master Servicer in respect of any waived Prepayment Charges pursuant to this Section shall be deemed to be paid outside of the Trust Fund and not part of any REMIC. [Signature page follows] -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties have entered into this Assignment and Assumption Agreement as of the date first above written. RESIDENTIAL FUNDING CORPORATION By: /s/Christopher Martinez Name: Christopher Martinez Title: Associate RESIDENTIAL ASSET MORTGAGE PRODUCTS, INC. By: /s/Joseph Orning Name: Joseph Orning Title: Vice President -------------------------------------------------------------------------------- EXHIBIT A APPENDIX E OF THE STANDARD & POOR'S GLOSSARY FOR FILE FORMAT FOR LEVELS(R)VERSION 5.6 REVISED July 11, 2005 APPENDIX E - STANDARD & POOR'S PREDATORY LENDING CATEGORIES Standard & Poor's has categorized loans governed by anti-predatory lending laws in the Jurisdictions listed below into three categories based upon a combination of factors that include (a) the risk exposure associated with the assignee liability and (b) the tests and thresholds set forth in those laws. Note that certain loans classified by the relevant statute as Covered are included in Standard & Poor's High Cost Loan Category because they included thresholds and tests that are typical of what is generally considered High Cost by the industry. STANDARD & POOR'S HIGH COST LOAN CATEGORIZATION --------------------------------------------------------------------------------------------------------------------- State/Jurisdiction Name of Anti-Predatory Lending Law/Effective Category under Applicable Date Anti-Predatory Lending Law ---------------------------------- ------------------------------------------------- -------------------------------- Arkansas Arkansas Home Loan Protection Act, Ark. Code High Cost Home Loan Ann.ss.ss.23-53-101 et seq. Effective July 16, 2003 ---------------------------------- ------------------------------------------------- -------------------------------- Cleveland Heights, OH Ordinance No. 72-2003 (PSH), Mun. Codess.ss. Covered Loan 757.01 et seq. Effective June 2, 2003 ---------------------------------- ------------------------------------------------- -------------------------------- Colorado Consumer Equity Protection, Colo. Stat. Ann.ss.ss. Covered Loan 5-3.5-101 et seq. Effective for covered loans offered or entered into on or after January 1, 2003. Other provisions of the Act took effect on June 7, 2002 ---------------------------------- ------------------------------------------------- -------------------------------- Connecticut Connecticut Abusive Home Loan Lending Practices High Cost Home Loan Act, Conn. Gen. Stat.ss.ss.36a-746 et seq. Effective October 1, 2001 ---------------------------------- ------------------------------------------------- -------------------------------- District of Columbia Home Loan Protection Act, D.C. Codess.ss. Covered Loan 26-1151.01 et seq. Effective for loans closed on or after January 28, 2003 ---------------------------------- ------------------------------------------------- -------------------------------- Florida Fair Lending Act, Fla. Stat. Ann.ss.ss.494.0078 High Cost Home Loan et seq. Effective October 2, 2002 ---------------------------------- ------------------------------------------------- -------------------------------- Georgia (Oct. 1, 2002 - Mar. 6, Georgia Fair Lending Act, Ga. Code Ann.ss.ss. High Cost Home Loan 2003) 7-6A-1 et seq. Effective October 1, 2002 - March 6, 2003 ---------------------------------- ------------------------------------------------- -------------------------------- Georgia as amended (Mar. 7, 2003 Georgia Fair Lending Act, Ga. Code Ann.ss.ss. High Cost Home Loan - current) 7-6A-1 et seq. Effective for loans closed on or after March 7, 2003 ---------------------------------- ------------------------------------------------- -------------------------------- HOEPA Section 32 Home Ownership and Equity Protection Act of High Cost Loan 1994, 15 U.S.C.ss.1639, 12 C.F.R.ss.ss.226.32 and 226.34 Effective October 1, 1995, amendments October 1, 2002 ---------------------------------- ------------------------------------------------- -------------------------------- Illinois High Risk Home Loan Act, Ill. Comp. Stat. tit. High Risk Home Loan 815,ss.ss.137/5 et seq. Effective January 1, 2004 (prior to this date, regulations under Residential Mortgage License Act effective from May 14, 2001) ---------------------------------- ------------------------------------------------- -------------------------------- Kansas Consumer Credit Code, Kan. Stat. Ann.ss.ss. High Loan to Value Consumer 16a-1-101 et seq. Loan (id.ss.16a-3-207) and; Sections 16a-1-301 and 16a-3-207 became effective April 14, 1999; Section 16a-3-308a became effective July 1, 1999 ---------------------------------- ------------------------------------------------- -------------------------------- High APR Consumer Loan (id.ss. 16a-3-308a) ---------------------------------- ------------------------------------------------- -------------------------------- Kentucky 2003 KY H.B. 287 - High Cost Home Loan Act, Ky. High Cost Home Loan Rev. Stat.ss.ss.360.100 et seq. Effective June 24, 2003 ---------------------------------- ------------------------------------------------- -------------------------------- Maine Truth in Lending, Me. Rev. Stat. tit. 9-A,ss.ss. High Rate High Fee Mortgage 8-101 et seq. Effective September 29, 1995 and as amended from time to time ---------------------------------- ------------------------------------------------- -------------------------------- Massachusetts Part 40 and Part 32, 209 C.M.R.ss.ss.32.00 et High Cost Home Loan seq. and 209 C.M.R.ss.ss.40.01 et seq. Effective March 22, 2001 and amended from time to time ---------------------------------- ------------------------------------------------- -------------------------------- Nevada Assembly Bill No. 284, Nev. Rev. Stat.ss.ss. Home Loan 598D.010 et seq. Effective October 1, 2003 ---------------------------------- ------------------------------------------------- -------------------------------- New Jersey New Jersey Home Ownership Security Act of 2002, High Cost Home Loan N.J. Rev. Stat.ss.ss.46:10B-22 et seq. Effective for loans closed on or after November 27, 2003 ---------------------------------- ------------------------------------------------- -------------------------------- New Mexico Home Loan Protection Act, N.M. Rev. Stat.ss.ss. High Cost Home Loan 58-21A-1 et seq. Effective as of January 1, 2004; Revised as of February 26, 2004 ---------------------------------- ------------------------------------------------- -------------------------------- New York N.Y. Banking Law Article 6-l High Cost Home Loan Effective for applications made on or after April 1, 2003 ---------------------------------- ------------------------------------------------- -------------------------------- North Carolina Restrictions and Limitations on High Cost Home High Cost Home Loan Loans, N.C. Gen. Stat.ss.ss.24-1.1E et seq. Effective July 1, 2000; amended October 1, 2003 (adding open-end lines of credit) ---------------------------------- ------------------------------------------------- -------------------------------- Ohio H.B. 386 (codified in various sections of the Covered Loan Ohio Code), Ohio Rev. Code Ann.ss.ss.1349.25 et seq. Effective May 24, 2002 ---------------------------------- ------------------------------------------------- -------------------------------- Oklahoma Consumer Credit Code (codified in various Subsection 10 Mortgage sections of Title 14A) Effective July 1, 2000; amended effective January 1, 2004 ---------------------------------- ------------------------------------------------- -------------------------------- South Carolina South Carolina High Cost and Consumer Home High Cost Home Loan Loans Act, S.C. Code Ann.ss.ss.37-23-10 et seq. Effective for loans taken on or after January 1, 2004 ---------------------------------- ------------------------------------------------- -------------------------------- West Virginia West Virginia Residential Mortgage Lender, West Virginia Mortgage Loan Broker and Servicer Act, W. Va. Code Ann.ss.ss. Act Loan 31-17-1 et seq. Effective June 5, 2002 ---------------------------------- ------------------------------------------------- -------------------------------- STANDARD & POOR'S COVERED LOAN CATEGORIZATION ---------------------------------- ------------------------------------------------- -------------------------------- State/Jurisdiction Name of Anti-Predatory Lending Law/Effective Category under Applicable Date Anti-Predatory Lending Law ---------------------------------- ------------------------------------------------- -------------------------------- Georgia (Oct. 1, 2002 - Mar. 6, Georgia Fair Lending Act, Ga. Code Ann.ss.ss. Covered Loan 2003) 7-6A-1 et seq. Effective October 1, 2002 - March 6, 2003 ---------------------------------- ------------------------------------------------- -------------------------------- New Jersey New Jersey Home Ownership Security Act of 2002, Covered Home Loan N.J. Rev. Stat.ss.ss.46:10B-22 et seq. Effective November 27, 2003 - July 5, 2004 ---------------------------------- ------------------------------------------------- -------------------------------- STANDARD & POOR'S HOME LOAN CATEGORIZATION --------------------------------------------------------------------------------------------------------------------- State/Jurisdiction Name of Anti-Predatory Lending Law/Effective Category under Applicable Date Anti-Predatory Lending Law ---------------------------------- ------------------------------------------------- -------------------------------- Georgia (Oct. 1, 2002 - Mar. 6, Georgia Fair Lending Act, Ga. Code Ann.ss.ss. Home Loan 2003) 7-6A-1 et seq. Effective October 1, 2002 - March 6, 2003 ---------------------------------- ------------------------------------------------- -------------------------------- New Jersey New Jersey Home Ownership Security Act of 2002, Home Loan N.J. Rev. Stat.ss.ss.46:10B-22 et seq. Effective for loans closed on or after November 27, 2003 ---------------------------------- ------------------------------------------------- -------------------------------- New Mexico Home Loan Protection Act, N.M. Rev. Stat.ss.ss. Home Loan 58-21A-1 et seq. Effective as of January 1, 2004; Revised as of February 26, 2004 ---------------------------------- ------------------------------------------------- -------------------------------- North Carolina Restrictions and Limitations on High Cost Home Consumer Home Loan Loans, N.C. Gen. Stat.ss.ss.24-1.1E et seq. Effective July 1, 2000; amended October 1, 2003 (adding open-end lines of credit) ---------------------------------- ------------------------------------------------- -------------------------------- South Carolina South Carolina High Cost and Consumer Home Consumer Home Loan Loans Act, S.C. Code Ann.ss.ss.37-23-10 et seq. Effective for loans taken on or after January 1, 2004 ---------------------------------- ------------------------------------------------- -------------------------------- -------------------------------------------------------------------------------- EXHIBIT B LIST OF MORTGAGE LOANS WITH ORIGINAL TERM TO MATURITY OF 360 MONTHS AND AN ORIGINAL AMORTIZATION TERM OF 480 MONTHS [SEE ATTACHMENT] Loan Number Principal Balance Original Term Amortization Term 10223750 263610.27 360 480 10255154 177869 360 480 10255460 229674.96 360 480 10296412 153413.05 360 480 10296472 149813.48 360 480 10296690 129921.82 360 480 10297426 194876.62 360 480 10321794 117910.15 360 480 10333916 105910.08 360 480 10334170 359752.5 360 480 10334174 449839.93 360 480 10334178 124937.88 360 480 10334184 329829.9 360 480 10334206 94455.13 360 480 10369976 314710.51 360 480 10369996 80731.08 360 480 10370078 117868.74 360 480 10370082 197956.94 360 480 10370118 264929.41 360 480 10370568 679662.06 360 480 10370576 229931.7 360 480 10370582 429815.07 360 480 10375064 113927.12 360 480 10382594 199948.63 360 480 10382804 86883.03 360 480 10389065 139643.62 360 480 10389077 74708.91 360 480 10389089 77316.61 360 480 10389093 219697.81 360 480 10389097 52923.04 360 480 10389113 199761.77 360 480 10389121 213716.26 360 480 10389127 123846.22 360 480 10389133 92881.5 360 480 10389155 83906.12 360 480 10389165 137485.95 360 480 10389171 229726.04 360 480 10389199 364647.78 360 480 10389213 58143.3 360 480 10389215 286611.52 360 480 10389227 344600.71 360 480 10389235 183721.07 360 480 10389245 129538.72 360 480 10389257 175863.43 360 480 10389275 225788.42 360 480 10389293 314357.36 360 480 10389297 184840.05 360 480 10389317 113929.08 360 480 10389345 176786.68 360 480 10389365 598518.01 360 480 10389377 134856.36 360 480 10389387 369752.11 360 480 10389407 144869.95 360 480 10389411 334783.7 360 480 10389433 484515.82 360 480 10389445 147936.85 360 480 10389447 64954.16 360 480 10389457 77245.44 360 480 10389463 311690.72 360 480 10389465 169836.55 360 480 10389475 278741.99 360 480 10389487 298793.69 360 480 10389493 82845.84 360 480 10389495 142524.4 360 480 10389529 99940.06 360 480 10389531 57949.83 360 480 10389537 194475.65 360 480 10389545 117898.66 360 480 10389573 167843.84 360 480 10389575 374544.44 360 480 10389597 251741.16 360 480 10389607 539638.2 360 480 10389617 63945.91 360 480 10389625 200484.07 360 480 10402173 264014.42 360 480 10435391 214826.99 360 480 10435559 106913.9 360 480 10435569 144870.88 360 480 10457383 455003.49 360 480 10457391 105914.67 360 480 10457395 349698.54 360 480 10457403 58260.95 360 480 10457433 175569.52 360 480 10457443 149890.11 360 480 10457449 145923.08 360 480 10457451 293724.75 360 480 10457467 289798.42 360 480 10457469 469826.4 360 480 10457479 689617.47 360 480 10457503 384760.92 360 480 10457517 319781.55 360 480 10457521 115448.61 360 480 10457523 219890.66 360 480 10457533 149841.51 360 480 10457539 92958.61 360 480 10457541 119946.98 360 480 10457559 634386.98 360 480 10457565 274812.27 360 480 10457569 253849.72 360 480 10457573 137774.13 360 480 10457575 120137.38 360 480 10457581 365008.5 360 480 10457595 232347.93 360 480 10457611 110894.49 360 480 10457619 258845.65 360 480 10457629 100911.99 360 480 10457635 100448.58 360 480 10457641 180870.83 360 480 10457647 404758.65 360 480 10457651 176877.46 360 480 10457653 131913.67 360 480 10457657 204923.29 360 480 10457661 114928.97 360 480 10457663 305886.97 360 480 10457671 121887.68 360 480 10457697 334688.5 360 480 10457699 207863.95 360 480 10457701 148418.27 360 480 10457703 288867.54 360 480 10457745 374850.71 360 480 10457769 242383.8 360 480 10457801 230053.71 360 480 10457805 244347.11 360 480 10457809 129897.04 360 480 10457819 141424.34 360 480 10457821 138950.56 360 480 10457823 199780.87 360 480 10457825 182905.67 360 480 10457831 78460.98 360 480 10457841 102942.9 360 480 10457851 229889.82 360 480 10457855 176818.32 360 480 10457859 122942.84 360 480 10457861 398882.16 360 480 10457865 239914.62 360 480 10462047 289677.11 360 480 10499211 144967.86 360 480 10499219 114928.97 360 480 10499225 132312.08 360 480 10499241 99926.22 360 480 10499247 177959.06 360 480 10499253 210737.66 360 480 10499255 255899 360 480 10499261 306817.06 360 480 10499263 114959.09 360 480 10499265 519888.59 360 480 10499275 193931.12 360 480 10499277 68886.33 360 480 10499281 259930.74 360 480 10499285 84963.54 360 480 10499295 119864.39 360 480 10499297 144965.39 360 480 10499307 156451.82 360 480 10499315 204956.2 360 480 10499319 324910.22 360 480 10499325 509842.99 360 480 10499331 154848.78 360 480 10499333 89977.71 360 480 10499347 170445.6 360 480 10499359 169949.52 360 480 10499375 157376.27 360 480 10499377 244929.8 360 480 10499383 73978.79 360 480 10499387 339891.51 360 480 10499389 289940.32 360 480 10499391 159945.17 360 480 10499407 392391.57 360 480 10499413 299950.73 360 480 10499417 249920.22 360 480 10499431 239936.07 360 480 10499433 132447.72 360 480 10499437 182956.32 360 480 10499441 215931.07 360 480 10499443 228000 360 480 10499459 260925.21 360 480 10499461 198924.17 360 480 10499463 127959.15 360 480 10499467 95973.48 360 480 10499471 114969.37 360 480 10499473 299925.72 360 480 10499477 166346.9 360 480 10499479 139948.51 360 480 10499493 340421.67 360 480 10499497 157957.91 360 480 10499505 313927.76 360 480 10499509 53985.62 360 480 10499511 124948.93 360 480 10499513 225922.55 360 480 10499519 199942.71 360 480 10499529 178440.97 360 480 10499539 184955.85 360 480 10499541 215938.11 360 480 10499545 194937.77 360 480 10499547 189859.32 360 480 10499559 228960.92 360 480 10499563 624814.38 360 480 10499565 649826.85 360 480 10499571 239431.38 360 480 10499573 199957.15 360 480 10499609 63467.26 360 480 10499613 309889.94 360 480 10499645 151864.67 360 480 10499647 87925.51 360 480 10499649 79858.52 360 480 10499661 239942.72 360 480 10499665 142924.64 360 480 10499675 59987.65 360 480 10499679 119834.02 360 480 10499697 88970.57 360 480 10499707 181432.97 360 480 10499711 237789.34 360 480 10499715 484867.78 360 480

EXHIBIT 10.161 CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION Execution Copy KNOW-HOW LICENSE AGREEMENT by and between INDEVUS PHARMACEUTICALS, INC. and NOVEXEL SA -------------------------------------------------------------------------------- THIS KNOW-HOW LICENSE AGREEMENT (“Agreement”) is effective as of December 4th, 2006 (“Effective Date”), by and between INDEVUS PHARMACEUTICALS, INC., a corporation organized and existing under the laws of the State of Delaware and having its principal office at 33 Hayden Avenue, Lexington, Massachusetts 02421, United States (“Indevus”), and NOVEXEL SA, a corporation organized and existing under the laws of France and having its principal office at Parc Biocitech, 102, route de Noisy, F-93230 Romainville France (“Novexel”). Indevus and Novexel are collectively referred to herein as the “Parties”, and individually, as a “Party”. W I T N E S S E T H: WHEREAS, effective April 18, 2003, Indevus entered into that certain License Agreement with Aventis Pharma SA (“Aventis”) (as amended, the “2003 License”) under which, among other things, Indevus was granted an exclusive license under AVENTIS Intellectual Property (as defined in the 2003 License) to develop and commercialize Compound and Product (each as defined below); WHEREAS, pursuant to the Assignment Agreement (as defined below) effective as of December 1, 2004, Aventis assigned to Novexel all of Aventis’s right, title and interest in and to all intellectual property rights relating to Compound and Product; WHEREAS, pursuant to the Assignment Agreement, effective as of December 1, 2004, Aventis also assigned to Novexel the 2003 License and Aventis’s rights and obligations thereunder (except for the right to manufacture and supply Nucleus (as defined below) that was retained by Aventis) and Novexel assumed all such rights and obligations thereunder; WHEREAS, under the 2003 License, Indevus, through its efforts to develop Product, has generated the Indevus Know-how (as defined below); WHEREAS, Indevus has made a strategic corporate decision to search for a partner to pursue development and commercialization of Compound and Product and Novexel wishes to have an exclusive right to pursue such activities, Indevus and Novexel have agreed, and mutually desire, to simultaneously execute three agreements which will, together, allow Novexel to exclusively pursue development and commercialization of Compound and Product; and WHEREAS the three agreements Indevus and Novexel have agreed to simultaneously execute include (i) a Termination Agreement terminating the 2003 License, (ii) this Know-How License Agreement under which Indevus will grant Novexel an exclusive license to Indevus Know-How (the “Know-How License”), and (iii) a letter agreement assigning Indevus’ rights and obligations relative to Aventis in the manufacture and supply of Nucleus to Novexel, to which Aventis is also a party (the “Side Agreement”). NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:   Page 1 -------------------------------------------------------------------------------- ARTICLE I DEFINITIONS Unless specifically set forth to the contrary herein, the following terms, where used in the singular or plural, shall have the respective meanings set forth below:     1.1 “Affiliate” means (i) any corporation or business entity of which more than fifty percent (50%) of the securities or other ownership interests representing the equity, the voting stock or general partnership interest are owned, controlled or held, directly or indirectly, by a Party or (ii) any corporation or business entity which, directly or indirectly, owns, controls or holds more than fifty percent (50%) (or the maximum ownership interest permitted by law) of the securities or other ownership interests representing the equity, the voting stock or, if applicable, the general partnership interest, of a Party.     1.2 “Assignment Agreement” means the Subscription Agreement in relation to Novexel SA dated as of 25 October 2004 by and among Aventis, Novexel and the other parties listed on the signature page thereto, a redacted form of which has been previously provided to Indevus.     1.3 “Aventis” means Sanofi-aventis, the successor to Aventis Pharma SA.     1.4 “Business Day(s)” means any day that is not a Saturday or a Sunday or a day on which the New York Stock Exchange is closed or a day that is a bank holiday in France (which days are set forth on Schedule 1.4).     1.5 “Calendar Quarter” means the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and December 31.     1.6 “Calendar Year” means each successive period of twelve (12) months commencing on January 1 and ending on December 31.     1.7 “Centralized Procedure” means the European Union Centralized Procedure for marketing authorization in accordance with Council Regulation n° 2309/93 of July 22, 1993 or any successor regulations.     1.8 “Compound” means the chemical compound known under the International Non-proprietary name aminocandin and the code name HMR-3270 and diagrammed on Schedule 1.8, and any other compounds disclosed or covered or included in the Novexel Patent Assets or any compound that is part of the aminocandin family of compounds or any derivative, homolog, or analog of any of the foregoing, and any isomer, salt, hydrate, solvate, amide, ester, metabolite, or prodrug of any of the foregoing     1.9 “Dominating Patent” shall mean an unexpired patent which has not been invalidated by a court or other governmental agency of competent jurisdiction which is owned by a Third Party and which Novexel or its sublicensees reasonably believe they have no   Page 2 --------------------------------------------------------------------------------   alternative to obtaining a royalty-bearing license under such patent in order to commercialize a Product under this Agreement without infringing such patent. Any Third Party patent that (i) [*] and (ii) becomes subject to the preceding sentence after the Effective Date, shall be deemed a Dominating Patent.     1.10 “EMEA” means the European Agency for the Evaluation of Medicinal Products based in London (UK), as established by Council Regulation n° 2309/93 of July 22, 1993, as subsequently amended by Commission Regulation 649/98 of March 23, 1998, and any successor thereto having substantially the same functions.     1.11 “FDA” means the United States Food and Drug Administration and any successor agency having substantially the same functions.     1.12 “First Commercial Sale” means the date of the first commercial sale of Product in the Territory by Novexel or its Affiliates, or their sublicensee(s) after all required Regulatory Approvals in the country of sale have been obtained.     1.13 “Indevus Know-How” means any and all information and materials, including but not limited to, discoveries, Inventory, information, processes, formulae, data, inventions (whether patentable or not), invention disclosures, know-how and trade secrets, patentable or otherwise, that relate to Compound or Product, including without limitation, all chemical, pharmaceutical, toxicological, biochemical, and biological, technical and non technical data, and information relating to the results of tests, assays, methods, and processes, and specifications and/or other documents containing information and related data, and any preclinical, clinical, assay control, manufacturing, regulatory, and any other data or information used or useful for the development, manufacturing, regulatory filing or application and/or regulatory approval of Compound or Product that are immediately prior to the Effective Date, owned or controlled by Indevus. A list of the principal components of the Indevus Know-How is attached as Schedule 1.13.     1.14 “Inventory” means the materials set forth on Schedule 1.14 attached hereto and incorporated by reference herein that as of the Effective Date are stored and held by or on behalf of Indevus.     1.15 “Losses” means any and all damages, awards, deficiencies, settlement amounts, defaults, assessments, fines, dues, penalties (including penalties imposed by any governmental authority), costs, fees, liabilities, obligations, taxes, liens, losses, and expenses (including court costs, interest and reasonable fees of attorneys, accountants and other experts) awarded or otherwise paid or payable to Third Parties.     1.16 “Material Adverse Change” means a serious adverse condition or event relating to the clinical safety, efficacy, toxicity or side effects of Compound or Product that (i) was not included in the Indevus Know-How; (ii) was in the Indevus Know-How or was known to Novexel, but after the Effective date and reasonably diligent efforts by Novexel is determined by Novexel to be a condition or event that cannot be reasonably overcome; (iii) was not, as of the Effective Date, known to Novexel, including any action by any Regulatory Authority significantly limiting the development or commercialization of Compound or Product.   -------------------------------------------------------------------------------- [*] CONFIDENTIAL TREATMENT REQUESTED Page 3 --------------------------------------------------------------------------------   1.17 “NDA” means a new drug application or other submission filed with the applicable Regulatory Authority in any regulatory jurisdiction in the Territory to obtain Regulatory Approval of a Product in such regulatory jurisdiction, and any amendments and supplements thereto.     1.18 “Net Sales” means the actual gross amount invoiced by Novexel, its Affiliates or its sublicensees for the commercial sale of all Products in the Territory to a Third Party, commencing upon the date of First Commercial Sale, after deducting the following: (a) trade, cash, quantity or ordinary discounts; (b) allowances for product returns, including allowances or credits for rejected Product, or spoilage or recalled Product; (c) rebates, credits, reimbursements and charge backs; (d) sales or excise taxes, VAT or other taxes, and transportation and insurance charges and additional special transportation, custom duties, and other governmental charges; (e) rebates or similar payments paid in connection with sales of Product to any governmental or regulatory authority in respect of any state or federal programs similar to Medicare or Medicaid in the United States in any country of the Territory; (f) retroactive price reductions; and (g) write-offs or allowances for bad debt, not to exceed two percent (2%) of Net Sales. If Novexel or its Affiliates or sublicensees sells Product together with other products to Third Parties in a particular country and the price attributable to the Product is less than the average price of “arms length” sales of the Product alone in the particular country for the reporting period in which sales occur (such sales to be excluded from the calculation of the average price of “arms length” sales), Net Sales for any such sales shall be the average price of “arms length” sales by Novexel or its Affiliates or sublicensees of the Product alone and in the country during the reporting period in which such sales occur. If the average price of “arms length” sale of the Product cannot be determined in any given country, Net Sales will be determined by the value of the Product sold to similar customers in countries with similar pricing and reimbursement structures and for similar quantities. Any dispute as to the determination of value shall be resolved under the dispute procedure in accordance with the provisions of Section 10.6. If a Product contains one or more therapeutically active ingredients in addition to Compound (“Combination Product”), the Net Sales from the Combination Product, for   Page 4 -------------------------------------------------------------------------------- the purposes of determining royalty payments, shall be determined by multiplying the Net Sales of the Combination Product during the applicable royalty reporting period, by the fraction, A/A+B, where A is the weighted average per unit sale price of Product when sold in finished form with the Compound as the only active ingredient in the country in which the Combination Product is sold, and B is the weighted average per unit sale price of an active ingredient other than Compound (it being understood that if there are multiple other active ingredients they shall be designated as B-1, B-2, etc.) contained in the Combination Product when sold separately in finished form in the country in which the Combination Product is sold multiplied by the number of units of such active ingredient(s) in the Combination Product, in each case during the applicable royalty reporting period or, if sales of the Product alone did not occur in such period, then in the most recent royalty reporting period in which arm’s length fair market sales of such Product occurred. In the event that such weighted average sale price cannot be determined for either the Product or all other product(s) included in the Combination Product, Net Sales for the purpose of determining royalty payments due on a Combination Product shall be mutually agreed upon by the Parties based on the relative value contributed by each component, such agreement not to be unreasonably withheld, conditioned or delayed. Use of Products for promotional or sampling purposes or for use in clinical trials contemplated under this Agreement shall not be considered in determining Net Sales. In the case of any sale of a Product between Novexel and its Affiliates or sublicensees for resale, Net Sales shall be calculated as above only on the first arm’s length sale thereafter to a Third Party.     1.19 “Novexel Know-How” means any and all information and materials, including but not limited to, discoveries, improvements, information, processes, formulae, data, inventions (whether patentable or not), invention disclosures, know-how and trade secrets, patentable or otherwise, that relate to Compound or Product, including without limitation, all chemical, pharmaceutical, toxicological, biochemical, and biological, technical and non technical data, and information relating to the results of tests, assays, methods, and processes, and specifications and/or other documents containing information and related data, and any preclinical, clinical, assay control, manufacturing, regulatory, and any other data or information used or useful for the development, manufacturing, regulatory filing or application and/or regulatory approval of Compound or Product that are as of the Effective Date or at any time during the Term of this Agreement become, owned or controlled by Novexel (other than pursuant to the license granted by Indevus under this Agreement) and as to which Novexel has the right to license or sublicense.     1.20 “Novexel Patent Assets” means the United States patents and patent applications and any foreign counterparts thereof listed on Schedule 1.20 or which as of the Effective Date are, or at any time during the Term of this Agreement become, owned or controlled by Novexel, and relate to Compound or Product or any improvement, including all certificates of invention and applications for certificates of invention and substitutions, divisions, continuations, continuations-in-part, patents issuing thereon or reissues or reexaminations thereof, supplementary protection certificates or the like of any such patents and patent applications.   Page 5 --------------------------------------------------------------------------------   1.21 “Nucleus” means deacylmulundocandin, the starting material for the manufacture of the Compound, obtained by biochemistry through a biosynthesis from an Aspergillus strain, the first step of which leads to deoxymulundocandin and the second step of which leads to deacylmulundocandin.     1.22 “Product” means any product in final form (or where the context so indicates, the product being tested) which contains Compound as at least one of the therapeutically active ingredients.     1.23 “Proprietary Information” means any and all scientific, clinical, regulatory, marketing, financial and commercial information or data, whether communicated in writing, orally or by any other means, which is owned and under the protection of one Party and is being provided by that Party to the other Party in connection with this Agreement. For purposes of the confidentiality and non-use provisions of this Agreement, Novexel Know-How and Reports are deemed Novexel Proprietary Information and Indevus Know-How is deemed Indevus Proprietary Information.     1.24 “Regulatory Approval” means all authorizations and approvals (including pricing and reimbursement approvals where required for marketing), of all regional, federal, state or local agencies, departments, bureaus or other governmental entities, necessary for the manufacture, use, storage, import, export, transport and sale of Product in a jurisdiction.     1.25 “Regulatory Authority” means the FDA in the United States and any body in the European Union and any health regulatory authority(ies) in any country(ies) in the Territory that is equivalent to the FDA and holds responsibility for granting Regulatory Approval for a Product in such country(ies), and any successor(s) thereto having substantially the same functions.     1.26 “Royalty Year” means, (i) for the year in which the First Commercial Sale occurs, the period commencing with the first day of the Calendar Quarter in which the First Commercial Sale occurs and expiring on the last day of the Calendar Year in which the First Commercial Sale occurs and (ii) for each subsequent year, each successive Calendar Year.     1.27 “SEC” means the US Securities and Exchange Commission or any successor agency.     1.28 “Side Agreement” means the agreement entered into by and among Novexel, Indevus and Aventis on even date herewith and attached as Exhibit A which provides inter alia, for Indevus’ rights and obligations under Sections 3.1.2 and 3.8 of the 2003 License to be assigned to Novexel, and that in the event of a termination of this agreement where Indevus will reacquire the rights consistent with the 2003 License, the rights and obligations under Sections 3.1.2 and 3.8 shall be reassigned back to Indevus.   Page 6 --------------------------------------------------------------------------------   1.29 “Termination Agreement” means the agreement entered into between the Parties on even date herewith, and attached as Exhibit B, which provides, inter alia, for the termination of the 2003 License in consideration of the Parties entering into this Agreement and Novexel, Indevus and Aventis entering into the Side Agreement.     1.30 “Territory” means all of the countries in the world.     1.31 “Third Party(ies)” means a person or entity who or which is neither a Party nor an Affiliate of a Party. ARTICLE II LICENSE; SUBLICENSES     2.1 License Grant. Indevus hereby grants to Novexel an exclusive license, with the right to sublicense in accordance with the terms of this Agreement (with the right of sublicensees to further sublicense), to use and practice the Indevus Know-How for any purpose in connection with Compound and/or Product, including to develop, make, have made, use, import, offer for sale, sell, market, promote, commercialize, distribute, or otherwise dispose of Compound and Product for any and all uses in the Territory.     2.2 Delivery of Indevus Know-How. Within thirty (30) days after the Effective Date, Indevus shall deliver to Novexel, at Indevus’s expense, all tangible items (except Inventory) within the Indevus Know-How in a form(s) to be agreed upon and to a place designated in writing by Novexel. The Parties shall agree on a mutual place and time within thirty (30) days after the Effective Date, to arrange for a delivery to Novexel’s personnel, at Indevus’s expense, all of the Indevus Know-How not available in tangible form. Such transfer shall be made by qualified Indevus personnel who understand, have used and are familiar with such Indevus Know-How.     2.3 Sublicenses. Subject to the terms and conditions of this Agreement, Novexel shall have the right to grant sublicenses of any of the rights granted to Novexel under Section 2.1 to Affiliates or any Third Party, provided, however, that any sublicense shall be consistent with Novexel’s obligations under this Agreement, including under Section 9.4. Novexel shall remain responsible for the performance by the sublicensee of such obligations. Novexel shall notify Indevus of any sublicense granted in the US, Japan and/or Europe.     2.4 Inventory. Effective as of the Effective Date, Indevus hereby assigns and transfers to Novexel all of Indevus’s right, title and interest in the Inventory. The Inventory shall be delivered for the account of Novexel, at Novexel’s expense, in accordance with and as soon as reasonably practicable after receipt by Indevus of written instructions from Novexel, provided, however, that prior to any such delivery, the Inventory shall be held from and after the Effective Date, for the account of Novexel and, from and after the Effective Date, Novexel shall bear all risk of partial or total deterioration or loss of any Inventory through no fault of Indevus, without any recourse against Indevus in relation thereto. To the best of Indevus’ knowledge, the Inventory at all times while held for the account of Indevus has been stored in accordance with cGMPs and all other applicable laws and regulations.   Page 7 --------------------------------------------------------------------------------   2.5 Non-Use/Non-Disclosure. From and after the Effective Date, Indevus agrees and covenants to Novexel that Indevus shall not disclose any Indevus Know-How to any Third Party without the prior written consent of Novexel. From and after the Effective Date (except if the provisions of Section 9.4.3 or 9.4.4 become applicable), Indevus agrees and covenants to Novexel that Indevus shall not use any Indevus Know-How for any purpose whatsoever. To implement the provision of this Section 2.5, Indevus shall make reasonable efforts to notify all of its employees who have used or have access to Indevus Know-How of the provisions of this Section 2.5, and in accordance with Indevus’ standard procedures, collect all documents and things containing Indevus Know-How and maintain them in a locked file.     2.6 Technical Assistance. 2.6.1 Access to Indevus’s Records. Upon Novexel’s request, within the six (6) month period after the Effective Date, Novexel personnel shall be permitted access to Indevus’s facility where the original documents and things within Indevus Know-How are maintained to inspect and copy, if desired, such original documents and things. Any such access shall be during normal business hours and upon at least five (5) Business Days advance notice. 2.6.2 Assistance. Within the one (1) year period after the Effective Date, Indevus shall make available to Novexel at Novexel’s designated facility, Indevus’ qualified personnel familiar with the Indevus Know-How to provide reasonable training and assistance to Novexel with its use of the Indevus Know-How, upon Novexel’s reasonable written request and at such times and for such periods as may be mutually agreed to in good faith, subject to the terms of this Section 2.6.2. Novexel shall bear all out of pocket expenses associated with such assistance. Such assistance shall be limited to [*]. Thereafter, if Novexel requests additional training or assistance, and Indevus agrees to provide such assistance, Novexel shall pay Indevus at the rate of [*] and bear all out of pocket expenses in the manner set forth above. Any such additional assistance shall be limited to [*].     2.7 Regulatory Filings. Within thirty (30) days after the Effective Date, Indevus, at its expense, shall transfer ownership to Novexel of any and all regulatory applications, filings and submissions with respect to Compound and Product so that Novexel can continue clinical development of Compound and Product in its own name, and in accordance with Section 3.2. ARTICLE III DEVELOPMENT AND COMMERCIALIZATION     3.1 Development and Commercialization. Novexel shall control and shall be solely responsible for development, manufacture and commercialization of Compound and   -------------------------------------------------------------------------------- [*] CONFIDENTIAL TREATMENT REQUESTED Page 8 --------------------------------------------------------------------------------   the Products conducted or performed after the Effective Date. Novexel shall comply with all applicable laws and regulations in the development and commercialization of Product. A summary of Novexel’s progress and results of such development and commercialization will be reported to Indevus at least on an annual basis. Such progress reports and the information, data and results contained therein (“Reports”) shall be deemed Proprietary Information of Novexel and shall remain the property of Novexel. Only those employees of Indevus who administer this Agreement shall have access to such Reports.     3.2 Regulatory Matters. Novexel shall own, control and retain primary legal and financial responsibility for the preparation, filing, prosecution and maintenance of all filings and regulatory applications required to obtain and maintain authorization to develop, manufacture, sell and use Product in the Territory. Novexel shall notify Indevus of the dates of First Commercial Sale in each country in the Territory. Novexel shall be solely responsible for filing all reports required to be filed in order to maintain Regulatory Approvals for Product in the Territory, and for all interactions with Regulatory Authorities in the Territory regarding such Regulatory Approvals. Novexel shall have sole responsibility for, bear all costs and expenses associated with and make all decisions with respect to any recall, withdrawal or seizure of the Product. Novexel shall notify Indevus with respect to any material changes or material problems that may arise in connection with its Regulatory Approvals in any country in the Territory.     3.3 Diligence; Development and Commercialization. Novexel shall use commercially reasonable efforts to develop and commercialize Product. As used herein, “commercially reasonable efforts” shall mean efforts and resources normally used by Novexel for a product owned by it or to which it has exclusive rights, which is of similar market potential at a similar stage in its development or product life, taking into account issues of safety and efficacy, product profile, the competitiveness of the marketplace, the proprietary position of the compound or product, the regulatory and reimbursement structure involved, the profitability of the concerned products, and other relevant factors if any.     3.4 Trademark. Novexel shall have the right to select, own and maintain trademarks for Product in the Territory.     3.5 Agreements. Schedule 3.5 sets forth a list of all contracts, agreements and other arrangements in effect as of the Effective Date between Indevus and any Third Parties relating to the research, development or storage of the Compound and Product. Indevus shall use commercially reasonable efforts to assign to Novexel, and Novexel shall assume all of Indevus’s obligations under, the contracts and agreements listed on Schedule 3.5 which Novexel shall specifically request, and Indevus shall terminate any such other contracts, agreements or other arrangements. From and after the Effective Date, Indevus shall have no obligations under any of the contracts or agreements assigned to Novexel except for payment obligations that accrued prior to the Effective Date.   Page 9 --------------------------------------------------------------------------------   3.6 Manufacturing and Supply. During the Term of this Agreement, and subject to the following sentence, Novexel shall have all rights and responsibility relating to chemistry, manufacturing and control for clinical and commercial use of Compound or Product. The Parties hereby acknowledge that pursuant to the 2003 License, Aventis retained the right to manufacture and supply or have manufactured or have supplied, the Nucleus under the terms and conditions set forth therein and that as of the Effective Date, Indevus and Aventis have not entered into the manufacturing and supply agreement referred to therein, but have extended the time period for entering into such an agreement through July 1, 2007, as established by the correspondence between Indevus and Aventis included in Exhibit C, which shall also include any amendments to the 2003 License. ARTICLE IV PAYMENTS AND REPORTS     4.1 License and Transfer Fees. In partial consideration of the rights granted by Indevus hereunder, Novexel shall pay Indevus the following non-refundable and non-creditable license fees by wire transfer of immediately available funds to a bank account or bank accounts designated by Indevus: 4.1.1 one million five hundred thousand dollars (US$1,500,000) payable within five (5) Business days after the Effective Date; and 4.1.2 two hundred fifty thousand dollars (US$250,000) on a quarterly basis, commencing twenty-four (24) months from the Effective Date, provided that such obligation shall expire on the commencement of the first Phase 2 clinical trial (first dosing of first patient) and payment of the milestone referred to in Section 4.2.1. Such payments may be temporarily suspended in the event of, and for the duration of, a Material Adverse Change, provided, that Novexel shall have provided Indevus with written notice and evidence of such Material Adverse Change prior to the date any quarterly payment required by this Section 4.1.2 would otherwise have been payable.     4.2 Milestone Payments. In further consideration of the rights granted by Indevus hereunder, Novexel shall pay Indevus the following non-refundable and non-creditable milestone payments, contingent upon occurrence of the specified event, with each milestone payment to be made no more than once with respect to the achievement of such milestone and no amounts payable for any subsequent or repeated achievement of such milestones, regardless of the number of Products for which such milestone may be achieved (but payable the first time such milestone is achieved): 4.2.1 For the first IV formulation of the first Product:     (a) US $2,000,000 upon commencement (first dosing of the first patient) of first Phase 2 clinical trial;     (b) US $750,000 upon the commencement (first dosing of the first patient) of the first Phase 3 clinical trial;   Page 10 --------------------------------------------------------------------------------   (c) US $1,500,000 upon the FDA’s acceptance for filing of the first NDA;     (d) US $750,000 upon the first acceptance for filing of an NDA with the EMEA;     (e) US $750,000 upon the first acceptance for filing of an NDA in Japan;     (f) US $3,500,000 upon receipt of first written Regulatory Approval in the United States by the FDA;     (g) US $2,000,000 upon receipt of written Regulatory Approval by the EMEA;     (h) US $2,000,000 upon receipt of written Regulatory Approval by the Regulatory Authority in Japan;     (i) US $750,000 upon the achievement of cumulative Net Sales of US $100,000,000;     (j) US $750,000 upon the achievement of cumulative Net Sales of US $200,000,000;     (k) US $750,000 upon the achievement of cumulative Net Sales of US $300,000,000; and     (l) US $750,000 upon the achievement of cumulative Net Sales of US $400,000,000. 4.2.2 For the first oral formulation of the first Product:     (a) US $2,250,000 upon the commencement (first dosing of the first patient) of the first Phase 3 Clinical Trial;     (b) US $2,625,000 upon the FDA’s acceptance for filing of the first NDA;     (c) US $1,875,000 upon the first acceptance for filing of an NDA by the EMEA;     (d) US $1,500,000 upon the first acceptance for filing of an NDA in Japan;     (e) US $5,000,000 upon receipt of first written Regulatory Approval in the United States by the FDA;     (f) US $4,000,000 upon receipt of written Regulatory Approval by the EMEA;     (g) US $2,000,000 upon receipt of written Regulatory Approval by the Regulatory Authority in Japan;   Page 11 --------------------------------------------------------------------------------   (h) US $1,500,000 upon the achievement of cumulative Net Sales of US $200,000,000;     (i) US $1,500,000 upon the achievement of cumulative Net Sales of US $400,000,000;     (j) US $1,500,000 upon the achievement of cumulative Net Sales of US $600,000,000;     (k) US $1,500,000 upon the achievement of cumulative Net Sales of US $800,000,000; and     (l) US $1,500,000 upon the achievement of cumulative Net Sales of US $1,000,000,000. Novexel shall notify Indevus in writing within fifteen (15) Business Days after the achievement of each milestone (thirty (30) days for the milestones set forth in Section 4.2.1 (i), (j), (k) and (l), and Section 4.2 (h), (i), (j), (k) and (l)), and payment shall be made concurrent with such notice by wire transfer of immediately available funds to a bank account or bank accounts designated by Indevus.     4.3 Royalties. 4.3.1 In further consideration of the rights granted by Indevus hereunder, Novexel shall pay to Indevus in each Royalty Year royalties on Net Sales in the Territory at the following rates:   Annual Net Sales in all countries in the Territory:    Royalty Rate   Less than US$500,000,000    5 % Greater than or equal to US$500,000,000 and less than US$1,000,000,000    6 % Greater than or equal to US$ 1,000,000,000    7.5 % 4.3.2 Royalties shall accrue as of the date of First Commercial Sale of Product in the Territory and shall continue and accrue on Net Sales in each country in the Territory until the later of in any such country, (a) the expiration of the last to expire Novexel Patent Asset that exists as of the Effective Date in such country and is listed on Schedule 1.20, or (b) [*] from the date of First Commercial Sale of Product in such country. After the expiration of the applicable royalty term in any country, Novexel shall be relieved of any royalty payment in that country.   -------------------------------------------------------------------------------- [*] CONFIDENTIAL TREATMENT REQUESTED Page 12 -------------------------------------------------------------------------------- 4.3.3 The payment of royalties hereunder shall be subject to the following:     (a) No royalties shall accrue on the disposition of Product by Novexel, Affiliates or sublicensees as samples or as donations (for example, to non-profit institutions or government agencies);     (b) In the event Novexel, a Novexel Affiliate or sublicensee sells Compound or bulk drug product rather than Product in finished packaged form to a Third Party, other than a sublicensee, and is unable to determine Net Sales as defined in this Agreement, then the royalty obligations shall apply to the Compound or bulk drug product sold; and     (c) Novexel shall be responsible for any royalties or other amounts payable to Third Parties in order to make, have made, use, sell or import Compound or Product in any country in the Territory, including pursuant to any license agreement with any Third Party. Notwithstanding the foregoing, except with respect to any payments required to be made in connection with the Nucleus, including the manufacture or rights to manufacture the Nucleus, if Novexel, its Affiliates, sublicensees or their co-promotion partners would be prevented from developing, making, having made, using, selling or importing Product in any country of the Territory on the grounds that by doing so they would infringe a Dominating Patent or other patent rights held by a Third Party in said country, and any of them enter into an agreement with a Third Party pursuant to which an actual royalty on Compound or Product is paid to such Third Party, then Novexel shall be entitled to a credit against future royalties otherwise payable to Indevus hereunder in an amount equal to [*] of the amount of such royalty payments paid to such Third Parties; provided that the credit for any given year will not exceed [*] of the royalties payable to Indevus for such year; and provided further that in such event Indevus has been informed of the Dominating Patent or other patent rights and has had an opportunity to provide input on any related discussion. 4.3.4 In the event that Novexel or any Novexel Affiliate or sublicensee determines to commercialize Product as an Over-the-Counter Product, the Parties shall negotiate in good faith a royalty payable to Indevus on Net Sales of Over-the-Counter Products in countries where the manufacture, use or sale of such Over-the-Counter Product wouldinfringe any of the Novexel Patent Assets in such country. 4.3.5 Upon the expiration of the obligation of Novexel to make the royalty payments required by Section 4.3.1 in any country in the Territory, Novexel shall have a fully paid-up, royalty free, transferable license in such country to use the Indevus Know-How for any purpose whatsoever.     4.4 Reports; Payment of Royalties. Novexel shall furnish to Indevus by not later than twenty (20) days following the end of each Calendar Quarter a written report for such Calendar quarter showing: (i) gross sales and Net Sales of Product or Compound   -------------------------------------------------------------------------------- [*] CONFIDENTIAL TREATMENT REQUESTED Page 13 --------------------------------------------------------------------------------   during such Calendar Quarter (including a detailing of all deductions taken in the calculation of Net Sales and, where available, the number of units sold) in each country’s currency, (ii) the formulas used in the calculation of the royalties owed thereon, (iii) the applicable exchange rate to convert from each country’s currency to United States Dollars, and (iv) the royalties payable to Indevus. Royalty payments shall first be calculated in the currency in which sales took place and then converted to United States Dollars using the arithmetic averages of the closing conversion rates on the first and last Business Day of such Calendar Quarter, as published by The Wall Street Journal, Eastern edition (if available), or any other publication as agreed to by the Parties. The royalties shown to have accrued by each report, if any, shall be due and payable on the date such report is due. Novexel shall keep, and shall require its Affiliates and sublicensees to keep, complete and accurate records in sufficient detail to enable the royalties payable hereunder to be determined.     4.5 In order for Indevus to receive compensation on a quarterly basis, Novexel shall pay to Indevus, on a quarterly basis, royalties based on the cumulative Net Sales for the applicable Royalty Year to date, less royalties previously paid to Indevus on account of Net Sales for the previous Calendar Quarters in such Royalty Year. Any change in the amount that would have been payable from Novexel to Indevus under this Agreement which results from any restatements to a prior period’s financial results due to errors, omissions, or any other misstatements, shall be added to or deducted from, as applicable, the amount of the next payment due under this Agreement.     4.6 Financial Audits. Upon the written request of Indevus and not more than once in each Calendar Year, Novexel shall permit an independent certified public accounting firm selected by Indevus and reasonably acceptable to Novexel to have access during normal business hours, upon ten-days notice to Novexel, to such of the records of Novexel, its Affiliates and sublicensees, as applicable, as may be reasonably necessary to verify the accuracy of the reports under Section 4.4 for any Royalty Year ending not more than [*]prior to the date of such request. The accounting firm shall disclose to Indevus only whether the reports are correct or incorrect and the specific details concerning any discrepancies. 4.6.1 If such accounting firm concludes that additional amounts were owed by Novexel for such Royalty Year, Novexel shall pay the additional amounts within thirty (30) days of the date Indevus delivers to Novexel such accounting firm’s written report so concluding. In the event such accounting firm concludes that amounts were overpaid by Novexel during such period, Indevus shall repay Novexel the amount of such overpayment within thirty (30) days of the date Indevus delivers to Novexel such accounting firm’s written report so concluding. The fees charged by such accounting firm shall be paid by Indevus; provided, however, that if an error in favor of Indevus of more than the greater of (i) [*] or (ii) [*] of the amounts due hereunder for the period being reviewed is discovered, then the fees and expenses of the accounting firm shall be paid by Novexel. 4.6.2 Upon the expiration of thirty-six (36) months following the end of any Royalty Year the calculation of royalties or other payments payable with respect to such   -------------------------------------------------------------------------------- [*] CONFIDENTIAL TREATMENT REQUESTED Page 14 -------------------------------------------------------------------------------- Royalty Year shall be binding and conclusive upon Indevus, and Novexel shall be released from any liability or accountability with respect to royalties for such Royalty Year. 4.6.3 Indevus shall treat all financial information subject to review under this Section 4.6 in accordance with the confidentiality provisions of this Agreement and shall cause its accounting firm to enter into a reasonable and mutually satisfactory confidentiality agreement with Novexel obligating it to retain all such financial information in confidence pursuant to such confidentiality agreement.     4.7 Payments. All payments to Indevus under this Agreement shall be made in United States dollars.     4.8 Late Payment. In case of any late payment due hereunder by Novexel, Novexel shall pay to Indevus interest on the unpaid amount until such payment is paid in full, at the LIBOR Rate (as defined below), [*] but in no event in excess of the maximum rate permitted by applicable law. “LIBOR Rate” means an interest rate per annum equal to the rate of interest per annum at which deposits in United States dollars are offered by the principal office of Citibank, N.A. in London, England, to prime banks in the London interbank market at 11:00 a.m. (London time) on the Business Day immediately preceding the commencement of such interest period.     4.9 Tax Withholding If withholding taxes are payable with respect to any payments to Indevus hereunder, Novexel shall pay such withholding taxes and deduct the amount thereof from the amounts otherwise due to Indevus hereunder. Novexel shall provide Indevus with a certificate evidencing payment of any withholding taxes hereunder, together with a written statement of any such taxes paid with respect to Indevus’s tax liability. Novexel shall provide Indevus with both a written statement of any such withholding taxes and a certificate evidencing payment of such taxes. Novexel will use commercially reasonable efforts consistent with its usual business practices and reasonably cooperate with Indevus to ensure that any withholding taxes imposed are reduced as far as possible under the provisions of the current or any future taxation treaties or agreements between foreign countries. In the event that Novexel is legally required to file such forms for the benefit of Indevus, Indevus shall provide fully completed forms for verification and subsequent filing by Novexel.     4.10 Restrictions on Payment. If by law, regulations or fiscal policy of a particular country, remittance of royalties in United States Dollars is restricted or forbidden, notice thereof will be promptly given to Indevus, and payment of the royalties shall be made by the deposit thereof in local currency to the credit of Indevus in a recognized banking institution designated by Indevus. When in any country the law or regulations prohibit both the transmittal and deposit of royalties on sales in such a country, royalty payments shall be suspended for as long as such prohibition is in effect and as soon as such prohibition ceases to be in effect, all royalties that Novexel would have been under obligation to transmit or deposit but for the prohibition, shall forthwith be deposited or transmitted promptly to the extent allowable.   -------------------------------------------------------------------------------- [*] CONFIDENTIAL TREATMENT REQUESTED Page 15 -------------------------------------------------------------------------------- ARTICLE V CONFIDENTIALITY AND PUBLICITY     5.1 Non-Disclosure and Non-Use Obligations. All Proprietary Information disclosed by one Party to the other Party hereunder shall be maintained in confidence and shall not be disclosed to any Third Party or used for any purpose except as expressly permitted herein without the prior written consent of the Party that disclosed the Proprietary Information to the other Party during the Term of this Agreement and for a period of five years thereafter, except that with respect to the Indevus Know-How, Indevus’s obligation hereunder shall continue throughout the Term of this Agreement. The foregoing non-disclosure and non-use obligations shall not apply to the extent that such Proprietary Information: 5.1.1 is known by the receiving Party at the time of its receipt, and not through a prior disclosure by the disclosing Party, as documented by business records; 5.1.2 is or becomes properly in the public domain or knowledge, but not by any action of the receiving Party; 5.1.3 is subsequently disclosed to a receiving Party by a Third Party who may lawfully do so and is not under an obligation of confidentiality to the disclosing Party; or 5.1.4 is developed by the receiving Party independently of Proprietary Information received from the other Party, as documented by research and development records.     5.2 Permitted Disclosure of Proprietary Information. Notwithstanding Section 5.1, 5.2.1 Novexel may disclose Indevus Proprietary Information:     (a) to governmental or other regulatory agencies in order to obtain patents, or to gain approval to conduct clinical trials or to market Product, but such disclosure may be only to the extent reasonably necessary to obtain such patents or authorizations;     (b) to its respective agents, consultants, Affiliates, sublicensees and/or other Third Parties for the development and/or marketing of Product (or for such parties to determine their interests in performing such activities) on the condition that such Third Parties agree to be bound by the confidentiality obligations consistent with this Agreement; or     (c) if required to be disclosed by law or court order, provided that notice is promptly delivered to the non-disclosing Party in order to provide an opportunity to challenge or limit the disclosure obligations; and 5.2.2 Indevus may disclose Novexel Proprietary Information if required to be disclosed by law or court order, provided that notice is promptly delivered to the non-disclosing Party in order to provide an opportunity to challenge or limit the disclosure obligations.   Page 16 --------------------------------------------------------------------------------   5.3 Return of Proprietary Information. Upon termination of this Agreement, the Party to which Proprietary Information has been disclosed pursuant to this Agreement shall, upon request, promptly return within thirty (30) days all such information, including any copies thereof, and cease its use or, at the request of the Party transmitting such Proprietary Information, shall promptly destroy the same and certify such destruction to the transmitting party; except for a single copy thereof which may be retained for the sole purpose of determining the scope of the obligations incurred under this Agreement. Upon termination of this Agreement, Novexel shall return to Indevus or destroy, as provided in Section 9.4, the Indevus Know-How, including any unused Inventory.     5.4 Public Disclosure. Notwithstanding the provisions of this Article V, it is understood that the Parties may make disclosure of this Agreement and the terms hereof in any filings required by the SEC, other governmental authority or securities exchange, may file this Agreement as an exhibit to any filing with the SEC, other governmental authority or securities exchange, and may distribute any such filing in the ordinary course of its business. Except as set forth in this Agreement or as required by law, neither Party shall make any press release or other public announcement or other disclosure to a Third Party concerning the existence of or terms of this Agreement without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed. Each Party agrees to provide to the other Party a copy of any public announcement as soon as reasonably practicable under the circumstances prior to its scheduled release. Each party shall have the right to expeditiously (but in any event within one Business Day of receipt) review any press release or announcement regarding this Agreement or the subject matter of this Agreement; provided, however, that such right of review shall only apply for the first time that specific information is to be disclosed, and shall not apply to the subsequent disclosure of substantially similar information that has previously been disclosed unless there have been material changes in the disclosure since the date of the previous disclosure. ARTICLE VI REPRESENTATIONS AND WARRANTIES     6.1 General Representations. Each Party hereby represents and warrants to the other Party as of the Effective Date as follows: 6.1.1 Such Party is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated; 6.1.2 Such Party has the corporate power and authority and the legal right to enter into this Agreement, the Termination and the Side Agreement and to perform its obligations hereunder and thereunder and the execution, delivery and performance by such party of this Agreement, the Termination and the Side Agreement has been duly authorized by all necessary corporate action;   Page 17 -------------------------------------------------------------------------------- 6.1.3 Each of this Agreement, the Termination and the Side Agreement has been duly executed and delivered on behalf of such party, and each constitutes a legal, valid, binding obligation, enforceable against such Party in accordance with its terms except as enforceability may be limited by (a) any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditor’s rights generally, or (b) general principles of equity, whether considered in a proceeding in equity or at law; 6.1.4 All necessary consents, approvals and authorizations of all governmental authorities and other persons required to be obtained by such Party in connection with this Agreement, the Termination and the Side Agreement have been obtained; and 6.1.5 The execution and delivery of this Agreement, the Termination and the Side Agreement and the performance of such Party’s obligations hereunder and thereunder does not conflict with or violate any requirement of applicable laws or regulations or any judgment, injunction, decree, determination or award presently in effect having applicability to it.     6.2 Indevus Representations and Warranties. Indevus represents and warrants to Novexel that as of the Effective Date: 6.2.1 Indevus has not received any written notice alleging that the practice of the subject matter of the Indevus Know-How or the making, using or selling of Compound or Product in the Territory would infringe any Third Party patents and Indevus is not aware of any facts or circumstances that would support a claim of infringement; 6.2.2 there are no claims, judgments or settlements against or owed by Indevus relating to the Indevus Know-How; 6.2.3 Indevus has not previously assigned, transferred, conveyed or otherwise encumbered any right, title and interest in the Indevus Know-How, or entered into any agreement with any Third Party which is in conflict with the rights granted to Novexel pursuant to this Agreement; 6.2.4 No Third Party has claimed or threatened to claim ownership, control or the right to use Indevus Know-How and Indevus is not aware of any facts or circumstances that would support such a claim; 6.2.5 Indevus has not filed, and shall not file during the Term of this Agreement, any application for patent, copyright, trademark or other form of intellectual property right disclosing or claiming any Indevus Know-How; 6.2.6 Indevus does not own, control or otherwise possess any information or technology related to Compound or Product that is not included in Indevus Know-How; and   Page 18 -------------------------------------------------------------------------------- 6.2.7 All of the information concerning Inventory set forth in Schedule 1.14, including the amount of each material listed, is true and accurate in all material respects; Indevus does not own or control any additional such materials; from and after the time such Inventory has been held for the account of Indevus, to the best of Indevus’ knowledge, the Inventory has been held and stored in accordance with cGMPs and all applicable laws and regulations.     6.3 Novexel Representations and Warranties. Novexel represents and warrants to Indevus that: 6.3.1 in accordance with the Assignment Agreement, effective as of December 1, 2004 , the 2003 License, and all of Aventis’ rights thereunder, other than with respect to the Nucleus, have been assigned by Aventis to Novexel, and Novexel has assumed all of Aventis’ obligations thereunder; the Assignment Agreement is in full force and effect and no party thereto is in breach or default thereof; and 6.3.2 as of the Effective Date, Novexel owns all right, title and interest in and to the Novexel Patent Assets, all of which are listed on Schedule 1.20, and has not assigned, transferred, conveyed or otherwise encumbered its right, title or interest in the Novexel Patent Assets;     6.4 THE LIMITED WARRANTIES SET FORTH IN THIS SECTION 6 ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY, WARRANTY OF NON-INFRINGEMENT AND ANY WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. EXCEPT FOR THE WARRANTIES EXPRESSED IN THIS SECTION 6, NEITHER PARTY MAKES ANY OTHER WARRANTY, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO THE COMPOUND OR THE PRODUCT. ARTICLE VII INDEMNIFICATION AND INSURANCE     7.1 Indemnification by Indevus. Indevus will indemnify, defend and hold harmless Novexel, its Affiliates, directors, officers, employees, agents, successors, and assigns (each, a “Novexel Indemnitee”) from and against any and all Losses arising out of, attributable to or resulting from any claim, suit, action or proceedings (collectively, “Claims”), that are brought by a Third Party against a Novexel Indemnitee that are attributable to a breach by Indevus of any of its representations, warranties or covenants under this Agreement; provided, however, that Indevus shall not be obligated under this Section 7.1 to the extent any Losses (A) arose out of the negligence or wrongdoing on the part of Novexel; (B) arose out of any breach by Novexel of any of its representations, warranties and/or covenants hereunder; or (C) are Losses subject to indemnification by Novexel under Section 7.2.     7.2 Indemnification by Novexel. Novexel shall indemnify, defend and hold harmless Indevus and its Affiliates, directors, officers, employees, agents, successors and   Page 19 --------------------------------------------------------------------------------   assigns (each a “Indevus Indemnitee”) from and against any and all Losses arising out of, attributable to or resulting from any Claims that are brought by a Third Party against an Indevus Indemnitee that are attributable to (i) the development, manufacture, use, marketing, promotion or sale of Compound or Product; (ii) Novexel’s negligence, recklessness or willful misconduct in exercising or performing any of its rights or obligations under this Agreement; or (iii) a breach by Novexel of any of its representations, warranties or covenants under this Agreement; provided, however, that Novexel shall not be obligated under this Section 7.2 to the extent any Losses (A) arose out of any breach by Indevus of any of its representations, warranties and/or covenants hereunder; or (B) are Losses subject to indemnification by Indevus under Section 7.1.     7.3 Procedure. In the event that any Indemnitee intends to claim indemnification under this Article VII it shall promptly notify the other Party (the “Indemnitor”) in writing of such Claim. Failure to provide prompt notice shall not relieve any Party of the duty to defend or indemnify unless such failure materially prejudices the defense of any matter. The Indemnitor shall have the sole right to control the defense and settlement thereof provided, however, that an Indemnitor shall not, without the written consent of the other Party, as part of any settlement or compromise (i) admit to liability on the part of the other Party; (ii) agree to an injunction against the other Party; or (iii) settle any matter in a manner that separately apportions fault to the other Party. The Parties shall have a reasonable opportunity to participate in decision-making with respect to the strategy of such defense, and shall reasonably cooperate with each other in connection with the implementation thereof. An Indemnitee shall not, except at its own cost, voluntarily make any payment or incur any expense with respect to any Claim without the prior written consent of the Indemnitor, which the Indemnitor shall not be required to give.     7.4 Insurance. Novexel shall maintain, during the Term of this Agreement and for a period of three (3) years after any expiration of termination of this Agreement, a Commercial General Liability Insurance policy or policies (including coverage for Product Liability, Contractual Liability, Bodily Injury, Property Damage and Personal Injury), with minimum limits per occurrence and in the aggregate customary for the stage of development and commercial activity of the aminocandin program, but in any event shall not be less than [*] total per year. Such insurance shall insure against liability arising out of the manufacture, use, sale, or marketing of Product in the Territory as appropriate for the stage and extent of development and commercial activity of the aminocandin program. During the Term, Novexel shall not permit such insurance to be reduced, expired or canceled without reasonable prior written notice to Indevus. Upon request Novexel shall provide Certificates of Insurance to Indevus evidencing the coverage specified herein.   -------------------------------------------------------------------------------- [*] CONFIDENTIAL TREATMENT REQUESTED Page 20 -------------------------------------------------------------------------------- ARTICLE VIII PATENT MATTERS     8.1 Novexel shall be responsible in its sole discretion for all filing, prosecution, maintenance, enforcement and defense (including interference and opposition proceedings) of the Novexel Patent Assets. Notwithstanding the foregoing, Novexel shall prosecute, maintain, enforce and defend the Novexel Patent Assets in the US, Europe and Japan covering Compound. ARTICLE IX TERM AND TERMINATION     9.1 Term and Expiration. This Agreement shall be effective as of the Effective Date and unless terminated earlier under Section 9.2, the term of this Agreement shall extend for a period (the “Term”) which shall expire and terminate, on a country-by country basis, on the expiration of all royalty obligations with respect to such country under Section 4.3.     9.2 Termination. 9.2.1 By Notice. Novexel shall have the right to terminate this Agreement (a) at any time upon [*] advance written notice to Indevus upon the occurrence of a Material Adverse Change, or (b) after the earlier of (i) the commencement of the first Phase 2 clinical trial, or (ii) [*] after the Effective Date, for any or no reason, upon [*] advance written notice to Indevus. In the event of any termination under this Section 9.2.1, the provisions of Section 9.4.3 shall be applicable, provided, that any amounts payable pursuant to Section 4.1.2 that become due during the period commencing from the date of the termination notice until the effective date of termination shall not be payable. 9.2.2 Termination of Agreement for Cause. Either Party may terminate this Agreement by notice to the other Party at any time during the Term as follows:     (a) if the other Party is in breach of any material obligation hereunder by causes and reasons within its control, or has breached, in any material respect, any representations or warranties set forth herein, and has not cured such breach within (i) [*] Business Days in case the breach is a non payment of any amount due under this Agreement, and (ii) within [*] for other cases of breach, after notice requesting cure of the breach, provided, however, that if a breach other than a non payment is not capable of being cured within [*] of such written notice, the Agreement may not be terminated sooner than [*] of such written notice so long as the breaching Party commences and is taking commercially reasonable actions to cure such breach as promptly as practicable; or   -------------------------------------------------------------------------------- [*] CONFIDENTIAL TREATMENT REQUESTED Page 21 --------------------------------------------------------------------------------   (b) upon the filing or institution of bankruptcy, reorganization, liquidation or receivership proceedings, or upon an assignment of a substantial portion of the assets for the benefit of creditors by the other Party; provided, however, in the case of any involuntary bankruptcy, reorganization, liquidation, receivership or assignment proceeding such right to terminate shall only become effective if the Party consents to the involuntary proceeding or such proceeding is not dismissed within [*] after the filing thereof.     9.3 Rights not Affected. All rights and licenses granted pursuant to this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the Bankruptcy Code licenses of rights to “intellectual property” as defined under Section 101(35A) of the Bankruptcy Code. The Parties agree that Novexel and Indevus shall retain and may fully exercise all of their respective rights, remedies and elections under the Bankruptcy Code. The Parties further agree that, in the event of the commencement of a bankruptcy or reorganization case by or against a Party under the Bankruptcy Code, the other Party shall be entitled to all applicable rights under Section 365 (including 365(n)) of the Bankruptcy Code. Upon rejection of this Agreement by a Party or a trustee in bankruptcy for such Party, pursuant to Section 365(n), the other Party may elect (i) to treat this Agreement as terminated by such rejection or (ii) to retain its rights (including any right to enforce any exclusivity provision of this Agreement) to intellectual property (including any embodiment of such intellectual property) under this Agreement and under any agreement supplementary to this Agreement for the duration of this Agreement and any period for which this Agreement could have been extended by such other Party, subject, however, to the continued payment of all amounts owing under this Agreement, all of which amounts shall be deemed to be royalties for purposes of Section 365(n) of the Bankruptcy Code. Upon written request to the trustee in bankruptcy or bankrupt Party, the trustee or Party, as applicable, shall (i) provide to the other Party any intellectual property (including such embodiment) held by the trustee or the bankrupt Party and shall provide to the other Party a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property and (ii) not interfere with the rights of the other Party to such intellectual property as provided in this Agreement or any agreement supplementary to this Agreement, including any right to obtain such intellectual property (or such embodiment or duplicates thereof) from a Third Party.     9.4 Effect of Expiration or Termination. Upon termination of this Agreement, all rights and licenses granted to Novexel hereunder shall terminate upon the effective date of such termination and the Parties shall arrange for an orderly return to Indevus (or, at Indevus’ request, destruction by Novexel) of any Indevus Know-How in Novexel’s possession including any remaining Inventory. Expiration or termination of this Agreement shall not relieve the Parties of any obligation accruing prior to such expiration or termination. 9.4.1Outstanding Payment. Payments of amounts owing to Indevus under this Agreement as of its expiration or termination shall be due and payable within the later of (i) to the extent such amounts can be calculated and a fixed sum determined at the time of   -------------------------------------------------------------------------------- [*] CONFIDENTIAL TREATMENT REQUESTED Page 22 -------------------------------------------------------------------------------- expiration or termination of this Agreement, thirty (30) after the date of such expiration or termination, or (ii) ten (10) days after the date in which such amounts can be calculated and a fixed sum determined. 9.4.2 Sale of Remaining Product. Upon termination of this Agreement (but not its expiration), Novexel shall notify Indevus of the amount of Product Novexel, its Affiliates and their sublicensees then have on hand or have committed to purchase or sell. For a period ending upon the earlier of: (i) Novexel, its Affiliates and their sublicensees sale of all Product in their possession on the date of termination of this Agreement, or (ii) the end of the six (6) month period following such termination (the “Trailing Period”), Novexel, its Affiliates and their sublicensees shall be permitted to sell such Product and Indevus hereby grants Novexel a non-exclusive license reasonably necessary to sell such Product, subject to the payment of royalties at the same rates and on the same terms and conditions as the royalties set forth in Section 4.3, on any Net Sales of such Product during the Trailing Period. 9.4.3 Termination by Novexel by Notice. If Novexel terminates this Agreement pursuant to Section 9.2.1, the following shall be applicable:     (a) Indevus shall have a [*] period to determine whether it wishes to obtain a license under the Novexel Patent Assets and Novexel Know-How. Upon Indevus’ written request and expense, Novexel shall reasonably cooperate to facilitate Indevus decision-making, including providing Indevus with reasonable access to the Novexel Patent Assets and Novexel Know-How. If Indevus decides to license the Novexel Patent Assets and the Novexel Know-How, it shall so notify Novexel in writing and the Parties shall then immediately execute a license (the “Automatic License”) identical, except for the following changes, to the 2003 License: (i) Aventis shall be replaced by Novexel as the licensor and in all other aspects (except with respect to those provisions specifically not assigned to Novexel by Aventis, in particular the commitment to supply Nucleus or Nucleus intellectual property, which is addressed in subsection (iv) below; (ii) any milestone events set forth in the 2003 License already achieved as of the effective date of the termination of this Agreement shall be deleted; (iii) the License Fee in Section 5.1 of the 2003 Agreement shall be replaced by a payment equal to the amount of all patent costs on the Novexel Patent Assets paid by Novexel during the period commencing on the Effective Date and expiring on the effective date of the termination of this Agreement, as evidenced by appropriate back-up documentation, up to a maximum [*] per year during such period; (iv) Novexel’s rights under the Side Agreement shall be assigned to Indevus on and subject to the same terms and conditions as set forth in the Side Agreement or any supply agreement between Aventis and Novexel with respect to the Nucleus then in effect; and (v) in the event Indevus advises that it desires to include in the Automatic License any Novexel Patent Asset that was acquired by Novexel from a Third Party after the Effective Date (other than in connection with a royalty-bearing license) (a “New Novexel Patent   -------------------------------------------------------------------------------- [*] CONFIDENTIAL TREATMENT REQUESTED Page 23 --------------------------------------------------------------------------------   Asset”), the Parties shall negotiate in good faith any additional consideration to be payable by Indevus to Novexel for the rights to such New Novexel Patent Asset. If Indevus advises Novexel in writing that it does not wish to obtain the Automatic License under the Novexel Patent Assets and Novexel Know-How, then Indevus shall have no further rights with respect to the Novexel Patent Assets and Novexel Know-How, and Novexel shall have no further obligation to Indevus with respect to the Novexel Patent Assets and Novexel Know-How; and     (b) In the event Indevus elects to license the Novexel Patent Assets and Novexel Know-How in accordance with Section 9.4.3(a), (i) Novexel will, if requested by Indevus, cooperate with Indevus or Indevus’ designee to transfer to Indevus or Indevus’ designee the supervision of any ongoing clinical trial in such a way that no delay incurs in such clinical trial, if the termination of such trial would materially adversely affect the development of Product and Indevus has advised Novexel that it intends to continue development of Product; (ii) Novexel will promptly upon having sent such notice transfer to Indevus or Indevus’ designee all data, files, INDs, Regulatory Approvals, if any, and information, data, Novexel Know-how, etc in the possession of Novexel and related to Compound or Product; (iii) Indevus will be entitled to start negotiations with Third Parties in relation to Compound or Product immediately upon receipt of such notice; and (iv) Novexel will provide Indevus with reasonable assistance that Indevus may request in responding to due diligence requests by Third Parties that Indevus is negotiating with as potential licensees for Compound or Product, provided that Novexel shall not be required to disclose to such Third Parties Novexel Proprietary Information that does not relate to Compound or Product. 9.4.4 Termination by Indevus for Cause. If Indevus terminates this Agreement pursuant to Section 9.2.2(a), the provisions of Section 9.4.3 shall be applicable except that in the event that Indevus advises that it desires to include in the Automatic License any Novexel Know-How that was developed by Novexel after the Effective Date (other than Novexel Know-How included in a New Novexel Patent Asset), the Parties shall negotiate in good faith any additional consideration to be payable by Indevus to Novexel for the rights to such new Novexel Know-How, provided, however, that the nature of the breach by Novexel shall be a principal component in determining the amount of any such additional consideration. 9.4.5 Termination by Novexel for Cause. If Novexel terminates this Agreement pursuant to Section 9.2.2, effective as of the effective date of such termination, if requested by Novexel, the Parties shall immediately enter into a new, mutually agreeable agreement granting Novexel the same rights and obligations that were granted by Indevus to and assumed by Novexel under this Agreement, and providing for compensation to Indevus which will be negotiated in good faith between the Parties.   Page 24 -------------------------------------------------------------------------------- 9.4.6 Survival. In addition to any other provisions of this Agreement which by their terms continue after the expiration of this Agreement, the provisions of Article VII shall survive the expiration or termination of this Agreement and shall continue in effect for five (5) years from the date of expiration or termination (subject to the changes thereto as set forth in the Automatic License). In addition, any other provision required to interpret and enforce the Parties’ rights and obligations under this Agreement shall also survive, but only to the extent required for the full observation and performance of this Agreement. 9.4.7 Non-Exclusive Right. Except as expressly set forth herein, the rights to terminate as set forth herein shall be in addition to all other rights and remedies available under this Agreement, at law, or in equity, or otherwise. ARTICLE X MISCELLANEOUS     10.1 Force Majeure. Neither Party shall be held liable or responsible to the other Party nor be deemed to have defaulted under or breached the Agreement for failure or delay in fulfilling or performing any term of the Agreement during the period of time when such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party including, but not limited to, fire, flood, embargo, war, acts of war (whether war be declared or not), terrorism, insurrection, riot, civil commotion, strike, lockout or other labor disturbance, factory shutdowns, failure of public utilities or common carriers, act of God or act, omission or delay in acting by any governmental authority or the other Party. The affected Party shall notify the other Party of such force majeure circumstances as soon as reasonably practicable.     10.2 Assignment. The Agreement may not be assigned or otherwise transferred without the prior written consent of the other Party; provided, however, that either Party may assign this Agreement to an Affiliate or in connection with the transfer or sale of its business or all or substantially all of its assets to which this Agreement relates or in the event of a merger, consolidation, change in control or similar corporate transaction. Any permitted assignee shall assume in writing all obligations of its assignor under this Agreement.     10.3 Severability. In the event that any of the provisions contained in this Agreement are held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, unless the invalid provisions are of such essential importance for this Agreement that it is to be reasonably assumed that the Parties would not have entered into this Agreement without the invalid provisions. In such event, the Parties shall substitute such invalid provisions by valid ones, which in their economic effect come so close to the invalid provisions that it can be reasonably assumed that the Parties would have entered into this Agreement also with those substituted provisions.   Page 25 --------------------------------------------------------------------------------   10.4 Notices. All notices or other communications which are required or permitted hereunder shall be in writing and sufficient if delivered personally, sent by facsimile (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by nationally-recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows: if to Novexel to: Novexel SA Parc Biocitech 102, route de Noisy F-93230 Romainville France Attention: Chief Executive Officer Fax No: +33 1 48 46 39 26 if to Indevus to: Indevus Pharmaceuticals, Inc. 33 Hayden Avenue Lexington, MA 02421 Attention: Chief Executive Officer Fax No.: 781-862-3859 or to such other address as the Party to whom notice is to be given may have furnished to the other Parties in writing in accordance herewith. Any such communication shall be deemed to have been given when delivered if personally delivered or sent by facsimile on a Business Day, upon confirmed delivery by nationally-recognized overnight courier if so delivered and on the third Business Day following the date of mailing if sent by registered or certified mail.     10.5 Applicable Law. The Agreement shall be governed by and construed in accordance with the laws of the United States of America and State of New York without reference to any rules of conflict of laws, except matters of intellectual property law, which shall be determined in accordance with the national intellectual property laws relevant to the intellectual property in question.     10.6 Dispute Resolution. 10.6.1 Except if a Party reasonably determines that it must seek a preliminary injunction, temporary restraining order or other provisional relief, the Parties shall resolve all claims, disputes, or controversies arising under, out of, or in connection with this Agreement (a “Dispute”) in accordance with the following procedure. The Parties agree to attempt initially to solve Disputes by conducting good faith negotiations. Any Disputes which cannot be resolved by good faith negotiation within [*] Business Days, shall be referred, by written notice from either Party to the other, to the Chief Executive Officer of each Party. Such Chief Executive Officers shall negotiate in good faith to achieve a resolution of the Dispute referred to them within [*] Business Days after such notice is received by the Party to whom the notice was sent. If the Chief Executive   -------------------------------------------------------------------------------- [*] CONFIDENTIAL TREATMENT REQUESTED Page 26 -------------------------------------------------------------------------------- Officers are unable to settle the Dispute between them within [*] Business Days, they shall so report to the Parties in writing. The Dispute shall then be referred to mediation as set forth in the following subsection 10.6.2. 10.6.2 Upon the Parties receiving the Chief Executive Officers’ report that the Dispute referred to them pursuant to subsection 10.6.1 has not been resolved, the Dispute shall be referred to mediation by written notice from either Party to the other. The mediation shall be conducted pursuant to the LCIA Mediation Procedure. In the event Indevus is the claimant, the mediation shall be held in London, England; in the event Novexel is the claimant, the mediation shall be held in Geneva, Switzerland. If the Parties have not reached a settlement within twenty (20) Business Days of the date of the notice of mediation, the Dispute shall be referred to arbitration pursuant to subsection 10.6.3. 10.6.3 If after the procedures set forth in subsections 10.6.1 and 10.6.2, the Dispute has not been resolved, a Party shall decide to institute arbitration proceedings, it shall give written notice to that effect to the other Party. The Parties shall refrain from instituting the arbitration proceedings for a period of sixty (60) days following such notice. During such period, the Parties shall continue to make good faith efforts to amicably resolve the dispute without arbitration. If the Parties have not reached a settlement during that period the arbitration proceedings shall go forward and be governed by the LCIA Arbitration Rules then in force. Each such arbitration shall be conducted by a panel of three arbitrators with appropriate experience in the biotechnology or pharmaceutical industry: one arbitrator shall be appointed by each of Novexel and Indevus and the third arbitrator, who shall be the Chairman of the tribunal, shall be appointed by the two Party-appointed arbitrators. In the event Indevus is the claimant, the arbitration shall be held in London, England; in the event Novexel is the claimant, the arbitration shall be held in Geneva, Switzerland. The arbitrators shall have the authority to grant specific performance. Judgment upon the award so rendered may be entered in any court having jurisdiction or application may be made to such court for judicial acceptance of any award and an order of enforcement, as the case may be. In no event shall a demand for arbitration be made after the date when institution of a legal or equitable proceeding based on such claim, dispute or other matter in question would be barred by the applicable statute of limitations. Each Party shall bear its own costs and expenses incurred in connection with any arbitration proceeding and the Parties shall equally share the cost of the mediation and arbitration levied by the LCIA. Any mediation or arbitration proceeding entered into pursuant to this Section 10.6 shall be conducted in the English language.     10.7 Entire Agreement. This Agreement, together with the Schedules and Exhibits hereto, contains the entire understanding of the Parties with respect to the subject matter hereof. All express or implied agreements and understandings, either oral or written, heretofore made are expressly merged in and made a part of this Agreement. This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by all Parties hereto.   -------------------------------------------------------------------------------- [*] CONFIDENTIAL TREATMENT REQUESTED Page 27 --------------------------------------------------------------------------------   10.8 Independent Contractors. It is expressly agreed that the Parties shall be independent contractors and that the relationship between the Parties shall not constitute a partnership, joint venture or agency. Neither Party shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other Party, without the prior consent of such other Party.     10.9 Waiver. The waiver by a Party hereto of any right hereunder or the failure to perform or of a breach by another Party shall not be deemed a waiver of any other right hereunder or of any other breach or failure by said other Party whether of a similar nature or otherwise.     10.10 Headings. The captions to the several Articles and Sections hereof are not a part of the Agreement, but are merely guides or labels to assist in locating and reading the several Articles and Sections hereof.     10.11 Counterparts. The Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.     10.12 Use of Names. Except as otherwise provided in this Agreement, neither Party shall use the name of the other Party in relation to this transaction in any public announcement, press release or other public document without the consent of such other Party, which consent shall not be unreasonably withheld or delayed; provided, however, that either Party may use the name of the other Party in any document required to comply with applicable laws, rules or regulations.     10.13 Interpretation. 10.13.1 Whenever any provision of this Agreement uses the term “including” (or “includes”), such term shall be deemed to mean “including without limitation” and “including but not limited to” (or “includes without limitations” and “includes but is not limited to”) regardless of whether the words “without limitation” or “but not limited to” actually follow the term “including” (or “includes”); 10.13.2 “Herein”, “hereby”, “hereunder”, “hereof” and other equivalent words shall refer to this Agreement in its entirety and not solely to the particular portion of this Agreement in which any such word is used; 10.13.3 All definitions set forth herein shall be deemed applicable whether the words defined are used herein in the singular or the plural; 10.13.4 Wherever used herein, any pronoun or pronouns shall be deemed to include both the singular and plural and to cover all genders; 10.13.5 The recitals set forth at the start of this Agreement, along with the Exhibits and Schedules to this Agreement, and the terms and conditions incorporated in such recitals, Exhibits and Schedules shall be deemed integral parts of this Agreement and all   Page 28 -------------------------------------------------------------------------------- references in this Agreement to this Agreement shall encompass such recitals, Exhibits and Schedules and the terms and conditions incorporated in such recitals, Exhibits and Schedules, provided, that in the event of any conflict between the terms and conditions of this Agreement and any terms and conditions set forth in the Exhibits and Schedules, the terms of this Agreement shall control; 10.13.6 In the event of any conflict between the terms and conditions of this Agreement and any terms and conditions that may be set forth on any order, invoice, verbal agreement or otherwise, the terms and conditions of this Agreement shall govern; 10.13.7 The Agreement shall be construed as if both Parties drafted it jointly, and shall not be construed against either Party as principal drafter; 10.13.8 Unless otherwise provided, all references to Sections, Schedules and Exhibits in this Agreement are to Sections, Schedules and Exhibits of and to this Agreement; 10.13.9 All references to days, months, quarters or years are references to calendar days, calendar months, calendar quarters or calendar years unless otherwise expressly provided; 10.13.10 Any reference to any federal, national, state, local or foreign statute or law shall be deemed to also refer to all rules and regulations promulgated thereunder, unless the context requires otherwise; 10.13.11 Any requirements of notice or notification by one Party to another shall be construed to mean written notice in accordance with Section 10.4; and 10.13.12 Wherever used, the word “shall” and the word “will” are each understood to be imperative or mandatory in nature and are interchangeable with one another. [remainder of page intentionally left blank]   Page 29 -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first set forth above.   INDEVUS PHARMACEUTICALS, INC. By:   /s/ Glenn L. Cooper, M.D. Name:   Glenn L. Cooper, M.D. Title:   Chairman and Chief Executive Officer NOVEXEL SA By:   /s/ Iain Buchanan Name:   Iain Buchanan itle:   Chief Executive Officer   Page 30 -------------------------------------------------------------------------------- SCHEDULE 1.4 BANK HOLIDAYS-FRANCE   Wednesday    January 1 (*)    New Year Day Monday    April 9 (**)    Easter Monday Thursday    May 1 (*)    Labour Day Thursday    May 8 (*)    End of World War II Thursday    May 17 (**)    Ascension Monday    May 28 (**)    Whit Monday Monday    July 14 (*)    National Day Friday    August 15 (**)    Assumption Saturday    November 1 (*)    All Saints’ Day Tuesday    November 11 (*)    End of World War I Thursday    December 25 (*)    Christmas -------------------------------------------------------------------------------- (*) Every year on same date (**) Dates are for 2007 , but for following years, since they are catholic religious feasts , they are worldwide identical dates. -------------------------------------------------------------------------------- SCHEDULE 1.8 COMPOUND [*]   -------------------------------------------------------------------------------- [*] CONFIDENTIAL TREATMENT REQUESTED -------------------------------------------------------------------------------- SCHEDULE 1.13 INDEVUS KNOW-HOW     1. Complete reports of all clinical trials undertaken including all adverse events identified by clinical investigators     a. Phase-I single dose study     b. Phase I multi-dose study (terminated due to injection site irritation issues)     c. Phase I multi-dose study with modified administration (terminated due to injection site irritation issues)     2. Complete reports and data from all formulation work including animal studies     3. All records (including batch records and GMP certifications) relating to synthesis, storage and transport of Inventory listed in Schedule 1.14     4. All correspondence with regulatory agencies relating to Compound     5. All correspondence with ethics committees and clinical investigators relating to Compound     6. Copies of all publications relating to Compound -------------------------------------------------------------------------------- SCHEDULE 1.14 INVENTORY [*]   -------------------------------------------------------------------------------- [*] CONFIDENTIAL TREATMENT REQUESTED -------------------------------------------------------------------------------- SCHEDULE 1.20 NOVEXEL PATENT ASSETS [*]   -------------------------------------------------------------------------------- [*] CONFIDENTIAL TREATMENT REQUESTED -------------------------------------------------------------------------------- SCHEDULE 3.5 AGREEMENTS   Facility and Address    Task/Agreement Type    Dates [*]   -------------------------------------------------------------------------------- [*] CONFIDENTIAL TREATMENT REQUESTED   - 2 - -------------------------------------------------------------------------------- EXHIBIT A SIDE AGREEMENT [SEE ATTACHED]   - 3 - -------------------------------------------------------------------------------- NOVEXEL novel therapies for infectious disease AVENTIS PHARMA SA 20 avenue Raymond Aron 92165 Antony France TO WHOM IT MAY CONCERN This letter is to inform you that Novexel is finalizing an agreement with Indevus whereby the rights to aminocandins licensed to Indevus by Aventis Pharma SA (“Aventis”) under the 18 April 2003 License Agreement will be transferred to Novexel. As you are aware, the rights and obligations of Aventis under this License Agreement were transferred to Novexel as of December 1, 2004. However, the part of the License Agreement that dealt with supply of Nucleus remained with Aventis. Novexel requests that the rights and obligations of Indevus under the License Agreement in Sections 3.1.2 and 3.8 now be assigned to Novexel. In the event the aforesaid agreement between Indevus and Novexel is terminated and Indevus reacquires the rights consistent with the License Agreement, these rights and obligations under Sections 3.1.2 and 3.8 shall be reassigned back to Indevus, upon joint notification by Novexel and Indevus to Aventis, thereto. The text of these Sections is reproduced below.     3.1.2 As long as AVENTIS manufactures and supplies or, in accordance with the provisions of Section 3.8 (a) hereof, AVENTIS’ permitted assignee manufactures and supplies, INDEVUS with Nucleus, in each case in accordance with the supply agreement contemplated by Section 3.8 (a) hereof, AVENTIS shall not be required to disclose or transfer to INDEVUS that portion of the AVENTIS Intellectual Property specifically covering the manufacturing process for the Nucleus, provided, however, that such information and AVENTIS Intellectual Property shall at all times be included in the Drug Master File relating to Compound and/or Product and AVENTIS hereby grants INDEVUS all rights of reference thereto. In the event that (i) AVENTIS and INDEVUS have not entered into such supply agreement relating to the manufacture and supply of the Nucleus by AVENTIS in the time period set forth in Section 3.8 hereto, or (ii) the Parties have entered into such supply agreement but for any reason AVENTIS or AVENTIS’ permitted assignee of such manufacturing right decides not to, or for any other reason, does not manufacture and supply INDEVUS with the Nucleus, AVENTIS shall promptly transfer to INDEVUS all AVENTIS Intellectual Property relating to the manufacturing process for the Nucleus and shall provide to INDEVUS in establishing a Third Party manufacturer of the Nucleus such reasonable assistance as can be expected to be needed by a manufacturer having a reasonably high level of knowledge and experience in the manufacturing of comparable products. Such assistance will be provided free of charge to the extent   - 4 - --------------------------------------------------------------------------------   that information has to be supplied, and on the basis of cost reimbursement if any employee of AVENTIS has to come on the concerned manufacturing premise, which in any case should be for a limited period of time, to be specified in the aforesaid supply agreement. 3.8 Manufacturing and Supply. INDEVUS shall have all rights and responsibility relating to chemistry, manufacturing and control for clinical and commercial use of Compound or Product such as but not limited to process development, scale up and manufacturing of Compound and Product, subject to the following: (a) Manufacture of Nucleus. AVENTIS shall retain the right to manufacture and supply or, subject to the provisions of this Section 3.8 (a), have manufactured or have supplied the Nucleus for additional clinical trials and for commercial use by INDEVUS, provided that (i) AVENTIS can manufacture and supply, or any Third Party manufacturer that is a permitted assignee of AVENTIS’ rights under this Section 3.8 (a) can manufacture and supply, the Nucleus in accordance with cGMP and other regulatory requirements; and (ii) AVENTIS shall not have the right to assign its rights under this Section 3.8 (a) to a Third Party manufacturer or supplier of the Nucleus, without INDEVUS’ prior written consent, except with a sale or other divesture of the manufacturing site where the Nucleus is manufactured; and (iii) any such manufacture and supply is in accordance with the terms of the agreement referred to in the next sentence. INDEVUS and AVENTIS shall negotiate in good faith to enter into a manufacturing and supply agreement between the Parties containing mutually acceptable terms within ninety (90) days after the Effective Date, which shall set forth the terms and conditions of the manufacturing and supply of the Nucleus. (b) Other Manufacturing. In connection with any other manufacturing and supply of Compound and/or Product, INDEVUS will consider AVENTIS in priority to any Third Party, as such manufacturer and supplier. If you are in agreement with these changes, please acknowledge by having this letter signed by an authorized member of your company.   - 5 - -------------------------------------------------------------------------------- Best regards,   For Novexel S.A.     For Indevus Pharmaceuticals Inc. /s/ Iain Buchanan     /s/ Glenn L. Cooper, M.D. Name:   Iain Buchanan     Name:   Glenn L. Cooper, M.D. Title:   CEO     Title:   Chairman and Chief Executive Officer Date:       Date:   for Aventis Pharma SA     for Aventis Pharma SA /s/ Jean-Luc Renard     /s/ Jose Ferrer Name:   Jean-Luc Renard     Name:   Jose Ferrer Title:   President & CEO     Title:   VP, Legal Operations Date:       Date:     - 6 - -------------------------------------------------------------------------------- EXHIBIT B TERMINATION AGREEMENT This Termination Agreement (“Termination Agreement”) is executed, delivered, and effective on this 4th day of December 2006 (the “Effective Date”) by and between Indevus Pharmaceuticals, Inc., a corporation organized and existing under the laws of the State of Delaware and having its principal office at 33 Hayden Avenue, Lexington, Massachusetts 02421, United States (“Indevus”), and Novexel SA, a corporation organized and existing under the laws of France and having its principal office at Parc Biocitech, 102, route de Noisy, F-93230 Romainville, France (“Novexel”). Indevus and Novexel may be referred to herein individually as a “Party” or collectively as the “Parties.” RECITALS WHEREAS, effective April 18, 2003, Indevus entered into that certain License Agreement with Aventis Pharma SA (“Aventis”) (as amended, the “2003 License”) under which, among other things, Indevus was granted an exclusive license under AVENTIS Intellectual Property (as defined in the 2003 License) to develop and commercialize Compound and Product ; WHEREAS, pursuant to the Subscription Agreement in relation to Novexel SA dated as of 25 October 2004 by and among Aventis, Novexel and the other parties listed on the signature page thereto (the “Assignment Agreement”), effective as of December 1, 2004, Aventis assigned to Novexel all of Aventis’s right, title and interest in and to all intellectual property rights relating to Compound and Product, including the 2003 License and Aventis’s rights and obligations thereunder (except for the right to manufacture and supply Nucleus that was retained by Aventis) and Novexel assumed all such rights and obligations thereunder; WHEREAS, under the 2003 License, Indevus, through its efforts to develop Product, has generated certain Indevus Know-How (as defined in the Know-How License, as defined below) ; WHEREAS, Indevus has made a strategic corporate decision to search for a partner to pursue development and commercialization of Compound and Product and Novexel wishes to have an exclusive right to pursue such activities, Indevus and Novexel have agreed, and mutually desire, to simultaneously execute three agreements which will, together, allow Novexel to exclusively pursue development and commercialization of Compound and Product; and WHEREAS the three agreements Indevus and Novexel have agreed to simultaneously execute include (i) this Termination Agreement terminating the 2003 License, (ii) a Know-How License Agreement under which Indevus will grant Novexel an exclusive license to Indevus Know-How (the “Know-How License”), and (iii) a letter agreement assigning Indevus’ rights and obligations relative to Aventis in the manufacture and supply of Nucleus to Novexel, to which Aventis is also a party (the “Side Agreement”). AGREEMENT NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Indevus and Novexel agree as follows:   - 7 - -------------------------------------------------------------------------------- 1. Defined Terms. All capitalized terms in this Termination Agreement (except Effective Date), unless otherwise set forth herein, shall have their respective meanings as set forth in the 2003 License, a copy of which is attached hereto as Exhibit A. 2. Termination. The 2003 License is hereby terminated as of the Effective Date and simultaneously with the effectiveness of the Know-How License. Except as expressly set forth in Section 3 below, all of the rights and obligations of each Party shall terminate (including, without limitation, (a) Indevus’s diligence obligations under Article III and payment obligations under Article V of the 2003 License)and (b) all rights and licenses in, to and under AVENTIS Intellectual Property, AVENTIS Information and Inventions and Novexel’s rights in and to Joint Information and Inventions (collectively, the “Licensed Intellectual Property”) granted to Indevus under the 2003 License. For the avoidance of doubt, Indevus shall have no right to practice any of the Licensed Intellectual Property under the 2003 License. 3. Effect of Termination. Notwithstanding termination of the 2003 License, the following terms and conditions will apply: (a) Notwithstanding Section 8.4(a) of the 2003 License, (i) Indevus shall not have the right to sell or otherwise dispose of the stock of any Product, and Indevus shall transfer all such stock, if any, to Novexel pursuant to the provisions of the Know-How License, and (ii) Article IV of the 2003 License shall not survive termination of the 2003 License, provided, however, that Sections 4.1 and 4.2(c) of the 2003 License shall survive such termination for a period of seven (7) years after the Effective Date. (b) Within thirty (30) days after the Effective Date, Indevus shall deliver to Novexel, at Indevus’s expense, all tangible items (except Inventory) within the Aventis Know-How within its possession and control in a form(s) to be agreed upon and to a place designated in writing by Novexel. The Parties shall agree on a mutual place and time within thirty (30) days after the Effective Date, to arrange for a delivery to Novexel’s personnel, at Indevus’s expense, all of the Aventis Know-How within its possession and control not available in tangible form. Such transfer shall be made by qualified Indevus personnel who understand, have used and are familiar with such Aventis Know-How. (c) Indevus covenants (i) to inform, as soon as practicable after the Effective Date, its employees with access to any of the Licensed Intellectual Property that the 2003 License has been terminated and that Indevus no longer has the right to practice any of the Licensed Intellectual Property and (ii) to use its best efforts to ensure that no such employee practices any of the Licensed Intellectual Property after the Effective Date except pursuant to the terms of the Know-How License. (d) Notwithstanding the provisions of Section 2 above, the Parties hereby acknowledge that pursuant to the 2003 License, Aventis retained the right to manufacture and supply or have manufactured or have supplied, the Nucleus under the terms and conditions set forth therein and that as of the Effective Date, Aventis and Novexel have entered into a Side Agreement (as defined in the Know-How License) providing, inter alia, that Indevus’ rights and obligations under Sections 3.1.2 and 3.8 of the 2003 License be assigned to Novexel.   - 8 - -------------------------------------------------------------------------------- 4. Representations and Warranties. (a) General Representations and Warranties. Each Party hereby represents and warrants to the other Party as of the Effective Date as follows:     (i) Such Party is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated;     (ii) Such Party has the corporate power and authority and the legal right to enter into this Termination Agreement, the Know-How License and the Side Agreement and to perform its obligations hereunder and thereunder and the execution, delivery and performance by such Party of this Termination Agreement, the Know-How License and the Side Agreement has been duly authorized by all necessary corporate action;     (iii) Each of this Termination Agreement, the Know-How License and the Side Agreement has been duly executed and delivered on behalf of such Party, and each constitutes a legal, valid, binding obligation, enforceable against such Party in accordance with its terms except as enforceability may be limited by (a) any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditor’s rights generally, or (b) general principles of equity, whether considered in a proceeding in equity or at law;     (iv) All necessary consents, approvals and authorizations of all governmental authorities and other persons required to be obtained by such Party in connection with this Termination Agreement, the Know-How License and the Side Agreement have been obtained; and     (v) The execution and delivery of this Termination Agreement, the Know-How License and the Side Agreement and the performance of such Party’s obligations hereunder and thereunder does not conflict with or violate any requirement of applicable laws or regulations or any judgment, injunction, decree, determination or award presently in effect having applicability to it. (b) Indevus Representations and Warranties. Indevus represents and warrants to Novexel that as of the Effective Date:     (i) Indevus has not previously assigned, transferred, conveyed, sublicensed or otherwise encumbered any of the rights or licenses granted to it under the 2003 License, or entered into any agreement with any Third Party which is in conflict with this Termination Agreement;     (ii) Indevus has not filed, and shall not file, any application for patent, copyright, trademark or other form of intellectual property right   - 9 - --------------------------------------------------------------------------------   disclosing or claiming any Licensed Intellectual Property, Indevus Information and Inventions or Indevus’ rights in and to Joint Information and Inventions;     (iii) To Indevus’ knowledge, no contract research organization, corporation, business entity or individual which have been involved in any studies conducted for the purpose of obtaining regulatory approvals for any Product have been debarred entities or individuals within the meaning of 21 U.S.C. section 335(a) or (b);     (iv) In connection with the development of Compound and Product conducted by or on behalf of Indevus, Indevus and to Indevus’ knowledge, its contractors have complied and are complying in all material respects with applicable United States and European laws and regulations, including United States good laboratory practices, in its conduct of toxicology studies on Compound and United States good clinical practices in its conduct of clinical studies on Compound;     (v) Indevus has not received any notice of breach of the 2003 License from Aventis; and entering into this Termination Agreement and the accompanying Know-How License will not result in any breach of the 2003 License or any other Indevus agreement or arrangement with, or obligation to, any Third Party. 5. Release of Claims (a) By Indevus. Except for the obligations set forth in this Termination Agreement, and in consideration of the release of claims by Novexel in Section 5(b) below, Indevus, on behalf of itself and its agents, attorneys, representatives, directors, officers, employees, subsidiaries, affiliates, heirs, successors, and assigns, including its parent company (if any), hereby waives any claim against Novexel resulting from or in any way arising out of the 2003 License and hereby releases and discharges Novexel and each of its parents, subsidiaries, affiliates, and each of its and their respective officers, directors, stockholders, employees, attorneys, agents, representatives, successors, and assigns from and for any and all claims, demands, actions, causes of actions, suits, judgments, liabilities, costs, attorneys’ fees, losses, expenses, or claims for relief, known or unknown, fixed or contingent, at law or in equity, of any kind or nature that Indevus now has or has ever had or may hereinafter claim to have had against them arising out of, based upon, or related, directly or indirectly, to the 2003 License or the termination thereof. (b) By Novexel. Except for the obligations set out in this Termination Agreement, in consideration of the release of claims by Indevus in Section 5(a) above, Novexel, on behalf of itself and its agents, attorneys, representatives, directors, officers, employees, subsidiaries, affiliates, heirs, successors, and assigns, including its parent company (if any), hereby waives any claim against Indevus resulting from or in any way arising out of the 2003 License and hereby releases and discharges Indevus and each of its parents, subsidiaries, affiliates, and each of its and their respective officers, directors, stockholders, employees,   - 10 - -------------------------------------------------------------------------------- attorneys, agents, representatives, successors, and assigns from and for any and all claims, demands, actions, causes of actions, suits, judgments, liabilities, costs, attorneys’ fees, losses, expenses, or claims for relief, known or unknown, fixed or contingent, at law or in equity, of any kind or nature that Novexel now has or has ever had or may hereinafter claim to have had against them arising out of, based upon, or related, directly or indirectly, to the 2003 License or the termination thereof. (c) Representations. Indevus and Novexel each represents and warrants to the other that the representing Party has full legal right and authority to release the claims released hereby and that the representing Party has taken or obtained all legal action or approval necessary for the execution, delivery, and performance of the obligations hereunder. The Parties each represents and warrants to the other that the representing Party is, as of the Effective Date, the sole and lawful owner of all right, title, and interest in its claims released hereby and that the representing Party has not assigned or otherwise transferred any right, title, or interest in such claims. 6. Negotiated Agreement. The Parties agree that this Termination Agreement is a fully negotiated document that shall be deemed to have been jointly drafted by the Parties and, therefore, shall not be more strictly construed against any Party as the draftsman. 7. Miscellaneous. (a) This Termination Agreement, together with any Exhibits hereto the Know-How License, and the Side Agreement are intended to embody the final, complete and exclusive agreements between the Parties with respect to the matters addressed herein and therein; are intended to supersede all prior agreements, understandings and representations written or oral, with respect thereto; and may not be contradicted by evidence of any such prior or contemporaneous agreement, understanding or representation, whether written or oral. (b) Amendment. This Termination Agreement shall not be modified, amended, canceled or altered in any way, and may not be modified by custom, usage of trade or course of dealing, except by an instrument in writing signed by both Parties. All amendments or modifications of this Termination Agreement shall be binding upon the Parties despite any lack of consideration so long as the same shall be in writing and executed by the Parties. (c) Governing Law and Dispute Resolution. This Termination Agreement shall be governed by and construed in accordance with the laws of the United States of America and State of New York without reference to any rules of conflict of laws, except matters of intellectual property law, which shall be determined in accordance with the national intellectual property laws relevant to the intellectual property in question. Any disputes incapable of being resolved by mutual agreement of the Parties shall be handled in accordance with Section 9.6 of the Know-How License. (d) Severability. In the event that any term, condition or provision of this Termination Agreement is held to be or become invalid or be a violation of any applicable law, statute or regulation, the same shall be deemed to be deleted from this Termination Agreement and shall be of no force and effect and this Termination Agreement shall remain in full force and   - 11 - -------------------------------------------------------------------------------- effect as if such term, condition or provision had not originally been contained in this Agreement. The validity and enforceability of the other provisions shall not be affected thereby. In such case or in the event that this Termination Agreement should have a gap, the Parties hereto shall agree on a valid and enforceable provision completing this Termination Agreement, coming as close as possible to the economic intentions of the Parties. In the event of a partial invalidity the Parties agree that this Termination Agreement shall remain in force without the invalid part. This shall also apply if parts of this Termination Agreement are partially invalid. (e) Assignment. This Termination Agreement may not be assigned or otherwise transferred by either Party, in whole or in part, whether voluntary, or by operation of law, without the consent of other Party, except in connection with a simultaneous permitted assignment of the Know-How License. Subject to the foregoing, this Termination Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. (f) Waiver. The performance of any obligation required of a Party hereunder may be waived only by a written waiver signed by the other Party, and such waiver shall be effective only with respect to the specific obligation described. The waiver by either Party of a breach of any provision of this Termination Agreement by the other Party shall not operate or be construed as a waiver of any subsequent breach of the same provision or another provision of this Termination Agreement. (g) Captions. The section headings and captions contained herein are for purposes of reference and convenience only and shall not in any way affect the meaning or interpretation of this Termination Agreement. (h) Word Meanings. Words such as herein, hereinafter, hereof and hereunder refer to this Termination Agreement as a whole and not merely to a section or paragraph in which such words appear, unless the context otherwise requires. The singular shall include the plural, and each masculine, feminine and neuter references shall include and refer also to the others, unless the context otherwise requires. (i) English Language. The official language of this Termination Agreement is English. All contract interpretations, notices and dispute resolutions shall be in English. Any attachments or amendments to this Termination Agreement shall be in English. Translations of any of these documents shall not be construed as official or original versions of such documents. (j) Notices. All notices or other communications which are required or permitted hereunder shall be in writing and sufficient if delivered personally, sent by facsimile (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by nationally-recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:   - 12 - -------------------------------------------------------------------------------- if to Novexel to: Novexel SA Parc Biocitech 102, route de Noisy F-93230 Romainville France Attention: Chief Executive Officer Fax No: +33 1 48 46 39 26 if to Indevus to: Indevus Pharmaceuticals, Inc. 33 Hayden Avenue Lexington, MA 02421, USA Attention: Chief Executive Officer Fax No.: 781-862-3859 or to such other address as the Party to whom notice is to be given may have furnished to the other Parties in writing in accordance herewith. Any such communication shall be deemed to have been given when delivered if personally delivered or sent by facsimile on a Business Day, upon confirmed delivery by nationally-recognized overnight courier if so delivered and on the third Business Day following the date of mailing if sent by registered or certified mail. (k) Counterparts. This Termination Agreement may be executed in two counterparts, each of which shall be deemed an original, but which taken together shall constitute one and the same instrument. {Signature page follows.}   - 13 - -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the Parties hereto have caused this Termination Agreement to be executed and delivered by the authorized representatives of each Party on the date first set forth above.   INDEVUS PHARMACEUTICALS, INC. By:   /s/ Glenn L. Cooper, M.D. Name:   Glenn L. Cooper, M.D. Title:   Chairman and Chief Executive Officer NOVEXEL SA By:   /s/ Iain Buchanan Name:   Iain Buchanan Title:   Chief Executive Officer -------------------------------------------------------------------------------- EXHIBIT A CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN FILED SEPARATELY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION LICENSE AGREEMENT by and between AVENTIS PHARMA SA and INDEVUS PHARMACEUTICALS, INC THIS LICENSE AGREEMENT effective as of April 18, 2003 (“Effective Date”), by and between AVENTIS PHARMA SA (“AVENTIS”), a corporation organized and existing under the laws of France and having its principal office at 20 avenue Raymond Aron, 92165 Antony, France (“AVENTIS”) and INDEVUS PHARMACEUTICALS INC., a corporation organized and existing under the laws of the State of Delaware and having its principal office at 99 Hayden Avenue, Suite 200, Lexington, Massachusetts 02421, United States (“INDEVUS”). W I T N E S S E T H: WHEREAS, AVENTIS is the owner of AVENTIS Intellectual Property, as defined herein and; WHEREAS, INDEVUS desires to obtain exclusive license rights, with a right to grant sublicenses, under the AVENTIS Intellectual Property, and AVENTIS desires to grant such license to INDEVUS, upon the terms and conditions set forth herein; and NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows: ARTICLE I DEFINITIONS Unless specifically set forth to the contrary herein, the following terms, where used with an initial capital letter, and where used in the singular or plural, shall have the respective meanings set forth below: 1.1 “Act” shall mean the Federal Food Drug and Cosmetic Act of 1934, and the rules and regulations promulgated thereunder, or any successor act, as the same shall be in effect from time to time. -------------------------------------------------------------------------------- 1.2 “Affiliate” shall mean (i) any corporation or business entity of which more than fifty percent (50%) of the securities or other ownership interests representing the equity, the voting stock or general partnership interest are owned, controlled or held, directly or indirectly, by a Party; (ii) any corporation or business entity which, directly or indirectly, owns, controls or holds more than fifty percent (50%) (or the maximum ownership interest permitted by law) of the securities or other ownership interests representing the equity, voting stock or general partnership interest of a Party or (iii) any corporation or business entity of which a Party has the right to acquire, directly or indirectly, at least fifty percent (50%) of the securities or other ownership interests representing the equity, voting stock or general partnership interest thereof. 1.3 “AVENTIS Intellectual Property” shall mean the AVENTIS Patent Assets and AVENTIS Know-How. 1.4 “AVENTIS Know-How” shall mean any and all information and materials, including but not limited to, discoveries, Improvements, information, processes, formulae, data, inventions (whether patentable or not), invention disclosures, know-how and trade secrets, patentable or otherwise, that relate to Compound or Product, including without limitation, all chemical, pharmaceutical, toxicological, biochemical, and biological, technical and non technical data, and information relating to the results of tests, assays, methods, and processes, and specifications and/or other documents containing information and related data, and any preclinical, clinical, assay control, manufacturing, regulatory, and any other data or information, submitted, or required to be submitted, to any Regulatory Authority in connection with any regulatory filing or application relating to Compound or Product, Chemistry, Manufacturing and Control (CMC) data, or similar data used or useful for the development, manufacturing and/or regulatory approval of Compound or Product that are or become at any time during the Term of this Agreement owned or controlled by AVENTIS and as to which AVENTIS has the right to license or sublicense to another party including such rights which AVENTIS may have to information developed by Third Parties. 1.5 “AVENTIS Patent Assets” shall mean the United States patents and patent applications and any foreign counterparts thereof listed in Schedule 1.5 hereto which as of the Effective Date are owned by AVENTIS or which AVENTIS has or acquires rights from a Third Party, and relate to Compound, Product or any Improvement, including but not limited to methods of their development, manufacture, or use, or otherwise relate to AVENTIS Know-How, including all certificates of invention and applications for certificates of invention and substitutions, divisions, continuations, continuations-in-part, patents issuing thereon or reissues or reexaminations thereof, supplementary protection certificates or the like of any such patents and patent applications. 1.6 “Business Day(s)” shall mean any day that is not a Saturday or a Sunday or a day on which the New York Stock Exchange is closed or a day that is a Bank Holiday in France (which days are set forth on Schedule 1.6 hereto). -------------------------------------------------------------------------------- 1.7 “Calendar Quarter” shall mean the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and December 31. 1.8 “Calendar Year” shall mean each successive period of twelve (12) months commencing on January 1 and ending on December 31. 1.9 “Centralized Procedure” shall mean the European Union Centralized Procedure for marketing authorization in accordance with Council Regulation n° 2309/93 of July 22, 1993 or any successor regulations. 1.10 “CFR” shall mean the United States Code of Federal Regulations. 1.11 “cGMP” shall mean current applicable good manufacturing practices as defined in regulations promulgated by the FDA under the Act relating to the formulation, manufacture, testing prior to delivery, storage and delivery of Compound or Product. 1.12 “Committee” shall mean the steering committee described in Section 3.3. 1.13 “Compulsory License” shall mean any agreement under which any governmental body in any country in the Territory grants or compels INDEVUS to grant, license or marketing rights for Product to any Third Party. 1.14 “Compound” shall mean the chemical compound known under the International Non-proprietary name aminocandin and the code name HMR-3270 and diagrammed on Schedule 1.14 hereto, and any other compounds disclosed or covered or included in the AVENTIS Patent Assets or any compound that is part of the aminocandin family of compounds or any derivative, homolog, or analog of any of the foregoing, and any isomer, salt, hydrate, solvate, amide, ester, metabolite, or prodrug of any of the foregoing that exists and is owned or controlled by AVENTIS as of the Effective Date. 1.15 “Development Plan” shall mean the plan related to the conduct of the Development Program, as described in Section 3.3.5. 1.16 “Development Program” shall mean those activities to be undertaken by INDEVUS or its designee (or, to the extent specifically set forth in this Agreement, AVENTIS) with respect to Compound or Product which are devoted to the evaluation of a potential pharmaceutical product in clinical trials, and/or the conduct of any other activities or studies directed toward obtaining Regulatory Approval of Product. 1.17 “Dominating Patent” shall mean an unexpired patent which has not been invalidated by a court or other governmental agency of competent jurisdiction which is owned by a Third Party and which INDEVUS or its sublicensees reasonably believe they have no alternative to obtaining a royalty-bearing license under such patent in order to commercialize a Product under this Agreement without infringing such patent. -------------------------------------------------------------------------------- 1.18 “Effective Date” shall mean the date first above written. 1.19 “EMEA” means the European Agency for the Evaluation of Medicinal Products based in London (UK), as established by Council Regulation n° 2309/93 of July 22, 1993, as subsequently amended by Commission Regulation 649/98 of March 23, 1998. 1.20 “End of Phase 2 Meeting” shall mean the first end of Phase 2 meeting with the FDA, as defined in 21 CFR Section 312.47, intended to determine the safety of proceeding to Phase 3, evaluate the Phase 3 plan and protocols and identify any additional information necessary to support an NDA for Product. 1.21 “FDA” shall mean the United States Food and Drug Administration. 1.22 “First Commercial Sale” shall mean the first sale of Product in any country by INDEVUS, its Affiliate or its sublicensee(s), for end use or consumption, after all required Regulatory Approvals have been granted by the governing health authority of such country. 1.23 “GAAP” shall mean generally accepted accounting principles in the United States. 1.24 “Generic Competition” in any particular country shall exist or commence on the earlier of (i) where IMS or IMS- equivalent data is available, the first date on which Generic Drugs achieve a market share in one Calendar Quarter of twenty percent (20%) or greater of the total prescriptions for Product in such country (as so shown by the average of the monthly IMS (or IMS-equivalent) data for such prescriptions) or (ii) the first date on which there are two Generic Drugs available in one Calendar Quarter in such country. 1.25 “Generic Drug(s)” shall mean any product containing compound that (i) is defined in a particular country in the Territory as a generic drug to the Compound by applicable legal texts or governing health authorities in such country, or (ii) can be substituted for the Compound by a pharmacy, other than a product introduced in such country by INDEVUS, its Affiliates or INDEVUS Sublicensees. 1.26 “Improvement” shall mean any and all improvements and enhancements, patentable or otherwise, related to the Compound or Product including, without limitation, in the manufacture, formulation, ingredients, preparation, presentation, means of delivery or administration, dosage, indication, use or packaging of Compound or Product. 1.27 “IND” shall mean an investigational new drug application and any amendments thereto relating to the use of Compound or Product in the United States or the equivalent application in any other regulatory jurisdiction in the Territory, the filing of which is necessary to commence clinical testing of pharmaceutical products in humans. 1.28 “INDEVUS Know-How” shall mean any and all information and materials, including but not limited to, discoveries, Improvements, information, processes, formulae, data, inventions (whether patentable or not), invention disclosures, know-how and trade secrets, patentable or otherwise, that relate to Compound or Product, including without limitation, all chemical, -------------------------------------------------------------------------------- pharmaceutical, toxicological, biochemical, and biological, technical and non technical data, and information relating to the results of tests, assays, methods, and processes, and specifications and/or other documents containing information and related data, and any preclinical, clinical, assay control, manufacturing, regulatory, and any other data or information (including without limitation any Drug Master Files (DMFs) if any, Chemistry, Manufacturing and Control (CMC) data or similar data) used or useful for the development, manufacturing, regulatory filing or application and/or regulatory approval of Compound or Product that as a result of the Development Program become owned or controlled by INDEVUS and as to which INDEVUS has the right to license or sublicense to another party including such rights which INDEVUS may have to information developed by Third Parties. 1.29 “INDEVUS Patent Assets” shall mean the United States patents and patent applications and any counterparts thereof which may be filed in other countries which at any time during the term of this Agreement are owned by INDEVUS or which INDEVUS has or acquires rights from a Third Party, and relate to Compound, Product or any Improvement, including but not limited to methods of their development, manufacture, or use, or otherwise relate to INDEVUS Know-How, including all certificates of invention and applications for certificates of invention, substitutions, divisions, continuations, continuations-in-part, patents issuing thereon or reissues or reexaminations thereof and any and all foreign patents and patent applications corresponding thereto, supplementary protection certificates or the like of any such patents and patent applications, including Program Information and Inventions and patents and patent applications resulting from the Development Program. 1.30 “NDA” shall mean a new drug application or other submission filed with the applicable Regulatory Authority in any regulatory jurisdiction in the Territory to obtain Regulatory Approval of a Product in such regulatory jurisdiction, and any amendments and supplements thereto. 1.31 “Net Sales” shall mean the gross amount invoiced by INDEVUS or its Affiliates or its sublicensees for sales of Product in the Territory commencing respectively on the date of First Commercial Sale in each country in the Territory, after deducting the following:     (i) trade, cash and quantity discounts not already reflected in the amount invoiced;     (ii) amounts repaid or credited for Product returns, including for rejections, or spoilage or recalls     (iii) rebates and chargebacks;     (iv) retroactive price reductions;     (v) sales or excise taxes, VAT or other taxes, custom duties, and other governmental charges and transportation and insurance charges to the extent included in the invoiced price; and if assessed directly against the seller, to the extent actually paid;     (vi) compulsory payments and rebates directly related to sales of Product to any governmental or regulatory authority in respect of any state or federal Medicare, Medicaid or similar programs in any country of the Territory; and --------------------------------------------------------------------------------   (vii) write offs for bad debts to the extent resulting exclusively from unpaid invoices of Products. Sales or other transfers between INDEVUS and its Affiliates and/or its sublicensees shall be excluded from the computation of Net Sales and no payments will be payable on such sales or transfers except where such Affiliates or sublicensees are end users, but Net Sales shall include the subsequent sales to Third Parties by such Affiliates or sublicensees. 1.32 “Nucleus” shall mean deacylmulundocandin, the starting material for the manufacture of the Compound, obtained by biochemistry through a biosynthesis from an Aspergillus strain, the first step of which leads to deoxymulundocandin and the second step of which leads to deacylmulundocandin. 1.33 “Over-the Counter Product” shall mean a Product that is not a Prescription Product. 1.34 “Party” shall mean AVENTIS or INDEVUS, and “Parties” shall mean AVENTIS and INDEVUS. 1.35 “Phase 1 Multiple Dose Clinical Trial” shall mean the first clinical trial in which multiple dosage ranges of Product are initially introduced into humans. 1.36 “Phase 2 Clinical Trial” shall mean the first clinical trial of Product in patients with an indicated fungal infection that is designed to show safety and efficacy of Product for its intended use. 1.37 “Phase 3 Clinical Trial” shall mean the first clinical trial conducted after an End of Phase 2 Meeting and conducted on a sufficient number of patients that is designed to establish that Product is safe and efficacious for its intended use. 1.38 “Prescription Product” shall mean a Product subject to the provisions of Section 503 (b) 1 (B) of the Act. 1.39 “Product” shall mean any product in final form (or where the context so indicates, the product being tested in clinical trials)which contains Compound as at least one of the therapeutically active ingredients. 1.40 “Proprietary Information” shall mean any and all scientific, clinical, regulatory, marketing, financial and commercial information or data, whether communicated in writing, orally or by any other means, which is owned and under the protection of one Party and is being provided by that Party to the other Party in connection with this Agreement. 1.41 “Regulatory Approval” shall mean all authorizations and approvals (including pricing and reimbursement approvals where required for marketing), of all regional, federal, state or local agencies, departments, bureaus or other governmental entities, necessary for the manufacture, use, storage, import, export, transport and sale of Product in a jurisdiction. -------------------------------------------------------------------------------- 1.42 “Regulatory Authority” shall mean the FDA in the U.S., and any body in the European Union and any health regulatory authority(ies) in any country(ies) in the Territory that is equivalent to the FDA and holds responsibility for granting Regulatory Approval for a Product in such country(ies), and any successor(s) thereto having substantially the same functions. 1.43 “Right of First Negotiation” shall have the meaning set forth in Section 2.4 of this Agreement. 1.44 “Royalty Year” shall mean, (i) for the year in which the First Commercial Sale occurs (the “First Royalty Year”), the period commencing with the first day of the Calendar Quarter in which the First Commercial Sale occurs and expiring on the last day of the Calendar Year in which the First Commercial Sale occurs and (ii) for each subsequent year, each successive Calendar Year. 1.45 “Sublicense Royalty Payments” shall mean royalty or other payments based on Net Sales of Product that are received by INDEVUS from a sublicensee of any of the rights granted by AVENTIS to INDEVUS under Section 2.1 of this Agreement, as consideration for the grant of such sublicense. 1.46 “Specifications” shall mean the written methods, formulae, procedures, specifications, tests (and testing protocols) and standards pertaining to the Nucleus as attached hereto as Schedule 1.46 and as they may be modified from time to time by mutual written agreement of the Parties and consistent with the Regulatory Approval. 1.47 “Territory” shall mean all of the countries in the world. 1.48 “Third Party(ies)” shall mean a person or entity who or which is neither a Party nor an Affiliate of a Party. 1.49 “Valid Claim” shall mean a claim of an issued and unexpired patent included within the AVENTIS Patent Assets, which has not been revoked or held unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, and which has not been disclaimed, denied or admitted to be invalid or unenforceable through reissue or disclaimer. ARTICLE II LICENSES; SUBLICENSES 2.1 License Grant. In consideration of and subject to the terms and conditions of this Agreement, AVENTIS hereby grants to INDEVUS an exclusive (even as to AVENTIS) license under AVENTIS Intellectual Property, including the right to grant sublicenses (subject to Section 2.3 below), to develop, make, have made, use, import, offer for sale, market, commercialize, distribute, sell or otherwise dispose of Compound and Product for all uses in the Territory. Notwithstanding the foregoing, it is understood and acknowledged that (i) provided that -------------------------------------------------------------------------------- AVENTIS is manufacturing the Nucleus in accordance with Section 3.8 (a) and the supply agreement referred to therein, the rights hereby granted shall not extend to the right to manufacture the Nucleus; and (ii) to the extent any part of the AVENTIS Intellectual Property falls outside the scope of the license granted to INDEVUS hereunder, AVENTIS shall retain such right and shall be free to operate under such right. 2.2 Improvement by INDEVUS. All rights and title to and interest in any Improvement conceived, developed, discovered and/or reduced to practice solely by INDEVUS in connection with the license granted under Section 2.1 above or INDEVUS’ activities hereunder shall be vested solely in INDEVUS. 2.3 Sublicenses. INDEVUS shall have the right to grant sublicenses to Affiliates or, subject to the Right of First Negotiation set forth in Section 2.4 below, any Third Party to develop, make, have made, use, import, offer for sale, market, commercialize, distribute and sell and otherwise dispose of Compound or Product in the Territory; provided, however, that (i) INDEVUS shall not have the right to grant any such sublicenses to a Third Party prior to the completion of Phase 1 studies necessary to commence the first Phase 2 Clinical Trial and (ii) INDEVUS shall advise AVENTIS of any proposed sublicense with a Third Party and give due consideration to AVENTIS’ reasonable comments thereto. In the event of a sublicense by INDEVUS to a Third Party, the provisions of Section 5.3.2 of this Agreement shall be applicable. Any such sublicense shall be subject to the terms and conditions of this Agreement, and INDEVUS shall be responsible to AVENTIS for any non- performance by the sublicensee of INDEVUS’ obligations under this Agreement that are assumed by the sublicensee. 2.4 Right of First Negotiation. INDEVUS shall grant AVENTIS a right of first negotiation (the “Right of First Negotiation”) to obtain from INDEVUS a Sublicense Opportunity (as defined below), on and subject to the following terms and conditions: 2.4.1. In the event INDEVUS intends to begin negotiations relating to a sublicense of Compound or Product (a “Sublicense Opportunity”), INDEVUS shall give written notice of such intention to AVENTIS (the “Commencement Notice”). The Commencement Notice shall include a summary of any INDEVUS Know-How generated pursuant to the Development Program that has not been previously presented at a Committee meeting. 2.4.2. AVENTIS shall have the right to exercise the Right of First Negotiation by delivery to INDEVUS of a written notice (the “AVENTIS Notice”) within [*] days after the date of receipt of the Commencement Notice stating that it has a bona fide interest in entering into such Sublicense Opportunity and including a proposal by AVENTIS of the terms thereof. 2.4.3. If AVENTIS exercises the Right of First Negotiation pursuant to Section 2.4.2, INDEVUS and AVENTIS shall engage in exclusive, good faith negotiations to enter into an agreement relating to the Sublicense Opportunity on mutually acceptable terms and conditions within [*] days of the date of receipt by INDEVUS of the AVENTIS Notice (the “Negotiation Period”). Such agreement would include the grant by INDEVUS to AVENTIS of an exclusive or non-exclusive sublicense under (i) the AVENTIS Intellectual Property and (ii) the INDEVUS   -------------------------------------------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED -------------------------------------------------------------------------------- Patent Assets and INDEVUS Know-How, to develop, make, have made, use, import, offer for sale, market, commercialize, distribute and sell and otherwise dispose of Compound and Product for such uses and in such countries in the Territory, and on such terms and conditions, as may be negotiated in good faith and mutually agreed to by the Parties. 2.4.4. In the event that (i) INDEVUS has not received the AVENTIS Notice in accordance with Section 2.4.2 within [*] days after the date of receipt of the Commencement Notice by AVENTIS, or (ii) the AVENTIS Notice states that AVENTIS does not intend to exercise its Right of First Negotiation, or (iii) AVENTIS exercises the Right of First Negotiation but the Parties are unable to reach agreement prior to expiration of the Negotiation Period, the Right of First Negotiation shall expire and INDEVUS shall be free to enter into a transaction relating to such Sublicense Opportunity with any Third Party; provided, however, that INDEVUS shall not enter into a Sublicense Opportunity with a Third Party for a period of [*] days after expiration of the Negotiation Period if the terms of the sublicense with such Third Party are, in the aggregate, less favorable to INDEVUS than the terms agreed to by AVENTIS in the negotiations pursuant to Section 2.4.3. ARTICLE III DEVELOPMENT AND COMMERCIALIZATION 3.1 Exchange of Information. 3.1.1. Subject to subsection 3.1.2, AVENTIS shall disclose to INDEVUS in the language in which they are available (except that all information required to be submitted to any Regulatory Authority in connection with any Regulatory Approval shall be disclosed by AVENTIS to INDEVUS in English) and in writing, in electronic format, where available, and hard copies (or, upon INDEVUS’ request, originals), (a) within ten (10) Business Days after execution of this Agreement, all AVENTIS Intellectual Property not previously available or made available to INDEVUS and (b) on an ongoing basis throughout the term of this Agreement, and in addition to the other communications required under this Agreement, all AVENTIS Intellectual Property, and any and all additions or revisions thereto, provided, however, that AVENTIS shall not be required to write any CMC documentation that does not exist as of the date of this Agreement. 3.1.2. As long as AVENTIS manufactures and supplies or, in accordance with the provisions of Section 3.8 (a) hereof, AVENTIS’ permitted assignee manufactures and supplies, INDEVUS with Nucleus, in each case in accordance with the supply agreement contemplated by Section 3.8 (a) hereof, AVENTIS shall not be required to disclose or transfer to INDEVUS that portion of the AVENTIS Intellectual Property specifically covering the manufacturing process for the Nucleus, provided, however, that such information and AVENTIS Intellectual Property shall at all times be included in the Drug Master File relating to Compound and/or Product and AVENTIS hereby grants INDEVUS all rights of reference thereto. In the event that (i)   -------------------------------------------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED -------------------------------------------------------------------------------- AVENTIS and INDEVUS have not entered into such supply agreement relating to the manufacture and supply of the Nucleus by AVENTIS in the time period set forth in Section 3.8 hereto, or (ii) the Parties have entered into such supply agreement but for any reason AVENTIS or AVENTIS’ permitted assignee of such manufacturing right decides not to, or for any other reason, does not manufacture and supply INDEVUS with the Nucleus, AVENTIS shall promptly transfer to INDEVUS all AVENTIS Intellectual Property relating to the manufacturing process for the Nucleus and shall provide to INDEVUS in establishing a Third Party manufacturer of the Nucleus such reasonable assistance as can be expected to be needed by a manufacturer having a reasonably high level of knowledge and experience in the manufacturing of comparable products. Such assistance will be provided free of charge to the extent that information has to be supplied, and on the basis of cost reimbursement if any employee of AVENTIS has to come on the concerned manufacturing premise, which in any case should be for a limited period of time, to be specified in the aforesaid supply agreement. 3.2 Diligence; Development and Commercialization. 3.2.1. INDEVUS Responsibility. INDEVUS shall use commercially reasonable efforts to develop and commercialize Product. As used herein, “commercially reasonable efforts” shall mean efforts and resources normally used by INDEVUS for a product owned by it or to which it has exclusive rights, which is of similar market potential at a similar stage in its development or product life, taking into account issues of safety and efficacy, product profile, the competitiveness of the marketplace, the proprietary position of the compound or product, the regulatory and reimbursement structure involved, the profitability of the concerned products, and other relevant factors if any. In furtherance of the objectives of the Development Program, INDEVUS shall provide general management and project management services, sufficient to support its obligations hereunder. The obligations set forth in this Section 3.2.1 are expressly conditioned upon the absence of any serious adverse conditions or event relating to the safety or efficacy of Compound or Product, including the absence of any action by any regulatory authority significantly limiting the development or commercialization of Compound or Product. 3.2.2. Potential AVENTIS Contribution. AVENTIS shall have the right but not the obligation to participate in the Development Program by conducting preclinical studies on the Compound or Product as determined by the Committee, provided, however, that (i) any such studies are approved in advance by the Committee and are specifically included in a Development Plan; (ii) all internal costs of any such studies shall be borne by AVENTIS, but AVENTIS shall be entitled to reimbursement by INDEVUS of costs incurred and paid by AVENTIS to Third Parties in conducting such studies if such costs are approved in advance in writing by INDEVUS, upon submission of appropriate supporting documentation therefore; and (iii) AVENTIS shall promptly report to INDEVUS the results of any such studies conducted by or on behalf of AVENTIS. 3.3 Steering Committee. The Parties hereby establish a steering committee (the “Committee”) to facilitate the Development Program as follows: 3.3.1. Composition of the Committee. The Development Program shall be conducted by INDEVUS under the supervision of the Committee, to the extent set forth herein. The Committee -------------------------------------------------------------------------------- shall be comprised of [*] named representatives of INDEVUS and [*] named representatives of AVENTIS. The initial representatives for each Party hereto are set forth on Schedule 3.3.1 hereto. Each Party may substitute one or more of its representatives, in its sole discretion, effective upon notice to the other Party of such change. After Regulatory Approval has been obtained, the Parties will discuss whether the Committee should be dissolved. Additional representatives or consultants may from time to time, by mutual consent of the Parties, be invited to attend Committee meetings, subject to compliance with Section 4.1. The Committee shall use its good faith efforts to resolve by consensus any issue relating to the Development Program. If the Committee shall arrive at a consensus on any issue relating to the Development Program, such consensus shall be binding upon the Parties hereto. All issues relating to costs of the Development Program shall be determined by and, except as otherwise contemplated by this Agreement, the responsibility of, INDEVUS. 3.3.2. Committee Resolution. If the Committee is unable to reach a consensus on any issue within thirty (30) days after such issue being presented to the Committee by a Party, notwithstanding the exercise of its best efforts, then such issue shall be referred to the chief executive officers of INDEVUS and AVENTIS (the “CEOs”). Any final decision of the CEOs shall be conclusive and binding on the Parties hereto, and must be reached, if practicable under the circumstances, within thirty (30) days after being referred to the CEOs. In the event that the Committee and/or the CEOs are unable to reach a consensus, issues shall be determined finally and conclusively by INDEVUS. 3.3.3. Meetings. During the Development Program, the Committee shall meet at least once each Calendar Quarter, starting in the Calendar Quarter in which this Agreement is executed, with the location for such meetings to be determined by the Committee, unless no later than thirty (30) days in advance of any meeting there is a determination by INDEVUS that no new business or other activity has transpired since the previous meeting, and that there is no need for a meeting. In such instance, the next quarterly meeting will be scheduled. The Committee may meet by means of conference call or other similar communications equipment. Each Party shall bear its own costs in connection with meetings of the Committee. 3.3.4. Committee Responsibilities. Except as specifically set forth in this Agreement, the Committee shall be responsible for overseeing the Development Program, including (i) reviewing and approving the Development Plan prepared by INDEVUS; (ii) facilitating the transfer of know-how as contemplated by this Agreement; (iii) coordinating scientific interactions; (iv) managing and assessing the progress of the development of Product and, to the extent contemplated by this Agreement, evaluating and, if determined by the Committee, approving AVENTIS to perform tasks required in connection with development of Product; and (v) resolving any disputes between the Parties relating to the Development Program. At each meeting, INDEVUS shall summarize the status of INDEVUS’ clinical development and regulatory activities with respect to Product, including any significant INDEVUS Know-How generated by INDEVUS in the course of conducting the Development Program. Any disclosures of such progress, results or know-how in any meeting shall be deemed Proprietary Information of INDEVUS.   -------------------------------------------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED -------------------------------------------------------------------------------- 3.3.5. Development Plan. Subject to the other provisions of this Section 3.3, the Development Program shall be governed by a plan which shall be provided by INDEVUS to the Committee (the “Development Plan), except that (i) the Development Plan for Year 1 of the Development Program is attached hereto as Exhibit 3.3.5, and (ii) all budget decisions relating to any Development Plan or the Development Program shall be determined solely by INDEVUS. Periodically, INDEVUS shall update the Development Plan, which update shall be reviewed and approved by the Committee, as per Section 3.3.4. (i). 3.3.6. Primary Contacts. INDEVUS and AVENTIS each shall appoint a person (a “Primary Contact”) to be the primary contact between the Parties with respect to the Development Program and to coordinate correspondence between the Parties. Each Party shall notify the other in writing within thirty (30) days after the Effective Date of the appointment of its Primary Contact and shall notify the other Party as soon as practicable upon changing this appointment in accordance with Section 9.4. The Primary Contact of each Party will be one of its three representatives in the Committee. 3.4 Reports. INDEVUS shall provide to the AVENTIS Primary Contact a copy of the annual reports to the INDs submitted by INDEVUS. Any disclosures of such clinical trial progress and results in any of the foregoing reports shall be deemed Proprietary Information of INDEVUS. 3.5 Regulatory Matters. 3.5.1. INDEVUS shall own, control and retain primary legal responsibility for the preparation, filing and prosecution of all filings, regulatory applications and Regulatory Approvals. INDEVUS shall promptly notify AVENTIS upon the receipt of Regulatory Approvals and of the date of First Commercial Sale. 3.5.2. AVENTIS shall transfer to INDEVUS as soon as practicable after the Effective Date any other regulatory filings relating to Compound or Product owned or controlled by AVENTIS, if any, and AVENTIS shall file a Drug Master File relating to the Nucleus if it is required by INDEVUS or a Regulatory Authority for conducting clinical studies or for obtaining Regulatory Approval for the Product, and Aventis will allow INDEVUS to cross reference any Drug Master File relating to the Nucleus. 3.6 Trademark. INDEVUS shall select, own and maintain trademarks for Product in the Territory. 3.7 Inventory. AVENTIS represents and warrants that (i) its current inventory is listed on Exhibit 3.7, provided that such inventory will be re-tested and, where applicable re-released, (and the resulting quantities will be less than the quantities listed in Exhibit 3.7) (the “AVENTIS Inventory”) and (ii) the manufacture, testing, delivery and storage of the AVENTIS Inventory will upon re-release, conform to the Specifications set forth in Schedule 1.46 and the specifications set forth in Exhibit 3.7 and, for so long as such Inventory is held for the account of INDEVUS as set forth in the following sentence, shall be held in compliance with cGMPs and all other applicable laws and regulations. Effective as of the Effective Date, all right, title and -------------------------------------------------------------------------------- interest in the AVENTIS’ Inventory shall be transferred to INDEVUS at AVENTIS’ expense and shall remain at AVENTIS in the name of and for the account of INDEVUS. However, INDEVUS shall bear all risk of partial or total deterioration or loss after transfer of title and interest to INDEVUS, without any recourse against AVENTIS in relation thereto. 3.8 Manufacturing and Supply. INDEVUS shall have all rights and responsibility relating to chemistry, manufacturing and control for clinical and commercial use of Compound or Product such as but not limited to process development, scale up and manufacturing of Compound and Product, subject to the following:     (a) Manufacture of Nucleus. AVENTIS shall retain the right to manufacture and supply or, subject to the provisions of this Section 3.8 (a), have manufactured or have supplied the Nucleus for additional clinical trials and for commercial use by INDEVUS, provided that (i) AVENTIS can manufacture and supply, or any Third Party manufacturer that is a permitted assignee of AVENTIS’ rights under this Section 3.8 (a) can manufacture and supply, the Nucleus in accordance with cGMP and other regulatory requirements; and (ii) AVENTIS shall not have the right to assign its rights under this Section 3.8 (a) to a Third Party manufacturer or supplier of the Nucleus, without INDEVUS’ prior written consent, except with a sale or other divesture of the manufacturing site where the Nucleus is manufactured; and (iii) any such manufacture and supply is in accordance with the terms of the agreement referred to in the next sentence. INDEVUS and AVENTIS shall negotiate in good faith to enter into a manufacturing and supply agreement between the Parties containing mutually acceptable terms within [*] days after the Effective Date, which shall set forth the terms and conditions of the manufacturing and supply of the Nucleus.     (b) Other Manufacturing. In connection with any other manufacturing and supply of Compound and/or Product, INDEVUS will consider AVENTIS in priority to any Third Party, as such manufacturer and supplier. ARTICLE IV CONFIDENTIALITY AND PUBLICITY 4.1 Non-Disclosure and Non-Use Obligations. All Proprietary Information disclosed by one Party to the other Party hereunder shall be maintained in confidence and shall not be disclosed to any Third Party or used for any purpose except as expressly permitted herein without the prior written consent of the Party that disclosed the Proprietary Information to the other Party during the term of this Agreement and for a period of five years thereafter. The foregoing non-disclosure and non-use obligations shall not apply to the extent that such Proprietary Information:     (a) is known by the receiving Party at the time of its receipt, and not through a prior disclosure by the disclosing Party, as documented by business records;     (b) is or becomes properly in the public domain or knowledge;   -------------------------------------------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED --------------------------------------------------------------------------------   (c) is subsequently disclosed to a receiving Party by a Third Party who may lawfully do so and is not under an obligation of confidentiality to the disclosing Party; or     (d) is developed by the receiving Party independently of Proprietary Information received from the other Party, as documented by research and development records. 4.2 Permitted Disclosure of Proprietary Information. Notwithstanding Section 4.1, a Party receiving Proprietary Information of another Party may disclose such Proprietary Information:     (a) to governmental or other agencies in order to obtain patents pursuant to this Agreement, or to gain approval to conduct clinical trials or to market Product, but such disclosure may be only to the extent reasonably necessary to obtain such patents or approvals;     (b) by each of INDEVUS or AVENTIS to its respective agents, consultants, Affiliates, INDEVUS’ sublicensees and/or other Third Parties for the research and development, manufacturing and/or marketing of the Compound and/or Product (or for such parties to determine their interests in performing such activities) on the condition that such Third Parties agree to be bound by confidentiality obligations consistent with this Agreement; provided, however, that except if such disclosure is required by law or is in connection with obtaining any Regulatory Approval, INDEVUS shall inform AVENTIS prior to disclosing to a Third Party AVENTIS Proprietary Information relating to the production of Compound and shall give due consideration to AVENTIS’ reasonable comments or objections to such disclosure; or     (c) if required to be disclosed by law or court order, provided that notice is promptly delivered to the non-disclosing Party in order to provide an opportunity to challenge or limit the disclosure obligations; provided, however, without limiting any of the foregoing, it is understood that the Parties or their Affiliates may make disclosure of this Agreement and the terms hereof in any filings required by the Securities and Exchange Commission (“SEC”), may file this Agreement as an exhibit to any filing with the SEC and may distribute any such filing in the ordinary course of its business, provided, however, that to the maximum extent allowable by SEC rules and regulations, the Parties shall be obligated to maintain the confidentiality obligations set forth herein and shall redact any confidential information set forth in such filings.     (d) Upon execution of this Agreement, either Party may issue a press release, provided that any such Party shall provide the other Party with a draft of such press release for review at least one Business Day prior to its intended release. 4.3 Publication. AVENTIS shall not submit for written or oral publication any manuscript, abstract or the like relating to Compound or Product, without the prior approval of INDEVUS. If AVENTIS proposes to submit such publication, it shall deliver the proposed publication at least thirty (30), or an outline of the oral disclosure at least fifteen (15), Business Days prior to planned submission or presentation. At the request of INDEVUS, the submission of such -------------------------------------------------------------------------------- publication may be delayed, including for issues of patent protection or other matters relating to the development of Compound or Product to be addressed in accordance with the terms of this Agreement. This section shall apply on a reciprocal basis in the case when INDEVUS proposes to submit an oral or written publication that may have an impact on the patentability of AVENTIS Intellectual Property. 4.4 Collaboration Information and Inventions.     (a) Subject to the provisions of Section 4.4(b), the entire right, title and interest in all discoveries, Improvements, processes, formulas, information, data, inventions, know-how and trade secrets, patentable or otherwise, that are primarily used or useful for the development, manufacturing and/or Regulatory Approval of Compound or Product and are obtained, generated, derived, developed or invented in the course of carrying out the Development Program (collectively, “Program Information and Inventions”): (i) solely by employees of AVENTIS shall be owned by AVENTIS (“AVENTIS Information and Inventions”); (ii) solely by employees of INDEVUS shall be owned solely by INDEVUS (“INDEVUS Information and Inventions”); and (iii) jointly by employees of AVENTIS and employees of INDEVUS shall be owned jointly by AVENTIS and INDEVUS (“Joint Information and Inventions”). Each Party shall promptly disclose to the other Party hereto the development, making, conception or reduction to practice of Program Information and Inventions as soon as practical after such information is obtained. Section 4.1 shall apply to such disclosure.     (b) INDEVUS shall retain all right, title and interest in and to any INDEVUS Information and Inventions and to its interest in all Joint Information and Inventions. AVENTIS shall retain all right, title and interest in and to any AVENTIS Information and Inventions and to its interest in all Joint Information and Inventions, all of which shall be included in the license granted to INDEVUS under this Agreement. ARTICLE V PAYMENTS; ROYALTIES AND REPORTS 5.1 License Fee. In consideration of the rights granted by AVENTIS hereunder, INDEVUS shall pay AVENTIS US $[*] within five (5) Business Days after the Effective Date. 5.2 Milestone Payments. Subject to the terms and conditions contained in this Agreement, and in further consideration of the rights granted by AVENTIS hereunder, INDEVUS shall pay AVENTIS the following milestone payments, contingent upon occurrence of the specified event,   -------------------------------------------------------------------------------- [*] CONFIDENTIAL TREATMENT REQUESTED -------------------------------------------------------------------------------- with each milestone payment to be made no more than once with respect to the achievement of such milestone and no amounts payable for any subsequent or repeated achievement of such milestones, regardless of the number of Products for which such milestone may be achieved (but payable the first time such milestone is achieved) for Product: 5.2.1. For the first IV formulation of the first Product:     (a) US $[*] upon commencement (first dosing of the first patient) of first multiple dose Phase 1 Clinical Trial;     (b) US $[*] upon commencement (first dosing of the first patient) of first Phase 2 Clinical Trial;     (c) US $[*] upon the commencement (first dosing of the first patient) of the first Phase 3 Clinical Trial;     (d) US $[*] upon the FDA’s acceptance for filing of the first NDA;     (e) US $[*] upon the first acceptance for filing of an NDA with the EMEA;     (f) US $[*] upon the first acceptance for filing of an NDA in Japan;     (g) US $[*] upon receipt of first written Regulatory Approval in the United States by the FDA;     (h) US $[*] upon receipt of written Regulatory Approval by the EMEA;     (i) US $[*] upon receipt of written Regulatory Approval by the Regulatory Authority in Japan;     (j) US $[*] upon the achievement of cumulative Net Sales of US $[*];     (k) US $[*] upon the achievement of cumulative Net Sales of US $[*];     (l) US $[*] upon the achievement of cumulative Net Sales of US $[*]; and     (m) US $[*] upon the achievement of cumulative Net Sales of US $[*]. 5.2.2. For the first oral formulation of the first Product:     (a) US $[*] upon the commencement (first dosing of the first patient) of the first Phase 3 Clinical Trial;     (b) US $[*] upon the FDA’s acceptance for filing of the first NDA;   -------------------------------------------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED --------------------------------------------------------------------------------   (c) US $[*] upon the first acceptance for filing of an NDA by the EMEA;     (d) US $[*] upon the first acceptance for filing of an NDA in Japan;     (e) US $[*] upon receipt of first written Regulatory Approval in the United States by the FDA;     (f) US $[*] upon receipt of written Regulatory Approval by the EMEA;     (g) US $[*] upon receipt of written Regulatory Approval by the Regulatory Authority in Japan;     (h) US $[*] upon the achievement of cumulative Net Sales of US $[*];     (i) US $[*] upon the achievement of cumulative Net Sales of US $[*];     (j) US $[*] upon the achievement of cumulative Net Sales of US $[*];     (k) US $[*] upon the achievement of cumulative Net Sales of US $[*]; and     (l) US $[*] upon the achievement of cumulative Net Sales of US $[*]. INDEVUS shall notify AVENTIS in writing within fifteen (15) Business Days after the achievement of each milestone (ninety (90) days for milestones 5.2.1 (j) through (m) and 5.2.2 (h) through (l)), and such notice shall be accompanied by the appropriate milestone payment. 5.3 Royalties and Other Payments. 5.3.1. Royalties Payable By INDEVUS. (i) Subject to the terms and conditions of this Agreement, and in further consideration of the rights granted by AVENTIS hereunder, INDEVUS shall pay to AVENTIS royalties in the applicable percentage set forth below for Net Sales of Prescription Products in each Royalty Year in the United States by INDEVUS or its Affiliates, as applicable, if the manufacture, use or sale of such Prescription Products would, absent the license granted hereunder, infringe one or more Valid Claims of the AVENTIS Patent Assets in the United States:   Annual Net Sales in U.S.:    Royalty Rate:   Up to US$[*]    [ *]% From US$[*] up    [ *]% -------------------------------------------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED -------------------------------------------------------------------------------- (ii) Subject to the terms and conditions of this Agreement, and in further consideration of the rights granted by AVENTIS hereunder, INDEVUS shall pay to AVENTIS royalties equal to the applicable percentage set forth below for total Net Sales of Prescription Products in each country in the Territory other than the United States in each Royalty Year by INDEVUS or its Affiliates where the manufacture, use or sale of such Prescription Product would, absent the license granted hereunder, infringe one or more Valid Claims of the AVENTIS Patent Assets in such country:   Total Annual Net Sales outside U.S.:    Royalty Rate:   Up to US$[*]    [ *]% From US$[*] up    [ *]% (iii) Royalties on Net Sales at the rates set forth in (i) and (ii) above shall accrue as of the date of First Commercial Sale of Product in the applicable country and shall continue and accrue on Net Sales on a country-by-country basis until the expiration of all AVENTIS Patent Assets in such country, provided, however, that no royalties shall be payable in respect of Net Sales of Product in any country during any period in which lawful Generic Competition exists in such country. Thereafter, INDEVUS shall be relieved of any royalty payment under this Section 5.3. (iv) The payment of royalties set forth above shall be subject to the following conditions: (a) only one payment shall be due with respect to the same unit of Product; and (b) no royalties shall accrue on the disposition of Product by INDEVUS, Affiliates or sublicensees as samples (promotion or otherwise) or as reasonable donations (for example, to non-profit institutions or government agencies) or to clinical trials. (v) In the event that INDEVUS or any INDEVUS Affiliate or sublicensee determines to commercialize Product as an Over-the-Counter Product, the Parties shall negotiate in good faith a royalty payable to AVENTIS on Net Sales of Over-the-Counter Products in countries where the manufacture, use or sale of such Over-the-Counter Product would, absent the license granted hereunder, infringe one or more Valid Claims of the AVENTIS Patent Assets in such country.   -------------------------------------------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED -------------------------------------------------------------------------------- (vi) In those countries in the Territory in which no Valid Claim of the AVENTIS Patent Assets exists as of the date of First Commercial Sale of Product INDEVUS would pay to AVENTIS, in consideration of the license under AVENTIS Know How, royalties on Net Sales of Products in such country(ies) at rates that are [*] of the rates stated in Section 5.3.1(i) or (ii), as applicable (or with respect to Over-the-Counter Products, the rates determined in accordance with Section 5.3.1 (v)), for a period expiring on the expiration date of the last to expire United States patent included in the AVENTIS Patent Assets, as long as the AVENTIS Know-How is not in the public domain and provided there is no Generic Competition in such country. Notwithstanding the foregoing, no royalties shall be payable in respect of Net Sales of any Product in any country of the Territory as of and after the date on which Generic Competition exists in the applicable country. 5.3.2. Payments in the Event of Sublicense. In the event INDEVUS enters into one or more sublicense agreement(s) with one or more Third Party or Third Parties under Section 2.3 of this Agreement, the respective percentages of royalties set forth in Section 5.3.1 would no longer be applicable to the Net Sales in the country or countries covered by the sublicense agreement(s) and, in lieu thereof, AVENTIS would receive the following respective percentages of the total Sublicense Royalty Payments for the concerned country(ies):     •   [*] percent ([*]%) if the sublicense agreement is entered into [*];     •   [*] percent ([*]%) if the sublicense agreement is entered into [*]; and     •   [*] percent ([*]%) if the sublicense agreement is entered into [*]. In order to calculate the amounts due to AVENTIS under this Section 5.3.2, it is understood that (i) any payment to INDEVUS by a sublicensee that is triggered by Net Sales (such as but not limited to fees) shall be considered Sublicense Royalty Payments; and (ii) if no royalties or a lower royalty percentage is paid by INDEVUS’ Sublicensee in consideration of an increased margin received by INDEVUS on Compound or Product supply or of higher milestones payments, such excess payments shall be considered Sublicense Royalty Payments. 5.3.3. Affiliate and Sublicensee Sales. In the event that INDEVUS transfers Compound (for conversion to Product) or Product to one of its Affiliates or Sublicensees, there shall be no royalty due at the time of transfer. Subsequent sales of Product by the Affiliate or the Sublicensee to end users such as patients, hospitals, medical institutions, health plans or funds, wholesalers, pharmacies or other retailers, shall be reported as Net Sales hereunder by INDEVUS.   -------------------------------------------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED -------------------------------------------------------------------------------- 5.3.4. Compulsory Licenses. If a compulsory license is granted to a Third Party with respect to Product in any country in the Territory with a royalty rate lower than the royalty rate provided by Section 5.3.1, then the royalty rate to be paid by INDEVUS on Net Sales in that country under Section 5.3.1 shall be reduced to the rate paid by the compulsory Third Party licensee, provided Indevus can show appropriate evidence that Indevus has used commercially reasonable efforts (i) to avoid having to grant such Compulsory License and (ii) to obtain the highest possible royalty rate from such Compulsory Licensee. 5.3.5. Third Party Licenses. If INDEVUS would be prevented from developing, making, having made, using, selling or importing Product in any country of the Territory on the grounds that by doing so INDEVUS or any sublicensee would infringe a Dominating Patent or other patent rights held by a Third Party in said country, [*] percent ([*]%) of any royalties or other payments payable or paid by INDEVUS to such Third Party in such country in any Royalty Year shall be creditable against the royalty or other payments payable to AVENTIS by INDEVUS in such country for such Royalty Year, provided that in such event AVENTIS has been informed of the Dominating Patent and has had an opportunity to provide input on any related discussion. 5.3.6. Combination Product. Notwithstanding the provisions of Section 5.3.1, in the event a Product is sold as a combination product with other biologically active components, Net Sales, for purposes of royalty payments on the combination product, shall be calculated by multiplying the Net Sales of that combination product by the fraction A/B, where A is the gross selling price of the Product sold separately and B is the gross selling price of the combination product. If no such separate sales are made by INDEVUS or its Affiliates, Net Sales for royalty determination shall be calculated by multiplying Net Sales of the combination product by the fraction C/(C+D), where C (excluding the fully allocated cost of the other biologically active component in question) is the fully allocated cost of the Compound and D is the fully allocated cost of such other biologically active components. 5.4 Reports; Payment of Royalty. During the term of the Agreement for so long as royalty or other payments are due, INDEVUS shall furnish to AVENTIS a quarterly written report for the Calendar Quarter showing (i) the Net Sales of all Products sold by INDEVUS or its Affiliates or sublicensees, as applicable, during the reporting period, (ii) the royalties or other payments payable to AVENTIS under this Agreement, (iii) in the case of sales outside the United States the calculation of the conversion to United States dollars as per Section 5.6, and (iv) in the case of a sublicense, Sublicense Royalty Payments received by INDEVUS. Reports shall be due on the [*] day following the close of each Calendar Quarter. Royalties or other payments shown to have accrued by each royalty report, if any, shall be due and payable on the date such report is due. INDEVUS shall keep complete and accurate records in sufficient detail to enable the royalties or other payments hereunder to be determined. 5.5 Audits. Upon the written request of AVENTIS and not more than once in each Calendar Year, INDEVUS shall permit an independent certified public accounting firm selected by   -------------------------------------------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED -------------------------------------------------------------------------------- AVENTIS and consented to in writing by INDEVUS, which consent shall not be unreasonably withheld, to have access during normal business hours, upon ten-days notice to INDEVUS, to such of the records of INDEVUS as may be necessary to verify the accuracy of the royalty reports hereunder for any Royalty Year ending not more than [*] months prior to the date of such request. The accounting firm shall disclose to AVENTIS only whether the royalty reports are correct or incorrect and the specific details concerning any discrepancies. 5.5.1. If such accounting firm concludes that additional royalties were owed during such Royalty Year, INDEVUS shall pay the additional royalties within [*] days of the date AVENTIS delivers to INDEVUS such accounting firm’s written report so concluding. In the event such accounting firm concludes that amounts were overpaid by INDEVUS during such period, AVENTIS shall repay INDEVUS the amount of such overpayment within [*] days of the date AVENTIS delivers to INDEVUS such accounting firm’s written report so concluding. The fees charged by such accounting firm shall be paid by AVENTIS; provided, however, that if an error in favor of AVENTIS of more than the greater of (i) $[*] or (ii) [*] percent ([*]%) of the royalties due hereunder for the period being reviewed is discovered, then the fees and expenses of the accounting firm shall be paid by INDEVUS. 5.5.2. Upon the expiration of [*] months following the end of any Royalty Year the calculation of royalties payable with respect to such year shall be binding and conclusive upon AVENTIS, and INDEVUS shall be released from any liability or accountability with respect to royalties for such year. 5.5.3. AVENTIS shall treat all financial information subject to review under this Section 5.5 in accordance with the confidentiality provisions of this Agreement and shall cause its accounting firm to enter into a reasonable and mutually satisfactory confidentiality agreement with INDEVUS obligating it to retain all such financial information in confidence pursuant to such confidentiality agreement. 5.6 Payment Exchange Rate. All payments to AVENTIS under this Agreement shall be made in United States dollars. In the case of sales invoiced in a currency other than the US dollar, the rate of exchange to be used in computing Net Sales shall be calculated monthly in accordance with GAAP and based on the conversion rates published in the Wall Street Journal, Eastern edition (if available). 5.7 Late Payment. In case of late payment of any payment due hereunder by INDEVUS (milestones or royalties) or in case of additional payment due by INDEVUS pursuant to Section 5.5.1, INDEVUS shall pay to AVENTIS interest on the unpaid amount until such payment is paid in full, at the LIBOR Rate (as defined below), plus [*], but in no event in excess of the maximum rate permitted by applicable law. “LIBOR Rate” means an interest rate per annum equal to the rate of interest per annum at which deposits in United States dollars are offered by the principal office of Citibank, N.A. in London, England, to prime banks in the London interbank market at 11:00 a.m. (London time) on the Business Day immediately preceding the commencement of such interest period.   -------------------------------------------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED -------------------------------------------------------------------------------- 5.8 Tax Withholding. If laws, rules or regulations require withholding of income taxes or other taxes imposed upon payments set forth in this Article V, AVENTIS shall provide INDEVUS, prior to any such payment, once each Royalty Year or more frequently if required, with all forms or documentation required by any applicable taxation laws, treaties or agreements to such withholding or as necessary to claim a benefit thereunder (including, but not limited to United States Internal Revenue Service Form W-8BEN or any successor forms) and INDEVUS shall make such withholding payments as required and subtract such withholding payments from the payments set forth in this Article V. INDEVUS will use commercially reasonable efforts consistent with its usual business practices and cooperate with AVENTIS to reduce any withholding taxes imposed as far as possible under the provisions of the current or any future taxation treaties or agreements between foreign countries. INDEVUS will cooperate and assist AVENTIS in having adequate documentation to claim tax credits for any and all taxes withheld pursuant to this Article V. To that end, within thirty (30) days of remitting any and all taxes withheld to the tax authorities, INDEVUS shall provide to AVENTIS proof of its remittance of taxes withheld from payments made to AVENTIS, and on an annual basis will provide AVENTIS with a United States Internal Revenue Service Form 1042-S and comparable state or local forms, if any, or successor federal forms. 5.9 Exchange Controls. Notwithstanding any other provision of this Agreement, if at any time legal restrictions prevent the prompt remittance of part or all of the royalties with respect to Net Sales in any country, payment shall be made through such lawful means or methods as INDEVUS may determine in consultation with AVENTIS. When in any country the law or regulations prohibit both the transmittal and deposit of royalties on sales in such a country, royalty payments shall be suspended for as long as such prohibition is in effect (and such suspended payments shall not accrue interest), and promptly after such prohibition ceases to be in effect, all royalties or other payments that INDEVUS or its Affiliates would have been obligated to transmit or deposit, but for the prohibition, shall be deposited or transmitted, as the case may be, to the extent allowable (with any interest earned on such suspended royalties which were placed in an interest-bearing bank account in that country, less any transactional costs). If the royalty rate specified in this Agreement should exceed the permissible rate established in any country, the royalty rate for sales in such country shall be adjusted to the highest legally permissible or government-approved rate. ARTICLE VI REPRESENTATIONS AND WARRANTIES 6.1 AVENTIS Representations and Warranties. AVENTIS represents and warrants to INDEVUS that as of the Effective Date:     (a) the pending patent applications and the issued patents included in the AVENTIS Patent Assets are in existence and, to the best of AVENTIS’ knowledge, recite patentable subject matter and contain claims that are valid and enforceable, respectively; and AVENTIS will comply and abide by the rules and / or statutes governing the prosecution, issuance and maintenance of such pending patent applications and issued patents in each applicable country of the Territory; --------------------------------------------------------------------------------   (b) this Agreement has been duly executed and delivered by AVENTIS and constitutes legal, valid, and binding obligations enforceable against AVENTIS in accordance with its terms, except as enforceability is limited by any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditor’s rights generally;     (c) no approval, authorization, consent, or other order or action of or filing with any court, administrative agency or other governmental authority is required for the execution and delivery by AVENTIS of this Agreement or the consummation by AVENTIS of the transactions contemplated hereby;     (d) AVENTIS has the full corporate power and authority to enter into and deliver this Agreement, to perform and to grant the licenses granted under Article II hereof and to consummate the transactions contemplated hereby; all corporate acts and other proceedings required to be taken to authorize such execution, delivery, and consummation have been duly and properly taken and obtained;     (e) AVENTIS has not previously assigned, transferred, conveyed or otherwise encumbered its right, title and interest in the AVENTIS Intellectual Property, including the Nucleus, or entered into any agreement with any Third Party which is in conflict with the rights granted to INDEVUS pursuant to this Agreement;     (f) it is the sole owner of the AVENTIS Intellectual Property including the Nucleus, all of which are free and clear of any liens, charges and encumbrances, no other person, corporate or other private entity, or governmental or university entity or subdivision thereof has any claim of ownership or rights with respect to the AVENTIS Intellectual Property, including the Nucleus, whatsoever;     (g) AVENTIS has disclosed to INDEVUS the complete texts of all patents or patent applications relating to Compound or Product that are in existence on the Effective Date and that are the property of AVENTIS as well as all information received by AVENTIS concerning the institution or possible institution of any interference, opposition, re-examination, reissue, revocation, nullification, or any official proceeding involving an AVENTIS Patent Asset, and that it will continue such disclosure with respect to new events during the term of the Agreement;     (h) Schedule 1.5 is a complete and accurate list of all patents and patent applications in the Territory relating to Compound or Product owned or exclusively licensed by AVENTIS and to which AVENTIS has the right to license;     (i) As of the Effective Date, to the best of AVENTIS’ knowledge, the contemplated development, importation, manufacture, use, offer for sale and sale of Compound included in the AVENTIS Patent Assets or Product or Nucleus would not infringe any patent rights owned or possessed by any Third Party; --------------------------------------------------------------------------------   (j) there are no claims, judgments or settlements against or owed by AVENTIS relating to the AVENTIS Patent Assets or pending or, to the best of AVENTIS’ knowledge, threatened claims or litigation against AVENTIS relating to the AVENTIS Patent Assets;     (k) AVENTIS has disclosed to INDEVUS all relevant information known by it regarding the AVENTIS Intellectual Property and it has no knowledge of the existence of any preclinical or clinical data or information relating to Compound or Product that has not been disclosed to INDEVUS that could materially influence INDEVUS’ decision to enter into this Agreement;     (l) no contract research organization, corporation, business entity or individual which have been involved in any studies conducted for the purpose of obtaining regulatory approvals have been debarred individuals or entities within the meaning of 21 U.S.C. section 335(a) or (b); and     (m) in connection with development of Nucleus, Compound and Product, AVENTIS has complied and is complying in all material respects with applicable U.S. and European laws and regulations including U.S. good laboratory practices in its conduct of toxicology studies on Compound and U.S. good clinical practices in its conduct of clinical studies on Compound.     (n) as of the Effective Date, there are no contracts, agreements and other arrangements between AVENTIS and any Third Parties relating to the research, development or commercialization of the Nucleus, Compound or Product that could impair the exercise of the rights granted to INDEVUS hereunder. 6.2 INDEVUS Representations and Warranties. INDEVUS represents and warrants to AVENTIS that as of the Effective Date:     (a) this Agreement has been duly executed and delivered by it and constitutes legal, valid, and binding obligations enforceable against it in accordance with its terms except as enforceability is limited by any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditor’s rights generally;     (b) it has full corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. All corporate acts and other proceedings required to be taken to authorize such execution, delivery, and consummation have been duly and properly taken and obtained; and     (c) no approval, authorization, consent, or other order or action of or filing with any court, administrative agency or other governmental authority is required for the execution and delivery by it of this Agreement or the consummation by it of the transactions contemplated hereby. -------------------------------------------------------------------------------- ARTICLE VII PATENT MATTERS 7.1 Filing, Prosecution and Maintenance of AVENTIS Patent Assets. AVENTIS shall have the first right to file, prosecute and maintain the AVENTIS Patent Assets and patents on AVENTIS Information and Inventions in AVENTIS’ name and shall be responsible for the payment of all patent prosecution and maintenance costs. If AVENTIS elects not to file, prosecute or maintain a patent application or patent included in the AVENTIS Patent Assets in any particular country, it shall provide INDEVUS with written advance notice sufficient to avoid any loss or forfeiture, and INDEVUS shall have the right, but not the obligation, at its expense, to file, prosecute or maintain such patent application or patent in such country in AVENTIS’ name. Thereafter, INDEVUS’ royalty obligations related to that AVENTIS Patent Asset in such country shall terminate and such patent or patent application in such country shall no longer be deemed an AVENTIS Patent Asset. Upon the reasonable request of one Party, the other Party shall reasonably cooperate in the filing, prosecution or maintenance of any patent application or patent included in the AVENTIS Patent Assets. The responsible Party under this Section 7.1 shall solicit the other Party’s review of the nature and text of such patent applications and important prosecution matters related thereto in reasonably sufficient time prior to filing thereof, and the responsible Party shall take into account the other Party’s reasonable comments related thereto. AVENTIS shall inform INDEVUS of any significant developments in the prosecution of pending patent applications included in the AVENTIS Patent Assets, including the issuance of any final office actions, allowance of claims, or upcoming grant of any domestic or foreign patent based thereon. 7.2 Program Information and Inventions. INDEVUS shall have the first right to file, prosecute and maintain any patent application(s) or patent(s) arising from INDEVUS Information and Inventions and from Joint Information and Inventions and shall be responsible for the payment of all patent prosecution and maintenance costs. Upon INDEVUS’ request, AVENTIS shall reasonably cooperate in the filing, prosecution or maintenance of any such patent application or patent. If INDEVUS elects not to file, prosecute or maintain any such patent application or patent in any particular country in the Territory, it shall provide AVENTIS with written advance notice sufficient to avoid any loss or forfeiture, and AVENTIS shall have the right, but not the obligation, at its sole expense, to file, prosecute or maintain such patent application or patent in such country in AVENTIS’ name, and INDEVUS shall transfer all right, title and interest in such patent application or patent, and the underlying INDEVUS Information and Inventions claimed by such patent application or patent, in such country to AVENTIS. The responsible Party under this Section 7.2 shall solicit the other Party’s review of the nature and text of such patent applications and important prosecution matters related thereto in reasonably sufficient time prior to filing thereof, and the responsible Party shall take into account the other Party’s reasonable comments related thereto. 7.3 Patent Office and Court Proceedings. Each Party shall inform the other Party of any request for, filing, or declaration of any proceeding before a patent office seeking to protest, oppose, cancel, reexamine, declare an interference proceeding, initiate a conflicts proceeding, or analogous process involving a patent application or patent included in the AVENTIS Patent Assets, or of the filing of an action in a court of competent jurisdiction seeking a judgment that a -------------------------------------------------------------------------------- patent included in the AVENTIS Patent Assets is either invalid or unenforceable or both. Each Party thereafter shall cooperate fully with the other with respect to any such patent office or court proceeding. Each Party will provide the other with any information or assistance that is reasonable. 7.4 Enforcement and Defense.     (a) Each Party shall promptly give the other Party notice of any infringement in the Territory of any patent application or patent included in the AVENTIS Patent Assets that comes to such Party’s attention. The Parties will thereafter consult and cooperate fully to determine a course of action, including, without limitation, the commencement of legal action by any Party. However, AVENTIS shall have the first right to initiate and prosecute such legal action at its own expense and in the name of AVENTIS and INDEVUS, or to control the defense of any declaratory judgment action relating to the AVENTIS Patent Assets. AVENTIS shall promptly inform INDEVUS if AVENTIS elects not to exercise such first right, and INDEVUS thereafter shall have the right either to initiate and prosecute such action or to control the defense of such declaratory judgment action in the name of INDEVUS and, if necessary, AVENTIS.     (b) If AVENTIS elects not to initiate and prosecute an infringement or defend a declaratory judgment action in any country in the Territory as provided in Subsection 7. 4(a), and INDEVUS elects to do so, the cost of any agreed-upon course of action, including the costs of any legal action commenced or any declaratory judgment action defended, shall be borne solely by INDEVUS.     (c) For any such legal action or defense, in the event that any Party is unable to initiate, prosecute, or defend such action solely in its own name, the other Party will join such action voluntarily and will execute all documents necessary for the Party to prosecute, defend and maintain such action. In connection with any such action, the Parties will cooperate fully and will provide each other with any information or assistance that either reasonably may request.     (d) Any recovery obtained by INDEVUS or AVENTIS shall be shared as follows: (i) the Party that initiated and prosecuted, or maintained the defense of, the action shall recoup all of its costs and expenses (including reasonable attorneys’ fees) incurred in connection with the action, whether the recovery is by settlement or otherwise; (ii) the other Party then shall, to the extent possible, recover its costs and expenses (including reasonable attorneys’ fees) incurred in connection with the action; (iii) if AVENTIS initiated and prosecuted, or maintained the defense of, the action, the amount of any recovery remaining then shall be retained by AVENTIS; and -------------------------------------------------------------------------------- (iv) if INDEVUS initiated and prosecuted, or maintained the defense of, the action, the amount of any recovery remaining shall be retained by INDEVUS, except that AVENTIS shall receive a portion equivalent to the royalties it would have received in accordance with the terms of this Agreement if such amount were deemed Net Sales.     (e) the foregoing subsections (a), (b), (c) and (d) shall apply on reciprocal basis regarding the INDEVUS Patent Assets and joint patents. 7.5 AVENTIS shall inform INDEVUS of any certification regarding any AVENTIS Patent Assets it has received pursuant to either 21 U.S.C. §§ 355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV) or under Canada’s Patented Medicines (Notice of Compliance) Regulations Article 5 and shall provide INDEVUS with a copy of such certification within five (5) Business Days of receipt. AVENTIS’ and INDEVUS’ rights with respect to the initiation and prosecution, or defense, of any legal action as a result of such certification or any recovery obtained as a result of such legal action shall be allocated as defined in Subsections 7.4(d) (i) through (iv); provided, however, that INDEVUS shall exercise the first right to initiate and prosecute, or defend, any action and shall inform AVENTIS of such decision within fifteen (15) days of receipt of the certification, after which time, if INDEVUS has not advised AVENTIS of its intention to initiate and prosecute, or defend, such action, AVENTIS shall have the right to initiate and prosecute, or defend, such action. 7.6 Patent Term Extensions or Restorations and Supplemental Protection Certificates. The Parties shall cooperate with each other in obtaining patent term extensions or restorations or supplemental protection certificates or their equivalents in any country in the Territory where applicable. If elections with respect to obtaining such extension or supplemental protection certificates are to be made, INDEVUS shall have the right to make the election and AVENTIS shall abide by such election. AVENTIS shall notify INDEVUS of (a) the issuance of each U.S. patent included within the AVENTIS Patent Assets, giving the date of issue and patent number for each such patent, and (b) each notice pertaining to any patent included within the AVENTIS Patent Assets pursuant to the United States Drug Price Competition and Patent Term Restoration Act of 1984 (hereinafter called the “1984 Act”), including notices pursuant to §§ 101 and 103 of the 1984 Act from persons who have filed an abbreviated NDA (“ANDA”). Such notices shall be given promptly, but in any event within five (5) Business Days of each such patent’s date of issue or receipt of each such notice pursuant to the Act, whichever is applicable. AVENTIS shall notify INDEVUS of each filing for patent term extension or restoration under the 1984 Act, any allegations of failure to show due diligence and all awards of patent term restoration (extensions) with respect to the AVENTIS Patent Assets. Likewise, AVENTIS shall inform INDEVUS of patent extensions in the rest of the world regarding Compound or Product. ARTICLE VIII TERM AND TERMINATION 8.1 Term and Expiration. Subject to Section 5.3.1 (vi), this Agreement shall be effective as of the Effective Date and unless terminated earlier pursuant to Section 8.2 or 8.3 below, the term of this Agreement shall continue in effect on a country-by-country basis until the date of -------------------------------------------------------------------------------- expiration of the last to expire patent included in the AVENTIS Patent Assets in such country. Expiration of this Agreement under this provision shall not preclude INDEVUS from continuing to develop, make, have made, use, sell, offer for sale, and import Product in the Territory without further remuneration to AVENTIS. 8.2 Termination by Notice. Notwithstanding anything contained herein to the contrary, INDEVUS shall have the right to terminate this Agreement at any time after completion of a [*]:     (a) by giving [*] days advance written notice to AVENTIS, if INDEVUS believes that the results of such trial (such as toxicology studies) lead to the conclusion that there is no reasonable likelihood to obtain Regulatory Approval, provided that such conclusion shall be submitted to the Committee and the decision to terminate the Development Program and consequently the Agreement, shall be made by the Committee; or     (b) by giving [*] days advance notice to AVENTIS, provided that: (i) INDEVUS will, if requested by AVENTIS, cooperate with AVENTIS or AVENTIS’ designee during such [*] day period to transfer to AVENTIS or AVENTIS’ designee the supervision of any ongoing clinical trial in such a way that no delay incurs in such clinical trial, if the termination of such trial would materially adversely affect the development of Product and AVENTIS has advised INDEVUS that it intends to continue development of Product; (ii) INDEVUS will promptly upon having sent such notice transfer to AVENTIS or AVENTIS’ designee all data, files, Regulatory Approvals, if any, and information, data, know-how, etc in the possession of INDEVUS and related to Compound or Product; (iii) AVENTIS will be entitled to start negotiations with Third Parties in relation to Compound or Product immediately upon receipt of such notice; and (iv) INDEVUS will provide AVENTIS with reasonable assistance that AVENTIS may request in responding to due diligence requests by Third Parties that AVENTIS is negotiating with as potential licensees for Compound or Product, provided that INDEVUS shall not be required to disclose to such Third Parties INDEVUS Proprietary Information that does not relate to Compound or Product. Except as otherwise set forth in this Agreement, in the event of such termination, (i) the rights and obligations hereunder, excluding any payment obligation that has accrued as of the termination date and excluding rights and obligations relating to confidentiality, shall terminate immediately, and (ii) the provisions of Section 8.4 shall be applicable.   -------------------------------------------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED -------------------------------------------------------------------------------- 8.3 Termination. 8.3.1. Termination for Cause. Either Party may terminate this Agreement by notice to the other Party at any time during the term of this Agreement as follows:     (a) if the other Party is in breach of any material obligation hereunder by causes and reasons within its control, or has breached, in any material respect, any representations or warranties set forth in Article VI, and has not cured such breach within (i) [*] Business Days in case the breach is a non payment of any amount due under this Agreement and (ii) within [*] days for other cases of breach, after notice requesting cure of the breach, provided, however, that if a breach other than a non payment is not capable of being cured within [*] days of such written notice, the Agreement may not be terminated sooner than [*] days of such written notice so long as the breaching Party commences and is taking commercially reasonable actions to cure such breach as promptly as practicable; or     (b) Upon the filing or institution of bankruptcy, reorganization, liquidation or receivership proceedings, under any re-organization or insolvency law of any jurisdiction, or upon an assignment of a substantial portion of the assets for the benefit of creditors by the other Party, or upon the rejection of this Agreement by either Party under section 365 of 11 U.S.C. §101 et seq. (the “Bankruptcy Code”); provided, however, that in the case of any involuntary bankruptcy, reorganization, liquidation, receivership or assignment proceeding such right to terminate shall only become effective if the Party consents to the involuntary proceeding or such proceeding is not dismissed within ninety (90) days after the filing thereof. 8.3.2. Licensee Rights Not Affected.     (a) All rights and licenses granted pursuant to this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the Bankruptcy Code licenses of rights to “intellectual property” as defined under Section 101(35A) of the Bankruptcy Code. The Parties agree that INDEVUS and AVENTIS shall retain and may fully exercise all of their respective rights, remedies and elections under the Bankruptcy Code.     (b) The Parties further agree that, in the event of the commencement of a bankruptcy or reorganization case by or against AVENTIS under the Bankruptcy Code, INDEVUS shall be entitled to all applicable rights under Section 365 (including 365(n)) of the Bankruptcy Code. Upon rejection of this Agreement by AVENTIS or a trustee in bankruptcy for AVENTIS, pursuant to Section 365(n), INDEVUS may elect (i) to treat this Agreement as terminated by such rejection or (ii) to retain its rights (including any right to enforce any exclusivity provision of this Agreement) to intellectual property (including any embodiment of such intellectual property) under this Agreement and under any agreement supplementary to this Agreement for the duration of this Agreement and any period for which this Agreement could have been extended by INDEVUS. Upon written request to the trustee in bankruptcy or AVENTIS, the trustee or AVENTIS, as   -------------------------------------------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED --------------------------------------------------------------------------------   applicable, shall (i) provide to INDEVUS any intellectual property (including such embodiment) held by the trustee or AVENTIS and shall provide to INDEVUS a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property and (ii) not interfere with the rights of INDEVUS to such intellectual property as provided in this Agreement or any agreement supplementary to this Agreement, including any right to obtain such intellectual property (or such embodiment or duplicates thereof) from a Third Party. 8.4 Effect of Expiration or Termination.     (a) Except as set forth in this Agreement, in the event of termination of this Agreement, the rights and obligations hereunder, excluding any payment obligation that has accrued as of the termination date and excluding rights and obligations relating to confidentiality, shall terminate immediately, except that INDEVUS and its Affiliates and sublicensees shall have the right to sell or otherwise dispose of the stock of any Product subject to this Agreement then on hand or in process of manufacture. Expiration or termination of this Agreement shall not relieve the Parties of any obligation accruing prior to such expiration or termination. In addition to any other provisions of this Agreement which by their terms continue after the expiration of this Agreement, the provisions of Article IV shall survive the expiration or termination of this Agreement and shall continue in effect for five (5) years from the date of expiration or termination. In addition, any other provision required to interpret and enforce the Parties’ rights and obligations under this Agreement shall also survive, but only to the extent required for the full observation and performance of this Agreement. Any expiration or early termination of this Agreement shall be without prejudice to the rights of any Party against the other accrued or accruing under this Agreement prior to termination. Except as expressly set forth herein, the rights to terminate as set forth herein shall be in addition to all other rights and remedies available under this Agreement, or at law.     (b) Upon termination of this Agreement pursuant to Section 8.2 or upon termination by AVENTIS pursuant to Section 8.3.1(a), INDEVUS shall, if requested to do so in writing by AVENTIS, grant a license to AVENTIS of INDEVUS Patent Assets and INDEVUS Know-How including any Regulatory Approval, if any, held by INDEVUS for Products at the time of termination. The Parties shall negotiate in good faith to enter into a mutually acceptable license provided, however, that such license shall be royalty-free if the termination is by INDEVUS under Section 8.2. ARTICLE IX MISCELLANEOUS 9.1 Force Majeure. Neither Party shall be held liable or responsible to the other Party nor be deemed to have defaulted under or breached the Agreement for failure or delay in fulfilling or performing any term of the Agreement during the period of time when such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party including, but not limited to, fire, flood, embargo, war, acts of war (whether war be declared or not), -------------------------------------------------------------------------------- insurrection, riot, civil commotion, strike, lockout or other labor disturbance, act of God or act, omission or delay in acting by any governmental authority, provided the affected Party has promptly notified the other Party of such force majeure circumstances as soon as reasonably practicable, and makes reasonable efforts to overcome force majeure and minimize the consequences of the force majeure, and resumes the performance of its obligations as soon as force majeure terminates. 9.2 Assignment. The Agreement may not be assigned or otherwise transferred without the prior written consent of the other Party; provided, however, that without such consent (i) either Party may assign this Agreement to an Affiliate, or in connection with the transfer or sale of all or substantially all of its business or assets or in the event of a merger, consolidation, change in control or similar corporate transaction and (ii)AVENTIS may assign this Agreement in connection with the transfer or sale of all or substantially all of its business or assets to which the Compound or Product relate, and provided further that the provisions of Section 2.4 may not be assigned by AVENTIS except to a Qualified Assignee of AVENTIS’ business and assets to which Compound or Product relate. For purposes of this Section 9.2, a Qualified Assignee shall mean a company that, at the time of exercise of the Right of First Negotiation, is actively engaged in the marketing of pharmaceutical products in those countries of the European Community where such Right of First Negotiation is meant to be implemented at that time and has the internal capability to achieve substantial market penetration and optimize sales of Product in such countries, taking into account the market potential of the Product and the status of the market as well as all relevant factors at that time. The Agreement shall be binding and inure to the successors of either Party thereto, in particular in the event of a merger, consolidation, change in control or similar corporate transaction. Any successor or permitted assignee shall assume all obligations of its assignor under this Agreement. 9.3 Severability. In the event that any of the provisions contained in this Agreement are held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, unless the invalid provisions are of such essential importance for this Agreement that it is to be reasonably assumed that the Parties would not have entered into this Agreement without the invalid provisions. In such event, the Parties shall substitute such invalid provisions by valid ones, which in their economic effect come so close to the invalid provisions that it can be reasonably assumed that the Parties would have entered into this Agreement also with those substituted provisions. 9.4 Notices. All notices or other communications which are required or permitted hereunder shall be in writing and sufficient if delivered personally, sent by facsimile (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by nationally-recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows: if to INDEVUS to: INDEVUS PHARMACEUTICALS, INC. 99 Hayden Avenue, Suite 200 Lexington, MA, United States 02421 Attention: President Fax No.: 1-781-862-3859 -------------------------------------------------------------------------------- if to AVENTIS to: AVENTIS PHARMA SA 20 avenue Raymond Aron 92165 Antony Cedex France Attention: General Counsel Fax No.: 33 1 55 71 66 50 or to such other address as the Party to whom notice is to be given may have furnished to the other Parties in writing in accordance herewith. Any such communication shall be deemed to have been given when delivered if personally delivered or sent by facsimile on a Business Day, upon confirmed delivery by nationally-recognized overnight courier if so delivered and on the third Business Day following the date of mailing if sent by registered or certified mail. 9.5 Applicable Law and Dispute Resolution. The Agreement shall be governed by and construed in accordance with the laws of New York, without reference to any rules of conflict of laws, except matters of intellectual property law, which shall be determined in accordance with the national intellectual property laws relevant to the intellectual property in question.     (a) The Parties agree to attempt initially to solve all claims, disputes, or controversies arising under, out of, or in connection with this Agreement (a “Dispute”) by conducting good faith negotiations. Any Disputes which cannot be resolved by good faith negotiation within thirty (30) Business Days, shall be referred, by written notice from either Party to the other, to the Chief Executive Officer of each Party. Such Chief Executive Officers shall negotiate in good faith to achieve a resolution of the Dispute referred to them within thirty (30) Business Days after such notice is received by the Party to whom the notice was sent. With the exception of issues subject to the provisions of Section 3.3.2, if the Chief Executive Officers are unable to settle the Dispute between them within thirty (30) Business Days, they shall so report to the Parties in writing. The Dispute shall then be referred to mediation as set forth in the following subsection (b).     (b) Upon the Parties receiving the Chief Executive Officers’ report that the Dispute referred to them pursuant to subsection (a) has not been resolved, the Dispute shall be referred to mediation by written notice from either Party to the other. The mediation shall be conducted pursuant to the LCIA Mediation Procedure. In the event INDEVUS is the claimant, the mediation shall be held in London, England; in the event AVENTIS is the claimant, the mediation shall be held in Geneva, Switzerland. If the Parties have not reached a settlement within twenty (20) Business Days of the date of the notice of mediation, the Dispute shall be referred to arbitration pursuant to subsection (c) below. --------------------------------------------------------------------------------   (c) If after the procedures set forth in subsections (a) and (b) above, the Dispute has not been resolved, a Party shall decide to institute arbitration proceedings, it shall give written notice to that effect to the other Party. The Parties shall refrain from instituting the arbitration proceedings for a period of sixty (60) days following such notice. During such period, the Parties shall continue to make good faith efforts to amicably resolve the dispute without arbitration. If the Parties have not reached a settlement during that period the arbitration proceedings shall go forward and be governed by the LCIA Arbitration Rules then in force. Each such arbitration shall be conducted by a panel of three arbitrators with appropriate experience in the biotechnology or pharmaceutical industry: one arbitrator shall be appointed by each of AVENTIS and INDEVUS and the third arbitrator, who shall be the Chairman of the tribunal, shall be appointed by the two Party-appointed arbitrators. In the event INDEVUS is the claimant, the arbitration shall be held in London, England; in the event AVENTIS is the claimant, the arbitration shall be held in the Geneva, Switzerland. The arbitrators shall have the authority to grant specific performance. Judgment upon the award so rendered may be entered in any court having jurisdiction or application may be made to such court for judicial acceptance of any award and an order of enforcement, as the case may be. In no event shall a demand for arbitration be made after the date when institution of a legal or equitable proceeding based on such claim, dispute or other matter in question would be barred by the applicable statute of limitations. Each Party shall bear its own costs and expenses incurred in connection with any arbitration proceeding and the Parties shall equally share the cost of the mediation and arbitration levied by the LCIA. Any mediation or arbitration proceeding entered into pursuant to this Section 9.5 shall be conducted in the English language. 9.6 Entire Agreement. This Agreement, including the exhibits and schedules hereto, contains the entire understanding of the Parties with respect to the subject matter hereof and supersedes all previous writings and understandings. This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by all Parties hereto. 9.7 Independent Contractors. It is expressly agreed that the Parties shall be independent contractors and that the relationship between the Parties shall not constitute a partnership, joint venture or agency. Neither Party shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other Party, without the prior consent of such other Party. 9.8 Waiver. The waiver by a Party hereto of any right hereunder or the failure to perform or of a breach by another Party shall not be deemed a waiver of any other right hereunder or of any other breach or failure by said other Party whether of a similar nature or otherwise. 9.9 Headings. The captions to the several Articles and Sections hereof are not a part of the Agreement, but are merely guides or labels to assist in locating and reading the several Articles and Sections hereof. -------------------------------------------------------------------------------- 9.10 Counterparts. The Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 9.11 LIMITATION OF LIABILITY. NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES ARISING OUT OF THIS AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY. [Remainder of page intentionally left blank] -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first set forth above.   AVENTIS PHARMA SA By:   /s/ GILLES BRISSON Name:   Gilles Brisson Title:   President and Chief Executive Officer INDEVUS PHARMACEUTICALS, INC. By:   /s/ GLENN L. COOPER Name:   Glenn L. Cooper, M.D. Title:   President and Chief Executive Officer -------------------------------------------------------------------------------- EXHIBITS AND SCHEDULES -------------------------------------------------------------------------------- SCHEDULE 1.5 AVENTIS PATENT ASSETS [*]   -------------------------------------------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED -------------------------------------------------------------------------------- SCHEDULE 1.6 BANK HOLIDAYS IN FRANCE AND IN U.S.A. FRANCE   Wednesday    January 1 (*)    New Year Day Monday    April 21 (**)    Easter Monday Thursday    May 1 (*)    Labour Day Thursday    May 8 (*)    End of World War II Thursday    May 29 (**)    Ascension Monday    June 9 (**)    Whit Monday Monday    July 14 (*)    National Day Friday    August 15 (**)    Assumption Saturday    November 1 (*)    All Saints’ Day Tuesday    November 11 (*)    End of World War I Thursday    December 25 (*)    Christmas -------------------------------------------------------------------------------- (*) Every year on same date (**) Dates are for 2003, but for following years, since they are catholic religious feasts, they are worldwide identical dates, U.S.A.   Wednesday    January 1 — (1)    New Years Day Monday    January 20 — (2)    Martin Luther King Day Monday    February 17 — (3)    President’s Day Monday    May 26 — (4)    Memorial Day Friday    July 4 —(1)    Independence Day Monday    September 1 — (5)    Labor Day Monday    October 13 — (6)    Columbus Day Tuesday    November 11 — (1)    Veteran’s Day Thursday    November 27 — (7)    Thanksgiving Day Thursday    December 25 — (1)    Christmas Day -------------------------------------------------------------------------------- Notes: ALL dates listed are for 2003   (1) Occur every year on the same date (2) Occurs on the third Monday in January every year (3) Occurs on the third Monday in February every year (4) Occurs on the fourth Monday in May every year (5) Occurs on the first Monday in September every year (6) Occurs on the second Monday in October every year (7) Occurs on the fourth Thursday in November every year -------------------------------------------------------------------------------- SCHEDULE 1.14 DIAGRAM OF HMR 3270 [*]   -------------------------------------------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED -------------------------------------------------------------------------------- SCHEDULE 1.46 SPECIFICATIONS OF NUCLEUS Preliminary Specification (based on [*] data) [*]   -------------------------------------------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED -------------------------------------------------------------------------------- SCHEDULE 3.3.1 COMMITTEE MEMBERS AVENTIS; [*] INDEVUS: [*]   -------------------------------------------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED   -------------------------------------------------------------------------------- EXHIBIT 3.3.5 ANNUAL DEVELOPMENT PLAN — YEAR 1 [*]   -------------------------------------------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED -------------------------------------------------------------------------------- EXHIBIT 3.7 AVENTIS INVENTORY (BEFORE RE-TESTING AND RE-RELEASE) [*]   -------------------------------------------------------------------------------- * CONFIDENTIAL TREATMENT REQUESTED * The exact amount to be provided by AVENTIS to INDEVUS in writing within ten (10) Business Days after the Effective Date -------------------------------------------------------------------------------- EXHIBIT C LETTERS OF EXTENSION FOR AVENTIS SUPPLY OF NUCLEUS [See attached] -------------------------------------------------------------------------------- From:    [email protected] Sent:    Tuesday, April 25, 2006 1:51 PM To:    Gwynne, David, PhD Cc:    Beerman, Noah Subject:    Aminocandin evaluation outcome Dear David, Further to our review of aminocandin, I am informing you that sanofi-aventis is not interested in pursuing further this project. Therefore, our 90 days period for evaluating our interest in submitting an indicative offer is over. I would like to thank you and your team for the pleasant exchanges we had on this project. I hope we will have other opportunities to work together in the future. Best regards, Sebastien Corporate Licenses, Sanofi-aventis 174 Av. de France, 75013 Paris Tel. +33 1 53774659 Mob. +33608961586 Fax. +33 153774994 11/15/2006 -------------------------------------------------------------------------------- Indevus Pharmaceuticals, Inc.     ORIGINAL                99 Hayden Avenue, Suite 200      Lexington, MA 02421-7966      Tel: 781-861-8444      Fax: 781-861-3830      www.indevus.com Thomas D. Forrester Corporate Counsel-Legal Corporate Development Aventis Pharmaceuticals Mail Code: BX2-71650 200 Crossing Boulevard PO Box 6890 Bridgewater, NJ 08807-0890 Re: Amendment No.1 of License Agreement between Indevus Pharmaceuticals, Inc. (“Indevus”) and Aventis Pharma SA (“Aventis”) dated April 18, 2003 (“the License Agreement”) Dear Tom: We refer to Section 3.8(a) of the License Agreement. The two parties agree to amend the License Agreement by deleting the last sentence of Section 3.8(a) in its entirety and substituting therefor the following sentence: “INDEVUS and AVENTIS shall negotiate in good faith to enter into a manufacturing and supply agreement between the Parties containing mutually acceptable terms within one hundred fifty (150) days after the Effective Date, which shall set forth the terms and conditions of the manufacturing and supply of the Nucleus.” Except as provided herein, all terms in the License Agreement shall remain in full force and effect. Please indicate your acceptance of this amendment by having the appropriate Aventis representative sign both of these originals in the space indicated and return one original to us for our files. Very truly yours,                                              Accepted and Agreed this 15th day of July, 2003   AVENTIS PHARMA SA     INDEVUS PHARMACEUTICALS, INC. By:   /s/ Gilles Brisson     By:   /s/ Mark S. Butler Name:   Gilles Brisson     Name:   Mark S. Butler Title:   President of Management Board     Title:   Executive Vice President, Chief Administrative Officer & General Counsel   -------------------------------------------------------------------------------- Aventis Pharma S.A.    ORIGINAL                    AVENTIS Amendment No. 2, dated as of September 12, 2003, to License Agreement between Indevus Pharmaceuticals, Inc. (“Indevus”) and Aventis Pharma SA (“Aventis”) dated April 18, 2003 (“License Agreement”) Whereas Indevus and Aventis desire to amend the last sentence of Section 3.8(a) of the License Agreement; NOW, THEREFORE, for good and valuable consideration the adequacy and sufficiency of which are hereby acknowledged, Indevus and Aventis hereby agree as follows: 1. Indevus and Aventis agree to amend the License Agreement by deleting the last sentence of Section 3.8(a) in its entirety and substituting therefor the following sentence: “INDEVUS and AVENTIS shall negotiate in good faith to enter into a manufacturing and supply agreement between the Parties containing mutually acceptable terms within two hundred forty (240) days after the Effective Date, which shall set forth the terms and conditions of the manufacturing and supply of the Nucleus.” 2. Except as provided herein, all terms in the License Agreement shall remain in full force and effect. IN WITNESS WHEREOF, Indevus and Aventis have caused this Amendment No.2 of the License Agreement to be executed by their duly authorized representatives as of the day and year first above written.   AVENTIS PHARMA SA     INDEVUS PHARMACEUTICALS, INC. By:   /s/ Alain Chevallier     By:   /s/ Mark S. Butler Name:   Alain Chevallier     Name:   Mark S. Butler Title:   General Manager and Member of Management Board     Title:   EVP   -------------------------------------------------------------------------------- ORIGINAL Amendment No. 3, dated as of December 10, 2003, to License Agreement between Indevus Pharmaceuticals, Inc. (“Indevus”) and Aventis Pharma SA (“Aventis”) dated April 18, 2003 (“License Agreement”) Whereas Indevus and Aventis desire to amend the last sentence of Section 3.8(a) of the License Agreement; NOW, THEREFORE, for good and valuable consideration the adequacy and sufficiency of which are hereby acknowledged, Indevus and Aventis hereby agree as follows: 1. Indevus and Aventis agree to amend the License Agreement by deleting the last sentence of Section 3.8(a) in its entirety and substituting therefor the following sentence: “INDEVUS and AVENTIS shall negotiate in good faith to enter into a manufacturing and supply agreement between the Parties containing mutually acceptable terms within three hundred sixty (360) days after the Effective Date, which shall set forth the terms and conditions of the manufacturing and supply of the Nucleus.” 2. Except as provided herein, all terms in the License Agreement shall remain in full force and effect. IN WITNESS WHEREOF, Indevus and Aventis have caused this Amendment No.3 of the License Agreement to be executed by their duly authorized representatives as of the day and year first above written.   AVENTIS PHARMA SA     INDEVUS PHARMACEUTICALS, INC. By:   /s/ Alain Chevallier     By:   /s/ Mark S. Butler Name:   Alain Chevallier     Name:   Mark S. Butler Title:   Chief Financial Officer and Member of Management Board     Title:   Executive Vice President, Chief Administrative Officer & General Counsel -------------------------------------------------------------------------------- ORIGINAL Amendment No. 4, dated as of April 2, 2004, to License Agreement between Indevus Pharmaceuticals, Inc. (“Indevus”) and Aventis Pharma SA (“Aventis”) dated April 18, 2003 (“License Agreement”) Whereas Indevus and Aventis desire to amend the last sentence of Section 3.8(a) of the License Agreement; NOW, THEREFORE, for good and valuable consideration the adequacy and sufficiency of which are hereby acknowledged, Indevus and Aventis hereby agree as follows: 1. Indevus and Aventis agree to amend the License Agreement by deleting the last sentence of Section 3.8(a) in its entirety and substituting therefor the following sentence: “INDEVUS and AVENTIS shall negotiate in good faith to enter into a manufacturing and supply agreement between the Parties containing mutually acceptable terms within four hundred fifty (450) days after the Effective Date, which shall set forth the terms and conditions of the manufacturing and supply of the Nucleus.” 2. Except as provided herein, all terms in the License Agreement shall remain in full force and effect. IN WITNESS WHEREOF, Indevus and Aventis have caused this Amendment No. 4 of the License Agreement to be executed by their duly authorized representatives as of the day and year first above written.   AVENTIS PHARMA SA     INDEVUS PHARMACEUTICALS, INC. By:   /s/ Alain Chevallier     By:   /s/ Mark S. Butler Name:   Alain Chevallier     Name:   Mark S. Butler Title:   Chief Financial Officer     Title:   Executive Vice President, Chief Administrative Officer & General Counsel   -------------------------------------------------------------------------------- ORIGINAL Amendment No. 5, dated as of July 1, 2004, to License Agreement between Indevus Pharmaceuticals, Inc. (“Indevus”) and Aventis Pharma SA (“Aventis”) dated April 18, 2003 (“License Agreement”) Whereas Indevus and Aventis desire to amend the last sentence of Section 3.8(a) of the License Agreement; NOW, THEREFORE, for good and valuable consideration the adequacy and sufficiency of which are hereby acknowledged, Indevus and Aventis hereby agree as follows: 1. Indevus and Aventis agree to amend the License Agreement by deleting the last sentence of Section 3.8(a) in its entirety and substituting therefor the following sentence: “INDEVUS and AVENTIS shall negotiate in good faith to enter into a manufacturing and supply agreement between the Parties containing mutually acceptable terms within five hundred thirty three (533) days after the Effective Date, which shall set forth the terms and conditions of the manufacturing and supply of the Nucleus.” 2. Except as provided herein, all terms in the License Agreement shall remain in full force and effect. IN WITNESS WHEREOF, Indevus and Aventis have caused this Amendment No. 5 of the License Agreement to be executed by their duly authorized representatives as of the day and year first above written.   AVENTIS PHARMA SA     INDEVUS PHARMACEUTICALS, INC. By:   /s/ Alain Chevallier     By:   /s/ Mark S. Butler Name:   Alain Chevallier     Name:   Mark S. Butler Title:   Chief Financial Officer     Title:   Executive Vice President, Chief Administrative Officer & General Counsel   -------------------------------------------------------------------------------- ORIGINAL Amendment No. 6, dated as of September 28, 2004, to License Agreement between Indevus Pharmaceuticals, Inc. (“Indevus”) and Aventis Pharma SA (“Aventis”) dated April 18, 2003 (“License Agreement”) Whereas Indevus and Aventis desire to amend the last sentence of Section 3.8(a) of the License Agreement; NOW, THEREFORE, for good and valuable consideration the adequacy and sufficiency of which are hereby acknowledged, Indevus and Aventis hereby agree as follows: 1. Indevus and Aventis agree to amend the License Agreement by deleting the last sentence of Section 3.8(a) in its entirety and substituting therefor the following sentence: “INDEVUS and AVENTIS shall negotiate in good faith to enter into a manufacturing and supply agreement between the Parties containing mutually acceptable terms within seven hundred thirty (730) days after the Effective Date, which shall set forth the terms and conditions of the manufacturing and supply of the Nucleus.” 2. Except as provided herein, all terms in the License Agreement shall remain in full force and effect. IN WITNESS WHEREOF, Indevus and Aventis have caused this Amendment No. 6 of the License Agreement to be executed by their duly authorized representatives as of the day and year first above written.   AVENTIS PHARMA SA     INDEVUS PHARMACEUTICALS, INC. By:   /s/ O. Jacquesson     By:   /s/ Mark S. Butler Name:   O. Jacquesson     Name:   Mark S. Butler Title:       Title:   Executive Vice President -------------------------------------------------------------------------------- ORIGINAL Amendment No. 7, dated as of April 20, 2005, to License Agreement between Indevus Pharmaceuticals, Inc. (“Indevus”) and Aventis Pharma SA (“Aventis”) dated April 18, 2003 (“License Agreement”) Whereas Indevus and Aventis desire to amend the last sentence of Section 3.8(a) of the License Agreement; NOW, THEREFORE, for good and valuable consideration the adequacy and sufficiency of which are hereby acknowledged, Indevus and Aventis hereby agree as follows: 1. Indevus and Aventis agree to amend the License Agreement by deleting the last sentence of Section 3.8(a) in its entirety and substituting therefor the following sentence: “INDEVUS and AVENTIS shall negotiate in good faith to enter into a manufacturing and supply agreement between the Parties containing mutually acceptable terms within eight hundred twenty (820) days after the Effective Date, which shall set forth the terms and conditions of the manufacturing and supply of the Nucleus.” 2. Except as provided herein, all terms in the License Agreement shall remain in full force and effect. IN WITNESS WHEREOF, Indevus and Aventis have caused this Amendment No. 7 of the License Agreement to be executed by their duly authorized representatives as of the day and year first above written.   AVENTIS PHARMA SA     INDEVUS PHARMACEUTICALS, INC. By:   /s/ Gilles Lhernould     By:   /s/ Mark S. Butler Name:   Gilles Lhernould     Name:   Mark S. Butler Title:   President     Title:   Executive Vice President By:   /s/ Gerard Touratier       Name:   Gerard Touratier       Title:   Financial Director         -------------------------------------------------------------------------------- ORIGINAL Amendment No. 8, dated as of July 20, 2005, to License Agreement between Indevus Pharmaceuticals, Inc. (“Indevus”) and Aventis Pharma SA (“Aventis”) dated April 18, 2003 (“License Agreement”) Whereas Indevus and Aventis desire to amend the last sentence of Section 3.8(a) of the License Agreement; NOW, THEREFORE, for good and valuable consideration the adequacy and sufficiency of which are hereby acknowledged, Indevus and Aventis hereby agree as follows: 1. Indevus and Aventis agree to amend the License Agreement by deleting the last sentence of Section 3.8(a) in its entirety and substituting therefor the following sentence: “INDEVUS and AVENTIS shall negotiate in good faith to enter into a manufacturing and supply agreement between the Parties containing mutually acceptable terms within nine hundred and forty (940) days after the Effective Date, which shall set forth the terms and conditions of the manufacturing and supply of the Nucleus.” 2. Except as provided herein, all terms in the License Agreement shall remain in full force and effect. IN WITNESS WHEREOF, Indevus and Aventis have caused this Amendment No. 7 of the License Agreement to be executed by their duly authorized representatives as of the day and year first above written.   AVENTIS PHARMA SA     INDEVUS PHARMACEUTICALS, INC. By:   /s/ Gilles Lhernould     By:   /s/ Mark S. Butler Name:   Gilles Lhernould     Name:   Mark S. Butler Title:   President     Title:   Executive Vice President By:   /s/ Gerard Touratier       Name:   Gerard Touratier       Title:   Financial Director         -------------------------------------------------------------------------------- ORIGINAL Amendment No. 9, dated as of November 9, 2006, to License Agreement between Indevus Pharmaceuticals, Inc. (“Indevus”) and Aventis Pharma SA (“Aventis”) dated April 18, 2003 (“License Agreement”) Whereas Indevus and Aventis desire to amend the last sentence of Section 3.8(a) of the License Agreement; NOW, THEREFORE, for good and valuable consideration the adequacy and sufficiency of which are hereby acknowledged, Indevus and Aventis hereby agree as follows: 1. Indevus and Aventis agree to amend the License Agreement by deleting the last sentence of Section 3.8(a) in its entirety and substituting therefor the following sentence: “INDEVUS and AVENTIS shall negotiate in good faith to enter into a manufacturing and supply agreement between the Parties containing mutually acceptable terms on or before July 1, 2007, which shall set forth the terms and conditions of the manufacturing and supply of the Nucleus.” 2. Except as provided herein, all terms in the License Agreement shall remain in full force and effect. IN WITNESS WHEREOF, Indevus and Aventis have caused this Amendment No. 7 of the License Agreement to be executed by their duly authorized representatives as of the day and year first above written.   AVENTIS PHARMA SA     INDEVUS PHARMACEUTICALS, INC. By:   /s/ Gilles Lhernould     By:   /s/ Mark S. Butler Name:   Gilles Lhernould     Name:   Mark S. Butler Title:   President     Title:   Executive Vice President By:   /s/ Gerard Touratier       Name:   Gerard Touratier       Title:   Financial Director      

Exhibit 10.15 MASTERCARD INTERNATIONAL INCORPORATED ANNUITY BONUS PROGRAM: STATEMENT OF COMPANY PAYROLL PRACTICES AND PROCEDURES (As amended and restated as of January 1, 2000 with amendments through December 1, 2005) 1. Purpose. This document describes the Company’s payroll practices and procedures applicable to the payment of Annuity Bonuses and Tax Equalization Payments to Participants whose benefits are curtailed under the MAP and the Savings Plan by operation of the Limits. The Practices and Procedures are not intended to be, and shall be not construed as, an “employee benefit plan” within the meaning of the Employee Retirement Security Act of 1974, as amended. 2. Eligibility. The Human Resources Department of the Company will advise Eligible Employees of their continuing eligibility to receive an Annuity Bonus. A Participant’s receipt of an Annuity Bonus for one Bonus Year will not obligate the Company to award an Annuity Bonus for any succeeding Bonus Year. Notwithstanding anything in the Practices and Procedures to the contrary, effective as of December 1, 2005, an individual who, on the date on which an Annuity Bonus or MAP Conversion Bonus would otherwise be paid in any form to such individual, is not actively employed by one of the Companies shall not, at any time, be eligible to receive such Annuity Bonus or MAP Conversion Bonus and shall forfeit all rights thereto. For purposes of the prior sentence, an individual who is in a notice period is not actively employed by one of the Companies. 3. Definitions and Rules of Construction. (a) Definitions. The following capitalized words shall have the meanings set forth below: “Accumulation Interest Rate” means an interest rate, which may differ between classes of employees, determined each Bonus Year by the Committee. “Additional Pay Credit Bonus” means the portion of the Annuity Bonus determined in accordance with Section 4(b). “Annuity Bonus” means the amount determined in accordance with Section 4(a). “Annuity Contract” means an annuity contract, or an addition to an existing annuity contract, issued by an insurance company or other third-party annuity provider selected by the Committee from time to time. “Applicable Date” has the meaning set forth in Section 5(b). “Applicable Tax Rate” means a uniform rate applicable to all Participants for a Bonus Year, reflecting the designated federal, state and local income tax rates specified by the Committee for this purpose. The Committee’s determination of the Applicable Tax -------------------------------------------------------------------------------- Rate shall be final and binding on all Participants and shall not be subject to appeal or review. “Benefit Limit” means the limit on benefits under the MAP or the Savings Plan imposed by Section 415 of the Code. “Board” means the Global Board of Directors of the Company. “Bonus Year” means the calendar year. “Code” means the Internal Revenue Code of 1986, as amended, and the applicable rulings and regulations thereunder. “Committee” means the Pension and Savings Plan Committee. “Company” means MasterCard International Incorporated, a Delaware not-for profit corporation, and any entity that succeeds to all or substantially all of its business or assets. “Companies” means the Company and each other corporation that has elected, with the consent of the Board or the Committee, to award Annuity Bonuses in accordance with the Practices and Procedures. “Compensation Limit” means the limit on compensation under the MAP or the Savings Plan imposed by Section 401(a)(17) of the Code. “Conversion Eligible Participant” mean a Participant who is eligible for a MAP Conversion Bonus in accordance with the provisions of Sections 5(a) and (b). “Effective Date” means January 1, 2000. “Eligible Employee” means a highly-compensated employee of any of the Companies. “Initial Account Balance” has the meaning set forth in the MAP. “Limits” means the Compensation Limit and the Benefit Limit. “MAP” means the MasterCard International Incorporated Accumulation Plan, as the same may be amended from time to time. “MAP Adjustment Bonus” means the amount determined in accordance with Section 4(c). “MAP Conversion Bonus” means the one-time bonus payable to certain Participants under Section 5 in connection with the establishment of MAP. -------------------------------------------------------------------------------- “Net Savings Plan Bonus” means the portion of the Annuity Bonus determined in accordance with Section 4(d). “Participant” means an Eligible Employee selected by the Company to receive an Annuity Bonus for a given Bonus Year. “Pay Credit” has the meaning set forth in the MAP. “Practices and Procedures” means these MasterCard International Incorporated practices and procedures, as the same may be amended from time to time. “Prior Plan Terms” has the meaning set forth in the MAP. “Savings Plan” means the MasterCard International Incorporated Savings Plan, as the same may be amended from time to time. “Savings Plan Adjustment Bonus” means the amount determined in accordance with Section 4(e). “Tax Equalization Payment” means an amount determined in accordance with Section 4(g) or 5(e), and subject to the provisions of Section 6(e). (b) Rules of Construction. Unless the context requires otherwise, the use of the masculine form of a word shall include the feminine form and the use of the singular form shall include the plural form. 4. Annuity Bonus. (a) Calculation. The amount of a Participant’s Annuity Bonus for a Bonus Year beginning on and after the Effective Date will equal the sum of (i) the Additional Pay Credit Bonus and (ii) the Net Savings Plan Bonus. (b) Additional Pay Credit Bonus. A Participant’s Additional Pay Credit Bonus for each Bonus Year beginning on or after the Effective Date shall be an amount determined in accordance with the formula [(1 - T) x (A - B)], where “A” is the sum of (i) the vested Pay Credits the Participant would have received for the Bonus Year under the MAP if the Limits did not apply to the Participant for such Year and (ii) the MAP Adjustment Bonus, if any, for such Bonus Year; “B” is the Pay Credit actually credited to the Participant for the Bonus Year; and “T” is the Applicable Tax Rate, as illustrated by the following example: Example Service 6 years Pay Credit Multiplier from MAP 5.75% Base Pay Plus AICP Incentive $200,000 Applicable Compensation Limit $170,000 -------------------------------------------------------------------------------- Pay Credit without Code Limit $ 11,500 ($200,000 x .0575) Pay Credit from MAP $ 9,775 ($170,000 x .0575) Applicable Tax Rate 40% Additional Pay Credit Bonus $ 1,035 (1 - .400) x ($11,500 - $9,775) All tax rates in the examples in the Practices and Procedures are for illustration purposes only. (c) MAP Adjustment Bonus. If a Participant who was not fully vested in the MAP would have received an Additional Pay Credit Bonus in a prior Bonus Year but for the vesting requirement in Section 4(b) and subsequently becomes entitled in a later Bonus Year to an Additional Pay Credit Bonus as part of such Participant’s Annuity Bonus, then the calculation of “A” for such Participant in such later Bonus Year shall include a MAP Adjustment Bonus. The “MAP Adjustment Bonus” shall equal the portion of the Pay Credits that were not taken into account for each such prior Bonus Year as a result of the vesting requirements and that become vested during the current Bonus Year, together with interest at the Accumulation Interest Rate, applied from the end of such prior Bonus Year to the end of the current Bonus Year, as illustrated by the following example: Example Year of Vesting 2003 Additional Pay Credit Bonus for 2001 $ 5,000 Additional Pay Credit Bonus for 2002 $ 7,000 Accumulation Interest Rate 8% MAP Adjustment Bonus for 2003 $13,392 [($5,000 x 1.082 ) + ($7,000 x 1.08)]. (d) Net Savings Plan Bonus. A Participant’s Net Savings Plan Bonus for each Bonus Year shall be an amount determined in accordance with the formula [(1 - T) x (X - Y)], where “X” is the sum of (i) the vested employer matching contribution that the Participant would have received for the Bonus Year under the Savings Plan if the Limits did not apply and assuming that, for such Bonus Year, the Participant’s tax deferral contributions under the Savings Plan were not limited by the dollar limits under Section 402(g) of the Code and (ii) the Savings Plan Adjustment Bonus, if any, for such Bonus Year; “Y” is the actual employer matching contribution received by the Participant for the Bonus Year under the Savings Plan; and “T” is the Applicable Tax Rate, as illustrated by the following example: Example Vested Savings Plan Match without Limits $26,000 Actual Vested Savings Plan Match $19,500 Applicable Tax Rate 40% Net Savings Plan Bonus $ 3,900 (1 - .400) x ($26,000 - $19,500) -------------------------------------------------------------------------------- (e) Savings Plan Adjustment Bonus. If a Participant who was not fully vested in the Savings Plan would have received a Net Savings Plan Bonus in a prior Bonus Year but for the vesting requirements in Section 4(d) and subsequently becomes entitled in a later Bonus Year to a Net Savings Plan Bonus as part of such Participant’s Annuity Bonus, then the calculation of “X” for such Participant in such later Bonus Year shall include a Savings Plan Adjustment Bonus. The “Savings Plan Adjustment Bonus” shall equal the portion of the employer matching contribution that was not taken into account for each prior Bonus Year as a result of the vesting requirements and that become vested during the current Bonus Year, together with interest at the Accumulation Interest Rate for the then current Bonus Year, applied from the end of such prior Bonus Year to the end of the current Bonus Year, as illustrated by the following example: Example Year of Vesting 2003 Net Savings Plan Bonus for 2001 $1,000 Net Savings Plan Bonus for 2002 $2,000 Accumulation Interest Rate 8% MAP Adjustment Bonus for 2003 $3,326 [($1,000 x 1.082) + ($2,000 x 1.08)]. (f) Form of Payment of Annuity Bonuses. As soon as reasonably practicable after the determination of a Annuity Bonus for a Bonus Year, the Company will apply the amount of the Annuity Bonus for a Bonus Year to the purchase of an Annuity Contract on the life of the Participant with a purchase price equal to the Annuity Bonus. The Annuity Contract will be distributed to the Participant as soon as reasonably practicable after such Annuity Contract is issued. (g) Tax Equalization Payment. In addition to the receipt of the Annuity Contract for a Bonus Year, each Participant shall receive, for each Bonus Year that the Participant earns an Annuity Bonus, a Tax Equalization Payment determined in accordance with the formula [(P/(1 - Ti)) - P], where “P” is the amount of the Annuity Bonus for the Bonus Year and “Ti” is the federal, state and local tax rate for the Participant specified by the Committee for the Bonus Year plus the rate of the Participant’s portion of the Medicare payroll tax, as illustrated by the following example: Example a. Annuity Bonus $10,000 b. Federal, State and Local Tax Rate 35% c. Medicare Tax 1.45% d. Tax Equalization Payment $5,736 [$10,000/(1 - .35 - .0145) - $10,000] e. Total Taxable Income (a + d) $15,736 f. Assumed Tax Due $ 5,736 g. Net After-Tax Cash Flow (d - f) $0.00 -------------------------------------------------------------------------------- The Tax Equalization Payment shall be paid (or remitted in the manner contemplated by Section 6(e)) to the Participant at the time that the Annuity Contract is delivered to the Participant, subject to applicable income tax and wage withholding requirements, including, without limitation, withholding required in respect of the delivery of the Annuity Contract. 5. MAP Conversion Bonus. (a) Limited Eligibility. The provisions of this Section 5 shall apply only to individuals selected to be Conversion Eligible Participants by the Committee from among the group of Eligible Employees who meet the criteria set forth in Section 5(b). (b) Minimum Eligibility Criteria. In order to be eligible for selection in accordance with Section 5(a) for a MAP Conversion Bonus, an Eligible Employee must be (i) an employee of one of the Companies on the Applicable Date (as defined below); (ii) have an Initial Account Balance under MAP on the Effective Date; and (iii) be a Participant in MAP on the Applicable Date. For purposes of this Section 5, “Applicable Date” shall be the later of (i) the Effective Date and (ii) the date a Conversion Eligible Participant vests in his Initial Account Balance under the MAP. (c) Payment and Form of Payment of the MAP Conversion Bonus. If a Participant is vested in his MAP benefit on the Effective Date, the MAP Conversion Bonus will be paid in accordance with this section as soon as reasonably practicable after the amount of such bonus has been determined. If a Participant is not vested in his MAP benefit on the effective Date, the MAP Conversion Bonus will be paid to such Participant at the same time as the first Additional Pay Credit Bonus is paid to such Participant (or, in the event of the Participant’s death prior to payment, at the time and in the form of the final Pay Credit Bonus payable under Section 5(g) below). Vesting is determined in accordance with the vesting provisions of Article VI of the MAP. The Company will apply the amount of the MAP Conversion Bonus to the purchase of an Annuity Contract on the life of the Participant with a purchase price equal to the MAP Conversion Bonus. The Conversion Eligible Participant will be the owner of the Annuity Contract and will have the ability to direct the investment of funds held under the Annuity Contract and to surrender the Annuity Contract at any time. The Annuity Contract will be distributed to the Conversion Eligible Participant as soon as reasonably practicable after such Annuity Contract is issued. (d) Amount of the MAP Conversion Bonus. The amount of a Conversion Eligible Participant’s MAP Conversion Bonus shall be determined as follows: 1. The Company shall calculate the difference which results by subtracting (B) the value of such Participant’s accrued benefit under the Prior Plan Terms immediately prior to the Effective Date from (A) the value of the accrued benefit that such Participant would have earned under the Prior Plan Terms immediately prior to the Effective Date if the Limits did not apply (the “Accrued Benefit Difference”), as illustrated by the following example: Example 12/31/99 Accrued Benefit under Prior $8,000 Plan Terms 12/31/99 Accrued Benefit under $10,000 Practices and Procedures Based Upon Prior Plan Terms Accrued Benefit Difference $ 2,000 -------------------------------------------------------------------------------- 2. The Company shall calculate the difference which results from subtracting (D) the Accrued Benefit Difference multiplied by the applicable factor set forth in Appendix A hereto from (C) the Accrued Benefit Difference multiplied by the applicable factor set forth in Part A of Appendix C of the MAP (the “Account Balance Difference”). The applicable factor from each table shall be based on the Conversion Eligible Participant’s age as of the last day of the calendar year in which the Effective Date occurs, as illustrated by the following example: Example Accrued Benefit Difference (from above) $ 2,000 Factor from Part A, Appendix C of MAP 10.2880 (for age 60 ) Factor from Appendix A of the Practices and Procedures (for age 60) 6.1638 Account Balance Difference $ 8,248 [($2,000 x 10.2880) - ($2,000 x 6.1638)] 3. If the Applicable Date is later than the Effective Date, the Account Balance Difference shall be credited with the Accumulation Interest Rate from the Effective Date to the last day of the Bonus Year in which the Participant vests in his benefit under MAP (the “Adjusted Account Balance Difference”). 4. The Account Balance Difference or Adjusted Account Balance Difference, as the case may be, is then multiplied by one minus the Applicable Tax Rate to calculate the MAP Conversion Bonus, as illustrated by the following example: Example Applicable Tax rate 40% MAP Conversion Bonus $4,949 [$8,248 x (1 - .40)] (e) Tax Equalization Payment. In addition to the receipt of the Annuity Contract in respect of the MAP Conversion Bonus, each Conversion Eligible Participant shall receive, at the time of delivery of such Annuity Contract, a Tax Equalization Payment determined in accordance with the formula [(R/(1 - Ti)) - R], where “R” is the amount of the MAP Conversion Bonus and “Ti” is the federal state and local tax rate for the Conversion Eligible Participant specified by the Committee plus the rate of the Conversion Eligible Participant’s portion of the Medicare payroll tax. The Tax Equalization Payment shall be paid to the Participant at the time that the Annuity Contract is delivered to the Participant, subject to applicable income tax and wage withholding requirements, including, without limitation, withholding required in respect of the delivery of the Annuity Contract. An example of tax equalization is set forth at the end of Section 4(g). -------------------------------------------------------------------------------- 6. General Provisions. (a) Administration. The Committee shall have the right (i) to construe and interpret the Practices and Procedures and all rules, regulations, agreements and other documents related thereto, (ii) to promulgate rules, regulations and agreements related to the Practices and Procedures, (iii) to approve all calculations necessary for the administration and implementation of the Practices and Procedures, (iv) to make factual and other determinations, (v) to delegate administrative authority to one or more officers or employees of the Companies or to one or more third-party administrators, (vi) to determine the amount of any Annuity Bonus, MAP Conversion Bonus or Tax Equalization Payment, (vii) to correct errors in any previous calculation, and (viii) to rely upon the reports of third parties, including the actuaries, attorneys and accountants of the Company. (b) Discretion as to Form of Payment. The Company shall have the right to pay some or all of each Annuity Bonus or MAP Conversion Bonus in cash rather than through the delivery of an Annuity Contract. (c) Participant Rights and Obligations Regarding Annuity Contracts. The Participant will be the owner of each Annuity Contract distributed to the Participant. A Participant, as the owner of a distributed Annuity Contract, will have the ability to direct the investment of funds held under the Annuity Contract. The actual accumulations under the Annuity Contract will be dependent upon investment decisions made by the Participant and consequently will not have any direct relationship to any assumptions that may be used in calculating the Annuity Bonus each year. A Participant is solely responsible for (i) reviewing the information (including the prospectus) provided by the issuer of the Annuity Contract for information on investment choices available under such contract and (ii) consulting with a personal investment adviser before making a decision to invest in the various accounts under the Annuity Contract. (d) Withdrawals and Annuity Contract Charges. 1. Annuity Contracts Attributable to Bonus Years Before 2005. A Participant will have the ability to surrender or withdraw amounts from an Annuity Contract at any time to the extent such contract or amount was purchased with an Annuity Bonus or MAP Conversion Bonus for Bonus Years ending prior to January 1, 2005 (a “Pre-2005 Amount”). If the Participant withdraws any Pre-2005 Amount from an Annuity Contract, for reasons other than retirement or disability of the Participant, within five years of the end of the initial Bonus Year applicable to the Participant, the Participant will no longer be entitled to an Annuity Bonus or MAP Conversion Bonus, if any, for any subsequent Bonus Year. Whether a withdrawal is by reason of retirement or disability shall be determined by the Committee. 2. Annuity Contracts Attributable to Bonus Years After 2004. A Participant shall not be permitted to surrender an Annuity Contract or withdraw any amount from an Annuity Contract to the extent such contract or amount was purchased with an Annuity Bonus for any Bonus Year beginning on or after January 1, 2005 (i.e., an Annuity Bonus payable in 2006 for Bonus Year 2005) for reasons other than termination of employment with the -------------------------------------------------------------------------------- Company or disability of the Participant. Whether a withdrawal is by reason of termination of employment or disability shall be determined by the Committee. 3. Annuity Contract Charges. Participants are responsible for reviewing the documents (including the prospectus) related to the Annuity Contract to determine the amount of the administrative charges against the value of the Annuity Contract if the Annuity Contract is surrendered during any period specified in the Annuity Contract. The Participant, and not the Company, shall be responsible for all charges against the value of the Annuity Contract (including load, redemption, withdrawal and surrender charges) assessed under or against the Annuity Contract after the Contract is issued. (e) Considerations Regarding Tax Equalization Payments. The Company shall have the right, in lieu of paying a Tax Equalization Payment to a Participant, to credit the amount of any such Tax Equalization Payment (in such proportions as determined by the Committee) as federal, state and local income and other applicable withholding amounts on behalf of the affected Participant. Tax Equalization Payments are designed to place a Participant in approximately the same after-tax position based upon the actual tax rate as if the Participant had not received the Annuity Bonus. As there are many variables in calculating a Participant’s tax liability, the Tax Equalization Payments will not, in most cases, necessarily make a Participant whole with respect to the income and other tax liability incurred as a result of receipt of the Annuity Bonus. The Company shall have no obligation to adjust the amount of any Tax Equalization Payment based upon a Participant’s individual circumstances. (f) Termination Before End of Bonus Year. If a Participant’s employment with the Companies terminates before the end of a Bonus Year for any reason other than Cause (as defined below), any amounts payable to the Participant for that Bonus Year will be based only on compensation from the Companies earned by the Participant for such year through the date of such termination of employment. No Annuity Bonus will be payable for a Bonus Year if a Participant’s employment is terminated for cause. For purposes hereof, “Cause” means (i) a materially dishonest act or omission or misrepresentation by Employee in connection with the Company’s business, the Participant’s gross incompetence, (ii) willful misconduct, breach of fiduciary duty involving personal profit, (iii) intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar minor violations of law), final cease-and-desist order, or (iv) notorious act(s) contrary to customarily recognized acceptable standards of behavior which results in publicly that adversely impacts the Company or its business reputation by reason of the nature of the act and the Participant’s association with the Company. (g) Death. If a Participant’s employment with the Companies ends during a Bonus Year as a result of the Participant’s death, any amounts otherwise payable to the Participant for that year shall be paid to the Participant’s Beneficiary in cash (and not in the form of an Annuity Contract). “Beneficiary” shall mean the individual designated in writing by the -------------------------------------------------------------------------------- Participant in accordance with these Practices and Procedures to receive any amounts after the date of death of the Participant or, if no such designation has been made or if no such individual survives the Participant, the Participant’s estate. A Beneficiary designation shall be effective only if it is in writing and received by the Company prior to the date of death of the Participant. (h) Indemnification. The Company shall indemnify and hold harmless to the fullest extent permitted by law each member of the Committee and each director, officer and employee of any of the Companies who are delegated or exercise duties or responsibilities under the Practices and Procedures in respect of any act or omission by any such person in connection with the administration or implementation of the Practices and Procedures. (i) Amendment and Termination. The Company shall have no obligation to make any payments or to provide any benefits under the Practices and Procedures after the date the Committee and the Board indicate that no further Annuity Bonuses are to be awarded by the Company. The Company may amend or terminate the Practices and Procedures in whole or in part at any time and without prior notice to any person by action of the Committee and the Board. -------------------------------------------------------------------------------- Appendix A Schedule of Conversion Factors   Age    Factor 20    0.2837 21    0.3064 22    0.3309 23    0.3574 24    0.3860 25    0.4169 26    0.4502 27    0.4862 28    0.5251 29    0.5671 30    0.6125 31    0.6615 32    0.7141 33    0.7715 34    0.8332 35    0.8999 36    0.9719 37    1.0497 38    1.1337 39    1.2241 40    1.3224 41    1.4282 42    1.5425 43    1.6659 44    1.7992 45    1.9431 46    2.0986 47    2.2665 48    2.4478 49    2.6436 50    2.8551 51    3.0835 52    3.3302 53    3.5966 54    3.8843 55    4.1950 56    4.5306 57    4.8930 58    5.2844 59    5.7072 60    6.1638 61    6.6569 62    7.1894 63    7.7646 64    8.3858 65    9.0567 66    8.8069 67    8.5539 68    8.3004 69    8.0477 70    7.7965

  Exhibit 10.2 — Form of Employee Deferred Performance Unit Award Letter «FirstLast» (address) Dear «Fname»: TODCO (the “Company”) hereby awards to you effective as of                     , 200___(the “Award Date”)                    Deferred Performance Units in accordance with the TODCO 2005 Long Term Incentive Plan (the “Plan”). Each Deferred Performance Unit represents the opportunity for you to receive one share of TODCO Class A common stock (“Common Stock”). Your award of Deferred Performance Units is more fully described in Appendix A, Terms and Conditions of Employee Deferred Performance Unit Award. This letter and the attached Appendix A shall be referred to and defined herein as the “Award Letter.” The exact amount of the shares of Common Stock you may earn will be determined based upon the Company’s achievement of a performance standard during the Performance Cycle as described in Appendix A. Your Deferred Performance Unit Award will become Earned Shares on the Determination Date and will be issued in Common Stock thereafter in accordance with Appendix A. Your Deferred Performance Units are subject to the terms and conditions set forth in the enclosed Plan, the Prospectus for the Plan, this Award Letter and any rules and regulations adopted by the Executive Compensation Committee of the Company’s Board of Directors in accordance with the terms of the Plan. This Award Letter, the Plan, and any other attachments should be retained in your files for future reference. Congratulations on your award. Very truly yours, Jan Rask Enclosures   --------------------------------------------------------------------------------   Appendix A Terms and Conditions of Employee Deferred Performance Unit Award [Date] The Deferred Performance Unit Award by TODCO (the “Company”) to you effective as of the Award Date provides for the opportunity for you to receive, if certain conditions are met, shares of TODCO Class A common stock (“Common Stock”) subject to the terms and conditions set forth in the TODCO 2005 Long Term Incentive Plan (the “Plan”), the enclosed Prospectus for the Plan, any rules and regulations adopted by the Executive Compensation Committee of the Company’s Board of Directors (the “Committee”), and this Award Letter. Any terms used and not defined in the Award Letter shall have the meanings set forth in the Plan. In the event there is an inconsistency between the terms of the Plan and the Award Letter, the terms of the Plan will prevail. 1. Determination of Earned Shares Earned Shares. The exact number of shares of Common Stock that will actually be earned by and awarded to you (the “Earned Shares”) out of the total maximum number of the Deferred Performance Units awarded to you in this Award Letter will be based upon the level of achievement by the Company of the performance standard described below over the three-year period commencing January 1, 200___(the “Performance Cycle”). The determination by the Committee with respect to the achievement of such performance standards will be made in the first quarter of 200___after all necessary Company and peer information is available. The specific date on which such determination is formally made and approved by the Committee is referred to as the “Determination Date.” After the Determination Date, the Company will notify you of the number of Earned Shares, if any, to be actually awarded to you. The delivery of the Earned Shares will be made no later than 2 1/2 months after the Determination Date. The calculation of Earned Shares shall be based on the Company’s Total Shareholder Return ranking compared to a defined peer group at the end of the Performance Cycle as determined by the Committee in its sole discretion. “Total Shareholder Return” is defined for a given company as the change in share price plus cumulative dividends paid, assuming dividend reinvestment during the Performance Cycle, over share price at the beginning of the Performance Cycle of the applicable company. Earned Shares will be calculated by multiplying the maximum number of Deferred Performance Units granted by the following percentages for the percentile rank achieved. For Total Shareholder Return performance between the percentile ranks noted below, linear interpolation will be used to calculate the exact number of Earned Shares:           Percentile Rank   Percentage   100th     100 % 92     91.67   84     83.33   75     75.00   68     66.67   62     58.33   56     50.00   50     40.00   44     30.00   38     20.00   32     10.00   25th or lower   ZERO   --------------------------------------------------------------------------------   The Company’s defined “Peer Group” shall consist of TODCO and the following companies: Atwood Oceanics Inc., Cal Dive International, Ensco International, Global Industries, Grant Prideco, Grey Wolf, Helmerich & Payne, Maverick Tube, Newpark Resources, Parker Drilling, Patterson – UTI Energy, Pride International, Rowan Companies Inc. and Tidewater Inc. Committee Determinations. In accordance with the provisions of the Plan, the Committee shall have the exclusive authority to make all determinations hereunder, including but not limited to the ranking of TODCO and its Peer Group. Without limiting the foregoing, the Committee shall have absolute discretion to determine the number of Earned Shares to which you are entitled, if any, including without limitation such adjustments as may be necessary in the opinion of the Committee to account for changes since the date of the Award Letter. Notwithstanding the foregoing, the Committee shall be precluded from increasing the amount that would otherwise be obtainable upon the achievement of the performance goals described in Section 1(a) above to the extent prescribed by Section 162(m) of the Internal revenue Code of 1986 as amended (the “Code”) and the applicable regulations rulings and notices thereunder. The Committee’s determination shall be final, conclusive and binding upon you. You will not have any right or claim with respect to any shares other than Earned Shares to which you become entitled in accordance herewith. You will not be required to pay any purchase price for the Earned Shares; however tax withholding is required pursuant to Section 8. 2. Vesting Unless vested on an earlier date as provided in this Appendix A, the Earned Shares will vest on the Determination Date. The Deferred Performance Units will only become Earned Shares, if at all, on the Determination Date. As described in Section 7 below, in the event of a Change in Control, a portion of your Deferred Performance Units may become Earned Shares. 3. Restrictions Until and unless Earned Shares become vested, you do not own any of the Common Stock potentially subject to the Deferred Performance Units awarded to you in this Award Letter and you may not attempt to sell, transfer, assign or pledge the Deferred Performance Units or the Common Stock that may be awarded hereunder. Your Earned Shares, if any, will be registered in your name as of the Determination Date. The Deferred Performance Units awarded hereunder shall be accounted for by the Company on your behalf on a ledger. Promptly after the Determination Date (but no later than 2 1/2 months after the Determination Date), the net shares (total vested Earned Shares minus any Earned Shares retained to satisfy the tax withholding obligation of the Company, as described in Section 8 if applicable), will be delivered in street name to your brokerage account (or, in the event of your death, to a brokerage account in the name of your beneficiary in accordance with the Plan) or, at the Company’s option, a certificate for such shares will be delivered to you. 4. Dividends and Voting The Deferred Performance Units granted herein do not give you any rights as a stockholder of the Company including, but not limited to, voting and dividend rights. 5. Termination of Employment If your employment is terminated prior to the Determination Date due to death, “Disability” (as defined below), “Retirement” (as defined below) or at the convenience of the Company (as determined by the Committee), you will be entitled to receive Earned Shares representing a “Pro Rata Share” of your Deferred Performance Units, if any become payable, on the Determination Date. The calculation of your Pro- Rata Share is determined by multiplying the number of Earned Shares calculated as of the Determination Date   --------------------------------------------------------------------------------   which would have otherwise been earned had your employment not been terminated, by a fraction, the numerator of which is the number of calendar days you were employed during the Performance Cycle after the Award Date and the denominator of which is the total number of calendar days in the Performance Cycle after the Award Date. Retirement is defined for the purpose of this section of Appendix A as meeting the “Rule of 70”, which requires a minimum age of 55, combined with years of service to total 70 or more. If you retire after the age of 55, yet your age and years of service do not lead to a combined 70, you will not be entitled to any Earned Shares. Retirement also means your retirement at the convenience of the Company as determined by the Committee. Disability shall mean you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death, or last a continuous period of not less than twelve months or by reason of either of the foregoing you are receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company. Except as provided under Section 7, “Change in Control”,” if your employment is terminated for any reason other than death, Disability, Retirement, or termination for the convenience of the Company, you will not be entitled to any Earned Shares. The Committee shall have absolute discretion to determine the date and circumstances of termination of your employment, including without limitation whether as a result of death, Disability, Retirement, or termination for the convenience of the Company, or any other reason, and its determination shall be final, conclusive and binding upon you. 6. Beneficiary You may designate a beneficiary to receive any Earned Shares that become due to you after your death, and may change your beneficiary from time to time. Beneficiary designations should be filed with the Committee of the Plan. If you fail to designate a beneficiary, Earned Shares due to you under the Plan will be issued to the executor or administrator of your estate in the event of your death. 7. Change in Control Acceleration of Vesting. If you are employed by the Company on the date of a Change in Control of the Company and the Determination Date has not occurred, you will be entitled to receive Earned Shares representing 50% of your Deferred Performance Units. to be paid no later than 2 1/2 months after a Change in Control. A Change in Control of the Company shall be deemed to have occurred as of the first day any one or more of the following conditions shall have been satisfied:   (a)   The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of shares representing 20% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation or other entity controlled by the Company, or (iv) any acquisition by any corporation or other entity pursuant to a transaction which complies with clauses (i), (ii) and (iii) of Section 7(c); or     (b)   Individuals who, as of the effective date of the Plan (as defined in the Plan), are members of the Board of Directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board of Directors of the Company; provided, however, that for purposes of this Section 7(b), any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, shall be considered as though such individual were a member of the Incumbent   --------------------------------------------------------------------------------   Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors of the Company; or   (c)   Consummation of a reorganization, merger, conversion or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then outstanding combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation or other entity resulting from such Business Combination (including, without limitation, a corporation or other entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Voting Securities, (ii) no Person (excluding any corporation or other entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation or other entity resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of the combined voting power of the then outstanding voting securities of the corporation or other entity resulting from such Business Combination except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation or other entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board of Directors of the Company, providing for such Business Combination; or     (d)   Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company other than in connection with the transfer of all or substantially all of the assets of the Company to an affiliate or a Subsidiary of the Company. 8. Tax Consequences and Income Tax Withholding You should review the Plan Prospectus for a general summary of the U.S. federal income tax consequences to you from this award of Deferred Performance Units and any Earned Shares based on currently applicable provisions of the Code and related regulations. The summary does not discuss state and local tax laws or the laws of any other jurisdiction, which may differ from U.S. federal tax law. Neither the Company nor the Committee guarantees the tax consequences of your award herein. You are advised to consult your own tax advisor regarding the application of the tax laws to your particular situation. The award under the Award Letter is subject to your making of arrangements satisfactory to the Company to satisfy any applicable U.S. federal, state or local withholding tax liability arising from the vesting of the Earned Shares. You can either make a cash payment to the Company of the required amount or at the discretion of the Committee you can elect to satisfy your withholding obligation by having the Company retain Common Stock having a value approximately equal to the amount of your withholding obligation from the Earned Shares otherwise deliverable to you upon the vesting of such shares. You may not elect for such withholding to be greater than the minimum statutory withholding tax liability arising from the vesting of the Earned Shares. If you fail to satisfy your withholding obligation in a time and manner satisfactory to the Company, no shares will be issued to you or the Company at its discretion shall have the right to   --------------------------------------------------------------------------------   withhold the required amount from your salary or other amounts payable to you prior to the delivery of the Common Stock to you. In addition, you must make arrangements satisfactory to the Company to satisfy any applicable withholding tax liability imposed under the laws of any other jurisdiction arising from the award hereunder. You may not elect to have the Company withhold Earned Shares having a value in excess of the minimum statutory withholding tax liability. If you fail to satisfy such withholding obligation in a time and manner satisfactory to the Company, no shares will be issued to you or the Company shall have the right to withhold the required amount from your salary or other amounts payable to you prior to the delivery of the Common Stock to you. 9. Restrictions on Resale Other than the restrictions referenced in paragraph 3, there are no restrictions imposed by the Plan on the resale of Earned Shares acquired under the Plan. However, under the provisions of the Securities Act of 1933 (the “Securities Act”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”), resales of shares acquired under the Plan by certain officers and directors of the Company who may be deemed to be “affiliates” of the Company must be made pursuant to an appropriate effective registration statement filed with the SEC, pursuant to the provisions of Rule 144 issued under the Securities Act, or pursuant to another exemption from registration provided in the Securities Act. At the present time, the Company does not have a currently effective registration statement pursuant to which such resales may be made by affiliates. These restrictions do not apply to persons who are not affiliates of the Company; provided, however, that all employees and the award made hereby are subject to the Company’s policies against insider trading (including black-out periods during which no sales are permitted) and to other restrictions on resale that may be imposed by the Company from time- to- time if it determines such restrictions are necessary or advisable to comply with applicable law. 10. Effect on Other Benefits Income recognized by you as a result of this award of the Deferred Performance Units, vesting , or payment of Earned Shares or dividends on your Earned Shares will not be included in the formula for calculating benefits under any of the Company’s retirement and disability plans or any other benefit plans. 11. Compliance With Laws This Award Letter, the Deferred Performance Units and any Earned Shares issued hereunder shall be subject to all applicable federal and state laws and the rules of the exchange on which shares of the Company’s Common Stock are traded. 12. Miscellaneous Not an Agreement for Continued Employment or Services. This Award Letter will not, and no provision of this Award Letter will be construed or interpreted to, create any right to be employed by or to provide services to or continue your employment with or provide services to the Company, the Company’s affiliates, parent, subsidiary or their affiliates. Community Property. Each spouse individually is bound by, and such spouse’s interest, if any, in this award of Deferred Performance Units or in any shares of Common Stock that may be awarded hereunder is subject to the terms of this Award Letter. Nothing in this Award Letter shall create a community property interest where none otherwise exists. Amendment for Code Section 409A. This award of Deferred Performance Units is intended to be exempt from Code Section 409A. If the Committee determines that this award of Deferred Performance Units is subject to Code Section 409A, the Committee may, in its sole discretion, amend the terms and conditions of this Award Letter to the extent necessary to comply with Code Section 409A.   --------------------------------------------------------------------------------   If you have any questions regarding your award of Deferred Performance Units or would like to obtain additional information about the Plan or the Committee, please contact the Company’s General Counsel. Your Award Letter, the Plan and all attachments should be retained in your files for future reference.  

Exhibit 10.1 AMENDED AND RESTATED STOCKHOLDERS’ AGREEMENT among JOHNSONDIVERSEY HOLDINGS, INC., COMMERCIAL MARKETS HOLDCO, INC. and MARGA B.V. Dated as of May 1, 2006 -------------------------------------------------------------------------------- TABLE OF CONTENTS             Page ARTICLE I         DEFINITIONS    2 1.1    Certain Definitions    2 1.2    Construction    26 1.3    Currency    26 ARTICLE II         ORGANIZATION    26 2.1    Certificate of Incorporation and Bylaws    26 2.2    Headquarters    26 ARTICLE III         STOCKHOLDERS    27 3.1    Stockholders    27 3.2    Purchase of Shares    27 ARTICLE IV         MANAGEMENT OF THE COMPANY    27 4.1    The Board    27 4.2    Size of the Board; Term    28 4.3    Nomination of Directors    28 4.4    Vacancies; Removal    30 4.5    Committees    31 4.6    Election Meetings    32 4.7    Chairman of the Board    32 4.8    Board Meetings    32 4.9    Compensation    33 4.10    Veto Matters    33 4.11    Annual Budgets    38 4.12    Strategic Plan    38 4.13    Material Legal Proceedings    39 4.14    Bankruptcy Events    39 4.15    Interview Rights    39 ARTICLE V         REPRESENTATIONS AND WARRANTIES    39 5.1    Organization    39 5.2    Authority    40 5.3    Consents and Approvals    40 5.4    No Violations    40 5.5    Litigation    40 5.6    Securities    41 5.7    No Registration    41 5.8    Investment Company Act    41 5.9    Survival    41 ARTICLE VI         COVENANTS    42 6.1    Financial Statements and Other Information    42 -------------------------------------------------------------------------------- 6.2    Maintenance of Books    42 6.3    Biannual Review    43 6.4    Confidentiality    43 6.5    Public Disclosures    45 6.6    Directors’ and Officers’ Insurance; Indemnification    45 6.7    Compliance with Agreement    45 6.8    Information    46 6.9    Certain Indemnification    46 6.10    Registers of Holders    46 6.11    Tax Residence    46 ARTICLE VII         TRANSFERS    46 7.1    Restrictions on Transfer of Shares    46 7.2    Approved Sale; Drag Along    46 7.3    Certain Permitted Transfers    47 7.4    Stockholders Leaving Groups    50 7.5    Termination of Restrictions    50 7.6    Void Transfers    50 7.7    Legend    50 7.8    Lock-up; Registration Rights    51 7.9    Transfer of Additional Shares    51 ARTICLE VIII         PUT AND CALL RIGHTS    53 8.1    Put Right    53 8.2    Put Price    53 8.3    Put Closing    54 8.4    Termination and Limitations of Put Rights    55 8.5    Call Right    57 8.6    Call Closing    58 8.7    Purchase Terms    58 8.8    Adjustment of Fair Market Value    59 8.9    Determination of Fair Market Value    60 8.10    Expert Determination of Applicable EBITDA    61 8.11    Expert Determination of Base Value    61 8.12    Information    62 8.13    Failure by the Company to Acquire Shares    62 8.14    Priority of Put and Call Rights    65 8.15    Exit Planning    65 8.16    Agency Adjustment    66 8.17    Contingent Payments    66 ARTICLE IX         TERMINATION    66 9.1    Termination    66 9.2    Prior Breach    66 ARTICLE X         GENERAL PROVISIONS    66 10.1    No Offset    66   ii -------------------------------------------------------------------------------- 10.2    Notices    66 10.3    Entire Agreement    67 10.4    Effect of Waiver or Consent    67 10.5    Amendment, Modification or Waiver    68 10.6    Binding Effect    68 10.7    Specific Performance    68 10.8    Governing Law; Severability    68 10.9    Notice to Stockholders of Provisions    68 10.10    Counterparts    69 10.11    Consent to Jurisdiction and Service of Process    69 10.12    Waiver of Jury Trial    69 10.13    Parties in Interest    70 10.14    Fees and Expenses    70 10.15    No Partnership    70 10.16    Supremacy    71 10.17    Exit Note    71 10.18    Effectiveness of this Agreement    72   iii -------------------------------------------------------------------------------- SCHEDULES AND EXHIBITS:   SCHEDULE A    Stockholders, Share Ownership and Share Consideration SCHEDULE B    Certain Disclosures EXHIBIT 1    Excluded Transactions EXHIBIT 2    Form of Assumption Agreement EXHIBIT 3    Term Sheet for the Exit Note EXHIBIT 4    Definition of EBITDA EXHIBIT 5    Certificate of Incorporation EXHIBIT 6    Bylaws EXHIBIT 7    Agreed Dividend Policy EXHIBIT 8    Material Benefit Plans EXHIBIT 9    Contingent Payments EXHIBIT 10    Certain Indemnification EXHIBIT 11    Net Debt Adjustments EXHIBIT 12    Committee Charters   iv -------------------------------------------------------------------------------- AMENDED AND RESTATED STOCKHOLDERS’ AGREEMENT This AMENDED AND RESTATED STOCKHOLDERS’ AGREEMENT (this “Agreement”), dated as of May 1, 2006, is by and among JohnsonDiversey Holdings, Inc., a Delaware corporation (formerly known as Johnson Professional Holdings, Inc., the “Company”), Commercial Markets Holdco, Inc., a Wisconsin corporation (“Holdco”), and Marga B.V., a company organized under the laws of The Netherlands (“Marga”) and an indirect, wholly-owned subsidiary of Unilever N.V., a company organized under the laws of The Netherlands (“Unilever NV”). Marga, together with Holdco and such other Persons listed on Schedule A (as such schedule may be amended from time to time), including any Permitted Transferees, are referred to collectively as the “Stockholders” and each individually as a “Stockholder.” RECITALS WHEREAS, the Company, which was formed by the filing on November 8, 2001 of a Certificate of Incorporation with the Secretary of State of the State of Delaware, had been a wholly-owned subsidiary of Holdco at all times prior to the Closing Date (as hereinafter defined); WHEREAS, on November 20, 2001, the Company, S.C. Johnson Commercial Markets, Inc. a Delaware corporation (now known as JohnsonDiversey, Inc., “CMI”) and a wholly-owned (except for one share) subsidiary of the Company, and Conopco, Inc., a New York corporation (“Conopco”) and an indirect, wholly-owned subsidiary of Unilever entered into a Purchase Agreement (the “Purchase Agreement”) providing for, among other things, (i) Conopco paying or causing to be paid the Subscription Payment (as defined in the Purchase Agreement) in exchange for the issuance by the Company to Marga of the number of Class B Shares (as hereinafter defined) set forth opposite Marga’s name on Schedule A as of the date hereof and (ii) the execution of this Agreement to set forth provisions relating to, among other things, the governance of the Company and various other rights and obligations of the Company and the Stockholders; WHEREAS, Conopco has caused Marga to pay the Subscription Payment to the Company pursuant to the Purchase Agreement, and Unilever NV has guaranteed the performance by Conopco of its obligations thereunder and by the Unilever Stockholder of its obligations hereunder, in each case pursuant to a Guarantee of Performance and Indemnity Agreement, dated as of November 20, 2001; WHEREAS, Marga shall initially be the Unilever Stockholder; WHEREAS, on or before the Closing Date, Holdco transferred to the Company, as an additional capital contribution, $25 million in the form of cash in consideration for which the Company issued additional Class A Shares (as hereinafter defined), which are included in the number of Class A Shares set forth opposite Holdco’s name on Schedule A as of the date hereof; and WHEREAS, the Company and the Stockholders desire to amend and restate this Agreement as provided herein, effective upon the completion of the sale of the Polymer Business -------------------------------------------------------------------------------- pursuant to the terms and conditions of the Asset and Equity Interest Purchase Agreement, dated as of May 1, 2006, by and among Johnson Polymer, LLC, JohnsonDiversey Holdings II B.V. and BASF Aktiengesellschaft in the form approved in writing by the Stockholders (including such amendments as may be made in accordance with that approval), save that the amendment set forth in Exhibit 11 shall become effective and binding, and the original Stockholders’ Agreement, dated May 3, 2002, shall be so amended, immediately upon the execution of this Agreement by the parties hereto. NOW, THEREFORE, the Company and the Stockholders agree as follows: ARTICLE I DEFINITIONS 1.1 Certain Definitions. Terms used in this Agreement with initial capital letters that are not defined in this Agreement shall have the meanings given to them in the Purchase Agreement. As used in this Agreement, the following terms have the following meanings: “144A Notes” means the 9.625% Senior Subordinated Notes due 2012 of CMI in the aggregate principal amount of $300,000,000 (the “Dollar Notes”) and the 9.625% Senior Subordinated Notes due 2012 of CMI in the aggregate principal amount of EUR 225,000,000 (the “Euro Notes”) in each case, issued on the Closing Date. “144A Notes Indentures” means the Indenture dated as of the Closing Date between CMI and BNY Midwest Trust Co., as trustee, providing for the issuance of the Dollar Notes and the Indenture dated as of the Closing Date between CMI and The Bank of New York, as trustee, providing for the issuance of the Euro Notes, in each case, as amended or supplemented from time to time. “Accounting Expert” means a firm of internationally recognized independent public accountants (other than the then current auditors of the Company, the Unilever Stockholder or Unilever) mutually selected by the Unilever Stockholder and the Company or, if the Unilever Stockholder and the Company fail to agree within ten Business Days after commencing discussions thereon, (a) the public accounting firm of Ernst & Young, LLP or any successor organization, subject to clearance of any conflicts of interest, (b) if Ernst & Young, LLP is conflicted, the public accounting firm of KPMG, LLP or any successor organization, subject to clearance of any conflicts of interest, and (c) if KPMG, LLP is conflicted, the public accounting firm of Deloitte & Touche LLP, or any successor organization, subject to clearance of any conflicts of interest. “Accounts Receivable Securitization Facility” means (a) the Receivables Sale Agreement, dated as of March 2, 2001, between CMI and JWPR Corporation, (b) the Receivables Sale Agreement, dated as of March 2, 2001, between Polymer and JWPR Corporation, (c) the Receivables Sale Agreement, dated as of March 2, 2001, between U.S. Chemical Corporation and JWPR Corporation, (d) the Receivables Sale Agreement, dated as of March 2, 2001, between Whitmire and JWPR Corporation, (e) the Receivables Purchase   2 -------------------------------------------------------------------------------- Agreement, dated as of March 2, 2001, among JWPR Corporation, Falcon Asset Securitization Corporation and Bank One, NA, and (f) the Receivables Sale and Contribution Agreement, dated as of March 2, 2001, among Polymer, U.S. Chemical Corporation, Whitmire, CMI, JWP Investments, Inc. and JWPR Corporation, in each case, as amended, restated or supplemented on or after the date hereof, other than to increase the amount of Indebtedness available thereunder. “Accreted Value” has the meaning set forth in the Note Indenture. “Accumulated Excess Pension Contributions” means the cumulative aggregate amount of all Pension Differential Contributions determined for all full and partial Fiscal Years, without duplication, during the period beginning on the Closing Date and ending on the last day of the applicable Measurement Period; provided, however, that if such aggregate amount is negative, it shall be deemed to be zero. “Additional Divestiture” has the meaning set forth in Section 8.13. “Additional Divestiture Identification” has the meaning set forth in Section 8.13. “Additional Floor Payment” has the meaning set forth in Section 7.9. “Additional Payments” has the meaning set forth in Section 7.9. “Additional Rounding Payment” has the meaning set forth in Section 7.9. “Additional Shares” has the meaning set forth in Section 7.9. “Additional Shares Closing Date” has the meaning set forth in Section 7.9. “Additional Shares Exercise Date” has the meaning set forth in Section 7.9. “Additional Shares Purchase Price” has the meaning set forth in Section 7.9. “Affiliate” means, with respect to a specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person. Notwithstanding the foregoing, for the purposes of this Agreement, (a) no Unilever Group Member shall be regarded as an Affiliate of Holdco, any other Holdco Group Member or any Company Group Member, and (b) no Holdco Group Member shall be regarded as an Affiliate of Unilever, any Unilever Group Member or any Company Group Member. “Affiliate Transaction” means any agreement, contract, arrangement or other transaction or series of related transactions (including, without limitation, any purchase, sale, transfer, assignment, lease, license, conveyance or exchange of assets or property, any merger, consolidation or similar transaction or any provision of any service) between or among (i) the Company or any Affiliate controlled by the Company (a “Company-Controlled Affiliate”), on the one hand, and (ii) any Holdco Group Member (other than the Company or a Company-Controlled Affiliate) or any director or officer of any such Holdco Group Member, on the other hand, that has an aggregate fair market value or pursuant to the terms thereof will result in   3 -------------------------------------------------------------------------------- aggregate expenditures or aggregate payments in excess of (a) with respect to agreements, contracts, arrangements and transactions that are not on arm’s length terms, $100,000 individually, or (b) with respect to agreements, contracts, arrangements and transactions that are on arm’s length terms, $2,000,000 individually, or (c) $100,000 individually (in the case of arm’s length agreements, contracts, arrangements and transactions) or $10,000 individually (in the case of non-arm’s length agreements, contracts, arrangements and transactions), as applicable, in each case in the event that Affiliate Transactions in excess of $10,000,000, collectively, have been entered into in the immediately preceding twelve months (each, an “Affiliate Maximum Amount”); provided, however, that Affiliate Transactions shall not include (A) transactions effected pursuant to (1) any Transaction Document, (2) any agreement, contract or arrangement set forth on Part A of Exhibit 1 as of the date of the Purchase Agreement, (3) any agreement, contract or arrangement on arm’s length terms set forth on Part B of Exhibit 1 as of the date hereof, (4) any agreement, contract or arrangement on arm’s length terms in effect, or entered into, on or prior to the date hereof that has an aggregate fair market value or pursuant to the terms thereof will result in aggregate expenditures or aggregate payments of less than $500,000 individually, and (5) any renewal, extension, amendment or modification of any of the foregoing which (x) is not material and does not provide for any price increases under such agreement, contract or arrangement in excess of 10% of then current prices, or (y) is automatically effective under the terms of such agreement, contract or arrangement as in effect on or prior to the date hereof), (B) any agreement, contract, arrangement or transaction with respect to the compensation of a director or officer of the Company or any Company-Controlled Affiliate approved by the Compensation Committee of the Board, and (C) any employment, non-competition, confidentiality or similar agreement entered into by the Company or any Company-Controlled Affiliate with a director, officer or employee of the Company or a Company-Controlled Affiliate in the Ordinary Course of Business. For purposes of this definition, “arm’s length terms” means terms that are no less favorable to the Company or such Company-Controlled Affiliate than those that could have been obtained in a transaction by the Company or such Company-Controlled Affiliate with a Person that is an independent third party. “Agency Adjustment” means an amount equal to the product of (a) the annual net after interest, allocated with revenue as the key, and tax earnings of the Company attributable to amounts payable by Unilever pursuant to the New Agency Agreement (the “Annual Agency Earnings”), times (b) the number of years remaining in the Agency Term after the applicable Put Closing Date or Call Closing Date (as the case may be). Annual Agency Earnings shall be measured on the basis of the net after interest and tax earnings attributable to (a) amounts actually paid by Unilever during the applicable Measurement Period if the New Agency Agreement was in effect during the entirety of such Measurement Period, or (b) amounts estimated in good faith by the Company to be paid by Unilever during the first year of the New Agency Agreement if the New Agency Agreement was not in effect during the entirety of the applicable Measurement Period, based upon the terms and conditions of the New Agency Agreement and prior experience which is comparable to the experience the Company anticipates under the New Agency Agreement. “Agency Term” has the meaning set forth in Section 8.16. “Agreement” has the meaning set forth in the introductory paragraph to this Agreement.   4 -------------------------------------------------------------------------------- “Alternative Structure Conditions” has the meaning set forth in Section 7.9. “Annual Capital Budget” has the meaning set forth in Section 4.11. “Annual Operating Budget” has the meaning set forth in Section 4.11. “Applicable EBITDA” means the aggregate EBITDA during the applicable Measurement Period, calculated in accordance with Exhibit 4. “Applicable Indebtedness” means the Indebtedness of the Company Group as of the last day of the applicable Measurement Period (measured on a consolidated basis in accordance with GAAP) as reflected on the financial statements of the Company as of such day. “Applicable Law” means (a) all applicable and binding international, foreign, federal, European Union, national, supranational, state, regional or local laws, statutes and subordinate legislation, directives, rules, regulations, ordinances, zoning, building or other similar restrictions, orders, decisions, judgments or decrees, regulatory agreements or regulatory orders, (b) the common law and (c) the rules and regulations of any United States or foreign securities exchange. “Applicable Rate” means a rate per annum (carried out to the fifth decimal place) equal to the offered rate that appears on a specified date (or, if it does not appear on such specified date, on the next preceding date on which it does appear) on the page of the Telerate Screen that displays an average British Banker’s Association Interest Settlement Rate for deposits in the applicable currency with a term of 180 days, plus 25 basis points. “Approved Sale” has the meaning set forth in Section 7.2. “Approved Sale Notice Date” means the date on which notice is given to the Unilever Stockholder of an Approved Sale, which notice shall not be given more than 30 calendar days prior to the date the parties enter into a definitive and binding agreement for such Approved Sale. “Assumption Agreement” means an agreement in substantially the form of Exhibit 2. “Audit Committee Charter” means the statement of authority and powers of the Audit Committee of the Board as set forth in Part A of Exhibit 12, which was adopted at the first regular meeting of the Board following the Closing Date, as such charter may be amended from time to time, subject to Section 4.10(a)(xiii). “Bankruptcy Event” has the meaning set forth in Section 4.14. “Bankruptcy Laws” has the meaning set forth in Section 4.14. “Base Value” means the enterprise value of the Company Group, determined as of the last day of the applicable Measurement Period, as may be agreed to by the Unilever Stockholder and the Company or as otherwise determined pursuant to Sections 8.9, 8.10 and 8.11   5 -------------------------------------------------------------------------------- in accordance with the Valuation Principles; provided, however, that the Base Value shall not be less than eight times the Applicable EBITDA. “beneficial owner,” “beneficially own” and “beneficial ownership” means, with respect to any securities, (a) securities that the designated Person or any of such Person’s Affiliates is deemed to “beneficially own” within the meaning of Rule 13d-3 under the Exchange Act, as in effect on the date of this Agreement, and (b) any securities that such Person or any of such Person’s Affiliates has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (written or oral), or upon the exercise of conversion rights, exchange rights, rights, warrants or options or otherwise (it being understood that such Person will also be deemed to be the beneficial owner of the securities convertible into or exchangeable for such securities). “Board” means the Board of Directors of the Company. “Brand License Agreement” has the meaning set forth in Section 7.3. “Business” means (a) the business of manufacturing, marketing, distributing, developing and selling building maintenance, cleaning, pest elimination, laundry, warewashing, food hygiene and sanitation products, plastic additives and polymer intermediates to, or for ultimate use by, Customers, and (b) the business of developing, marketing, selling and providing facilities maintenance services for Professional End-Users. Without limiting the generality of the foregoing, the Business shall include the DiverseyLever Business (as defined in the Purchase Agreement). “Business Day” means a day that is not a Saturday, Sunday or other day on which commercial banking institutions in New York City, Amsterdam or London are authorized or required by Applicable Law to be closed; provided, that the days beginning on an including December 21 of each year and ending on and including January 2 of each year shall not constitute Business Days. “Business Plan” has the meaning set forth in Section 4.11. “Business Plan Meeting” has the meaning set forth in Section 4.11. “Bylaws” has the meaning set forth in Section 2.1. “Call Closing” has the meaning set forth in Section 8.6. “Call Closing Date” has the meaning set forth in Section 8.6. “Call Notes” has the meaning set forth in Section 8.5. “Call Notice” has the meaning set forth in Section 8.5. “Call Option” has the meaning set forth in Section 8.5. “Call Shares” has the meaning set forth in Section 8.5.   6 -------------------------------------------------------------------------------- “Cash” means the cash (or cash equivalents) balance of the Company Group as of the last day of the applicable Measurement Period (measured on a consolidated basis in accordance with GAAP). “Certificate” has the meaning set forth in Section 2.1. “Certified Applicable EBITDA” has the meaning set forth in Section 8.10. “Certified Base Value” has the meaning set forth in Section 8.11. “Certified Cash Flows” has the meaning set forth in Section 8.10. “Chairman” means the chairman from time to time of the Board. “Charter Documents” means the Certificate and the Bylaws. “Chief Executive Officer” means the chief executive officer from time to time of the Company. “Chief Financial Officer” means the chief financial officer from time to time of the Company. “Class A Common Stock” means (a) the Class A Common Stock, par value $0.01 per share, of the Company, and (b) any equity securities issued with respect to any such Class A Common Stock by way of a stock dividend or stock split, or in connection with a combination of shares, recapitalization, merger, consolidation, or other reorganization, or otherwise. “Class A Shares” means shares of Class A Common Stock. “Class B Common Stock” means (a) the Class B Common Stock, par value $0.01 per share, of the Company, and (b) any equity securities issued with respect to any such Class B Common Stock by way of a stock dividend or stock split, or in connection with a combination of shares, recapitalization, merger, consolidation, or other reorganization, or otherwise. The Class B Common Stock shall have a liquidation preference equal to the Share Price (the “Class B Liquidation Preference”). The Class B Common Stock shall be identical to the Class A Common Stock in all respects, other than the Class B Liquidation Preference. “Class B Shares” means shares of Class B Common Stock. “Closing Date” means May 3, 2002. “CMI” has the meaning set forth in the second recital to this Agreement. “CMI Business” shall mean (a) the business of manufacturing, marketing, distributing, developing and selling building maintenance, cleaning, pest elimination, laundry, warewashing, food hygiene and sanitation products, plastic additives and polymer intermediates to Customers, and (b) the business of developing, marketing, selling and providing facilities maintenance services for Professional End-Users, in the case of (a) and (b), as conducted by the   7 -------------------------------------------------------------------------------- Company, its Subsidiaries (excluding, prior to the Closing Date, the “Companies” sold to the Company pursuant to the Purchase Agreement, but including them thereafter) and any other Persons that are controlled, directly or indirectly, by the Company. “Common Stock” means the Class A Common Stock and Class B Common Stock. “Common Stock Equivalents” means any options, warrants or other rights, agreements, arrangements or commitments of any character obligating the Company or any of its Subsidiaries to issue or sell any shares of capital stock of or other equity interests in the Company or any of its Subsidiaries, or any securities or obligations convertible into, or exchangeable for, any such shares of capital stock or other equity interests, or obligating the Company or any of its Subsidiaries to grant, extend, or enter into any such right, agreement, arrangement or commitment, other than the issuance of any of the foregoing by any Subsidiary of the Company to the Company or any other Subsidiary of the Company. “Company” has the meaning set forth in the introductory paragraph to this Agreement. “Company Group” means the Company and any Subsidiaries of the Company from time to time. “Company Group Member” means any member of the Company Group. “Compensation Committee Charter” means the statement of authority and powers of the Compensation Committee of the Board as set forth in Part B of Exhibit 12, which was adopted at the first regular meeting of the Board following the Closing Date, as such charter may be amended from time to time, subject to Section 4.10(a)(xii). “Confidential Information” has the meaning set forth in Section 6.4. “Confidentiality Agreements” means the Letter Agreement, dated as of December 20, 2000, between Unilever United States, Inc. and CMI, as amended, and the Joint Defense Agreement, dated as of June 1, 2001, between Unilever NV, Unilever PLC and CMI. “Conflicting Provisions” has the meaning set forth in Section 10.16. “Conopco” has the meaning set forth in the second recital to this Agreement. “Contingent Payment Amount” has the meaning set forth on Exhibit 9. “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of another Person whether through the ownership of securities, by contract or agency, or otherwise, it being understood, without prejudice to the generality of the foregoing, that a Person shall be presumed to have control of an Entity when such Person has direct or indirect ownership of more than 50% of the Total Voting Power or general partnership interests or voting interests in such Entity, and the terms “controlling,” “controlled by” and “under common control with” shall be construed accordingly.   8 -------------------------------------------------------------------------------- “Credit Agreement” means the Credit Agreement, dated as of the Closing Date, among S.C. Johnson Commercial Markets, Inc., Johnson Wax Professional, Inc., a company organized under the laws of Canada, Johnson Professional Co., Ltd., a company organized under the laws of Japan, and Johnson Diversey Netherlands II B.V., a company organized under the laws of the Netherlands, each as a borrower, Johnson Professional Holdings, Inc., the lenders and issuers party thereto, as lenders, Citicorp USA, Inc., as administrative agent for such lenders, Goldman Sachs Credit Partners L.P., as syndication agent for the Senior Lenders, and ABN Amro Bank N.A., Bank One N.A., Royal Bank of Scotland PLC, New York Branch and General Electric Capital Corporation, each as a co-documentation agent for such lenders, as amended, restated, supplemented or otherwise modified from time to time. “Credit Documents” means the Credit Agreement and any and all notes, guarantees, security agreements, pledge agreements, mortgages, deposit account control agreements, fee letters, letter of credit reimbursement agreements, foreign exchange or currency swap agreements, each hedging contract to which the Company, or a subsidiary of the Company, and a lender under the Credit Agreement (or an affiliate) is a party, each agreement pursuant to which a lender under the Credit Agreement (or an affiliate) provides cash management services to the Company, or a subsidiary of the Company, other agreements delivered by the Company, or a subsidiary of the Company, granting a lien on or security interest in any of its property to secure payment of the Company’s, or such subsidiary’s, obligations under the Credit Agreement other documents, instruments or agreements entered into in connection with or pursuant to the foregoing, and any and all documents, instruments or agreements evidencing or securing the amendment, refinancing, modification, replacement, renewal, restatement, refunding, deferral, extension, supplement, reissuance or resale thereof. “Cumulative Special Funding Adjustment” means the amount of contributions paid, during the period beginning on the Closing Date and ending on the last day of the applicable Measurement Period, in respect of an unfunded pension arrangement to a fund for the purpose of prefunding such benefits as are provided under the unfunded pension arrangements, other than as may be required by Applicable Law. All such contributions in a local jurisdiction shall initially be expressed in the relevant local currency but shall be converted into dollars as of the last day of each Fiscal Year (and, if the applicable Measurement Period is not a Fiscal Year, the last day of such Measurement Period). Each such conversion shall be calculated using (1) the applicable exchange rate as published in the “Cross-Rates and Derivatives: Exchange Cross-Rates” (or any successor column), as appearing in the Financial Times on the last day of the applicable Fiscal Year or Measurement Period, or (2) if the Financial Times is not published or such column does not appear on such date, the applicable exchange rate on the immediately preceding date on which the Financial Times is so published and such column appears, or (3) if an exchange rate for the relevant local currency is not so published, such rate as the Company’s independent auditors and Unilever’s independent auditors shall mutually agree by reference to generally accepted, published exchange rates for such currency into dollars as at, or as near as possible to, the last day of the applicable Fiscal Year or Measurement Period. “Customer” means (a) Professional End-Users and (b) any wholesaler, distributor, “cash and carry” outlet or similar reseller who purchases products sold by the Business, in each case described in clause (b), for the purpose of resale, either directly or indirectly, to Professional End-Users.   9 -------------------------------------------------------------------------------- “DGCL” means the Delaware General Corporation Law, as amended from time to time. “Directors” means the members of the Board. “DiverseyLever Business Products” means (a) fabric care products, (b) machine warewashing products, (c) kitchen cleaning products, (d) personal care products, (e) building care products (including floorcare, washroom and roomcare cleaning products), (f) pest control products, (g) air cleaning products, (h) vehicle cleaning products, (i) open plant cleaning products, (j) commercial bottlewashing products, (k) track treatment products, (l) cleaning and hygiene products for intensive livestock, food and beverage processing and packaging, pasteurizer treatment, agriculture and dairy applications, (m) commercial floorcare and carpet care machines (including parts and accessories therefor), (n) cleaning and hygiene utensils and paper products for use by Professional End-Users (including tools, pads, cloths, cutting boards and the like), (o) commercial membrane cleaning products, (p) commercial cleaning in place products, (q) industrial water treatment products, (r) industrial lubricant, paper manufacturing, industrial surface cleaning and treatment, industrial maintenance and cleaning and other specialty manufacturing products, and (s) equipment used to dispense, dose, monitor or control any of the foregoing. “Early Unilever Sale” has the meaning set forth in Section 7.3. “Early Unilever Sale Period” has the meaning set forth in Section 7.3. “EBITDA” has the meaning set forth on Exhibit 4. “Eighth Year” means the eighth anniversary of the Closing Date. “Eighth Year Action” has the meaning set forth in Section 8.13. “Eighth Year Put Closing Date” has the meaning set forth in Section 8.3. “Election Meeting” means any Stockholders Meeting held or to be held for the purpose of electing a Director or Directors to the Board. “Entity” means any general partnership, limited partnership, corporation, association, cooperative, joint stock company, trust, limited liability company, business trust, joint venture, unincorporated organization or governmental entity (or any department, agency or political subdivision thereof). “Exchange Act” means the Securities Exchange Act of 1934, as amended. “Exit Note” shall mean a subordinated promissory note of the Company dated as of the Eighth Year Put Closing Date (a) in an aggregate principal amount equal to the Share Price as of the Eighth Year Put Closing Date, (b) bearing interest from the Eighth Year Put Closing Date to the maturity date at the Applicable Rate as of the Eighth Year Put Closing Date, payable in arrears on the maturity date, (c) having a final maturity date of (i) if the Unilever Stockholder’s Ownership Interest on the Eighth Year Put Closing Date is 10% or less, 1 year   10 -------------------------------------------------------------------------------- from the Eighth Year Put Closing Date, or (ii) if the Unilever Stockholder’s Ownership Interest on the Eighth Year Put Closing Date is more than 10%, 90 days from the Eighth Year Put Closing Date, and (d) providing for the terms and conditions, including, without limitation, the terms relating to ranking, subordination covenants, other terms and rights and remedies relative to other creditors of the Company Group, set forth on Exhibit 3. The holder of the Exit Note shall not transfer such Note to any other Person except (x) a Unilever Group Member of which Unilever has Unilever Required Control (subject to compliance with Sections 7.3 and 7.4, which Sections shall apply, mutatis mutandi, to the Exit Note), or (y) a Person that is previously approved in writing by the Company, which approval may be granted or withheld in the Company’s sole discretion. “Experts” has the meaning set forth in Section 8.11. “Fair Market Value” means (a) (i) the Base Value, minus (ii) the Net Debt Amount (or, if the Net Debt Amount is a negative number, plus the absolute value of the Net Debt Amount), minus (iii) all Repurchase Expenses to the extent not otherwise reflected in the Net Debt Amount and incurred on or prior to the applicable Put Closing Date or Call Closing Date, plus (iv) $90 million multiplied by (b) (i) the number of Unilever Shares to be purchased by the Company, divided by (ii) the total number of issued and outstanding Shares (on a Fully-Diluted basis) on the date the Initial Put Notice or Call Notice, as the case may be, is given. “Final Exit Date” means the date on which (a) the Company consummates the purchase from the Unilever Stockholder of Unilever Shares (whether for cash or in exchange for the Exit Note) in accordance with (i) the Unilever Stockholder’s exercise of its Put Option, or (ii) the Company’s exercise of its Call Option, or (b) the sale of Unilever Shares pursuant to an Approved Sale, Unilever Sale, Early Unilever Sale, Private Placement or other permitted Transfer is consummated, in each case such that immediately following such purchase or sale the Unilever Stockholder ceases to own any Class B Shares. “Financial Advisors” has the meaning set forth in Section 8.9. “Financial Expert” has the meaning set forth in Section 8.11. “Financing Agreements” means (a) the Credit Agreement and any Credit Document, (b) the 144A Notes and the 144A Notes Indenture, (c) the Note and the Note Indenture, (d) the Accounts Receivable Securitization Facility, (e) any other documents, indentures, notes, instruments and agreements entered into by the Company or any of its Subsidiaries (i) in connection with the 144A Notes and the 144A Notes Indenture, or (ii) on or prior to the date hereof, in connection with the Credit Agreement, the Note, the Note Indenture, the Accounts Receivable Securitization Facility or the transactions contemplated thereby, and (f) subject to the second proviso to Section 4.10(c)(i), any other documents, indentures, notes, instruments or agreements entered into in connection with a Refinancing, in the case of (a) through (f) above, as amended, restated, supplemented or otherwise modified from time to time. “First Offer Closing Date” has the meaning set forth in Section 7.3. “First Offer Notice” has the meaning set forth in Section 7.3.   11 -------------------------------------------------------------------------------- “First Offer Price” has the meaning set forth in Section 7.3. “First Offer Sale” has the meaning set forth in Section 7.3. “Fiscal Quarter” means each three-month period ending on the Friday nearest, in each case, March 31, June 30, September 30 or December 31, as the case may be. “Fiscal Year” means the 12-month period ending on the Friday nearest June 30 or any other comparable date on which a Fiscal Quarter ends, as fixed by the Board from time to time for annual fiscal reporting purposes. “Fixed Price Date” has the meaning set forth in Section 8.2. “Full Representation Holding” means the beneficial ownership of Class B Shares representing in the aggregate at least 20% of the outstanding Shares. “Fully-Diluted” means giving effect to the exercise or conversion of, or otherwise giving effect to the existence, on a pro forma basis, of any Common Stock Equivalents (other than Common Stock Equivalents which are convertible into, or exercisable or exchangeable for, Common Stock at a price greater than the Base Value for the applicable Measurement Period on a per share basis assuming only the Shares are outstanding) issued in accordance with Section 4.10, and assuming that such Common Stock Equivalents were exercised or converted. “Funded Indebtedness” of the Company Group means on any date an amount equal to the aggregate outstanding principal amount of Indebtedness; provided, however, that Indebtedness in respect of the Note shall be excluded from the amount referred to above. “GAAP” means U.S. generally accepted accounting principles, as in effect from time to time, consistently applied. “Governmental Authority” means any governmental department, commission, board, bureau, agency, court, regulatory body or other instrumentality of competent jurisdiction of the United States, the European Union or any other country, or any state, region, jurisdiction, municipality or other political subdivision of a country or any other supranational organization of sovereign states. “Group” means the Holdco Group, the Unilever Group or the Company Group, as the case may be. “Holdco” has the meaning set forth in the introductory paragraph of this Agreement. “Holdco Directors” means Helen Johnson Leipold, S. Curtis Johnson, Clifford Louis and Gregory E. Lawton, each of whom is currently serving as a Director as of the date hereof, and any other Directors nominated by the Holdco Stockholder pursuant to Section 4.3(a)(ii).   12 -------------------------------------------------------------------------------- “Holdco Group” means Holdco, its Affiliates from time to time and Johnson Family Members. “Holdco Group Member” means any member of the Holdco Group. “Holdco Note Indebtedness” has the meaning set forth in Section 4.10(c)(v). “Holdco Required Control” means, with respect to a Person, (a) (i) if a corporation, the aggregate beneficial ownership by Holdco of securities representing at least 80% of the Total Voting Power in such Person and (ii) if an Entity other than a corporation, the aggregate beneficial ownership by Holdco of at least 80% of the partnership or other similar voting interest, and (b) the right to elect a majority of such Person’s board of directors or comparable governing body. “Holdco Shares” means the Class A Shares originally issued to or hereafter acquired by any Holdco Group Member. “Holdco Stockholder” means, collectively, the Holdco Group Members who from time to time hold Class A Shares. “Incumbent Independent Directors” has the meaning set forth in the definition of “Independent Director” herein. “Incur” means, with respect to any Indebtedness, to create, issue, incur (by merger, conversion, exchange or otherwise), assume, guarantee or become liable in respect of, or create any obligation to pay, such Indebtedness (and “Incurrence” and “Incurred” shall have meanings correlative to the foregoing); provided, however, that a change in GAAP that results in an obligation of the Company Group that exists at such time, and is not therefore classified as Indebtedness, becoming Indebtedness shall not be deemed an Incurrence of such Indebtedness; provided, further, that any indebtedness of a Person existing at the time such Person becomes a Subsidiary of the Company shall be deemed to be Incurred by such Subsidiary at the time it becomes a Subsidiary of the Company; and provided, further, that amortization of discount of Indebtedness sold at a discount shall not be deemed to be the Incurrence of Indebtedness. “Indebtedness” means the aggregate amount for the Company Group of all borrowings and indebtedness in the nature of borrowings (including, without limitation, financing, acceptance credits, borrowings under letter of credit facilities and similar transactions, discounting or similar facilities, finance leases, capital leases, loan stocks, bonds, debentures, notes, debt or inventory financing, sale and lease back arrangements, obligations incurred in connection with the acquisition of, or as the deferred purchase price for, property, assets or businesses, overdrafts, net obligations under any accounts receivable financing or securitization transactions, net obligations arising from hedging arrangements in respect of interest rates, currencies or raw materials or other commodities, whether or not accounted for on the balance sheet, or any other arrangements the purpose of which is to raise money, and all obligations of the type referred to above of other Persons the payment of which a Company Group Member is responsible for or liable (including as co-obligor, guarantor or otherwise), in each case to the extent of such responsibility or liability), in each case as reflected in the financial statements of the Company in accordance with GAAP or, if no financial statements are available as of the   13 -------------------------------------------------------------------------------- applicable date, as would be required to be so reflected on such financial statements prepared as of such date in accordance with GAAP, but excluding (a) trade and other accounts payable incurred in the ordinary course of business, and (b) obligations with respect to letters of credit securing obligations entered into in the ordinary course of business of the relevant Company Group Member to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the third Business Day following receipt by such Company Group Member of a demand for reimbursement following payment on the letter of credit. “Indebtedness to EBITDA Ratio” means (a) the sum of (i) Funded Indebtedness as of the last day of the applicable Measurement Period (except to the extent such Indebtedness is to be repaid and/or refinanced in connection with a Refinancing on such day and is included in clause (ii) below), and (ii) all additional Funded Indebtedness incurred or to be incurred in connection with the applicable Refinancing as if such Refinancing had occurred on such day, divided by (b) the Applicable EBITDA. “Indemnified Documents” shall mean (a) any registration statement (and any amendment or supplement thereto) under the Securities Act (“Registration Statement”), including any related preliminary prospectus or final prospectus, and exhibits and schedules thereto, (b) any information, documents and reports filed pursuant to the Exchange Act, and (c) any preliminary or final offering memorandum or other document provided to prospective investors and pursuant to which the Company offers and sells securities and under which there is liability under the Securities Act or the Exchange Act, in each case of or by any member of the Company Group and as amended or supplemented from time to time. “Independence Questionnaire” means a director questionnaire signed by an Independent Director or an individual proposed to be nominated as an Independent Director assessing the criteria set forth in the definition of “Independent Director” herein with respect to such Director or nominee. “Independent Director” means an individual other than (a) an officer or employee of the Company or any of its Subsidiaries, or (b) any other individual having a relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a Director, in each case at the time of his or her nomination and at any time thereafter. Except to the extent the Unilever Stockholder shall have waived in writing any of the criteria set forth below with respect to a particular individual nominated or elected to serve as an Independent Director (an “Independence Criteria Waiver”), the following individuals shall not be considered independent: (i) a Johnson Family Member; (ii) an individual who is a member of the immediate family of a lineal descendant of Herbert F. Johnson Jr. or Henrietta Johnson Louis.; (iii) an individual who is employed by a Related Person or who has been employed by a Related Person at any time during the past two years;   14 -------------------------------------------------------------------------------- (iv) an individual who accepts any compensation from a Related Person in excess of $60,000 during the previous Fiscal Year, other than (a) compensation for board service, or (b) benefits under a retirement plan or program; (v) an individual who is a member of the immediate family of an individual who is, or has been in any of the past three years, employed by a Related Person as an officer; (vi) an individual who is a partner in, or a controlling shareholder or an executive officer of, any for-profit business organization to which a Related Person made, or from which a Related Person received, payments (other than those arising solely from investments in such Related Person’s securities) that exceed 5% of such Related Person’s or business organization’s consolidated gross revenues for that year, or $200,000, whichever is more, in any of the past two years; and (vii) an individual who is employed as an executive officer of another Entity where any of the Company’s executive officers serve on that Entity’s compensation committee. Notwithstanding the foregoing, (x) Todd Brown, Irene M. Esteves, Robert M. Howe, Neal Nottleson and Reto Wittwer, each of whom is, as of the date hereof, serving, or has agreed to serve, as a Director (the “Incumbent Independent Directors”), shall be deemed to be “Independent Directors,” as of the date hereof and thereafter, and (y) no Unilever Director shall be deemed to be an “Independent Director.” Except as otherwise agreed by the Holdco Stockholder and the Unilever Stockholder, an Independence Criteria Waiver, once given, shall remain in full force and effect as to the Director to which it relates to the extent and scope of the specific criteria so waived for the full term of such Director’s service as Director of the Company, and any renewal terms thereof. For purposes of this definition, “immediate family” means a person’s spouse, parents, children, siblings, mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law, daughter-in-law and any other relative who resides in such person’s home. “Initial Unilever Proposals” has the meaning set forth in Section 8.9. “Initial EBITDA Proposal” has the meaning set forth in Section 8.9. “Initial Put Notice” has the meaning set forth in Section 8.1. “Initial Sale Period” means (a) May 3, 2007 through the later of (i) May 3, 2008 and (ii) February 3, 2009, if the Unilever Stockholder shall have delivered a First Offer Notice to the Company by May 3, 2008, and (b) if the Unilever Stockholder shall not have delivered a First Offer Notice to the Company by May 3, 2008 pursuant to Section 7.3(g), the period commencing on the termination of the Initial Put Notice and ending on May 3, 2010. “Initial Valuation Proposal” has the meaning set forth in Section 8.9. “Intellectual Property” means all intellectual property, including, without limitation, (a) all patents, industrial and utility models and registered designs, including applications, provisional applications, reissues, divisions, continuations, continuations-in-part,   15 -------------------------------------------------------------------------------- renewals, re-examinations and extensions of the foregoing, and all forms of protection of a similar nature or having equivalent or similar effect to any of these that may subsist anywhere in the world, (b) trademarks, service marks, proprietary rights in trade names, trade dress, domain names, labels, logos, slogans and all other devices used to identify any product, service, business or company whether registered, unregistered or at common law, and any applications for registration or registrations thereof and all forms of protection of a similar nature or having equivalent or similar effect to any of these that may subsist anywhere in the world, (c) all proprietary know-how and trade secrets (including anything deemed a “trade secret” as defined under the Delaware Uniform Trade Secret Act (DEL. CODE ANN. tit. 6, §§ 2001 et seq. (2000))) held in any form, including all product specifications, processes, formulas, product designs, plans, ideas, concepts, inventions, manufacturing, engineering and other manuals and drawings, technical information, data, research records, customer and supplier lists and similar data and information, and all other confidential or proprietary technical and business information and (d) all copyrights and database rights (whether registered or unregistered and including applications for the registration of any such thing) and unregistered design rights and all forms of protection of a similar nature or having equivalent or similar effect to any of these which may subsist anywhere in the world. “Japan Business” has the meaning set forth in Section 8.13. “Johnson Family Member” means (a) a lawful lineal descendant of Herbert F. Johnson, Jr. or Henrietta Johnson Louis or the spouse of any such person; (b) an estate, trust (including a revocable trust, declaration of trust or a voting trust), guardianship or custodianship for the primary benefit of one or more individuals described in clause (a) above; and (c) an Entity controlled by one or more individuals or entities described in clauses (a) or (b) above; provided, however, that, for purposes of this Agreement, no Company Group Member shall be regarded as a Johnson Family Member. For the avoidance of doubt, S.C. Johnson & Son, Inc. and its Subsidiaries are, as of the date hereof, Johnson Family Members. “Management Plan Documents” means the Commercial Markets Holdco, Inc. Amended and Restated Long-Term Equity Incentive Plan (the “Holdco Plan”), the Long Term Incentive Plan Operating Provisions – Senior Executive under the Holdco Plan and the form of Employment Agreement under the Holdco Plan. “Marga” has the meaning set forth in the introductory paragraph of this Agreement. “Material Legal Proceeding” means any Legal Proceeding (as defined in the Purchase Agreement) involving amounts that are not covered by insurance and are in excess of $10 million, other than any Legal Proceeding to which any Unilever Group Member is or is proposed to be a party opposed or having any interest adverse to, directly or indirectly, the Company Group Member which is a party to such Legal Proceeding. “Measurement Period” means: (a) for purposes of any exercise of the Put Option, the twelve-month period ending on the last day of the most recent Fiscal Quarter covered by the most recent   16 -------------------------------------------------------------------------------- financial statements delivered by the Company pursuant to Section 6.1(b) or (c) on or prior to the date on which such Put Option is exercised, subject to clause (x) of Section 8.4(d); (b) for purposes of any exercise of the Call Option, the twelve-month period ending on the last day of the most recent Fiscal Quarter covered by the most recent financial statements delivered by the Company pursuant to Section 6.1(b) or (c) on or prior to the date on which such Call Option is exercised, subject to the proviso to Section 8.5(a) and the proviso to Section 8.5(b); and (c) for purposes of an Approved Sale, the twelve-month period ending on the last day of the most recent Fiscal Quarter immediately preceding the Approved Sale Notice Date. For the avoidance of doubt, unless the Share Price is fixed in accordance with Section 8.4(d) or 8.5(a) or (b), the Measurement Period shall be reset each time a Put Notice or Call Notice is given or deemed given. “Minimum Representation Holding” means the beneficial ownership of Class B Shares representing in the aggregate at least 5% of the outstanding Shares. “Net Debt Amount” means Applicable Indebtedness, minus Cash, and as adjusted in accordance with Exhibit 11. “Net Periodic Pension Cost” means net periodic pension cost as determined on a FAS 87, FAS 106 or FAS 112 basis as applicable (or if these accounting standards are not applicable, using principles consistent with these accounting standards) using the projected unit credit method. “Net Proceeds” means the net proceeds, after payment of all Repurchase Expenses, of a Refinancing, any action in connection with a Partial Repurchase or an Eighth Year Action, as the case may be. “New Agency Agreement” has the meaning set forth in Section 8.16. “New Material Benefit Plan” has the meaning set forth in Section 4.10. “Non-Arm’s Length Terms” has the meaning set forth in Exhibit 4. “Notes” means the 10.67% Senior Discount Notes due 2013 of the Company issued on the Closing Date, and any “Special Interest Notes” (as defined in the Notes Indenture) issued in accordance with the terms of Exhibit A to the Registration Rights Agreement dated as of the Closing Date between the Company and Unilever N.V. “Notes Indenture” means the Indenture dated as of the Closing Date between the Company and BNY Midwest Trust Co., as trustee, providing for the issuance of the Notes, as amended or supplemented from time to time.   17 -------------------------------------------------------------------------------- “Notice Period” means the period commencing on the date on which the Company delivers financial statements pursuant to Section 6.1(b) or (c) and ending 20 Business Days after such date. “Noticed Shares” has the meaning set forth in Section 7.3. “Ordinary Course of Business” means, in relation to any part of the DiverseyLever Business or the CMI Business, as the case may be, the ordinary and usual course of operations of the DiverseyLever Business or the CMI Business, as the case may be, consistent with past practice. “Ownership Interest” means, with respect to a Stockholder, the number of Shares beneficially owned by such Stockholder divided by the total number of Shares then outstanding. “Partial Put Notice” has the meaning set forth in Section 8.4. “Partial Repurchase” means (a) the repurchase by the Company of less than all the Unilever Shares and Notes, in each case then beneficially owned by the Unilever Stockholder following the exercise by the Company of the Call Option pursuant to Section 8.5 or (b) the repurchase by the Company of less than all the Put Securities following the exercise by the Unilever Stockholder of a Put Option pursuant to Section 8.1. “Partially Put Securities” means the portion of the Put Securities that (a) has an aggregate Put Price equal to the Net Proceeds described in the first sentence of Section 8.4(d), and (b) comprise either (i) solely Put Shares or (ii) (A) a number of Put Shares equal to the total number of Put Shares multiplied by the Partial Put Percentage, and (B) Put Notes with an aggregate Accreted Value equal to the aggregate Accreted Value of all the Put Notes multiplied by the Partial Put Percentage, in each case rounded down to the nearest whole number. For purposes of this definition, the “Partial Put Percentage” shall be equal to (1) the amount of the Net Proceeds described in the first sentence of Section 8.4(d), divided by (2) the aggregate Put Price for all the Put Securities. “Pension Differential Contribution” means, in respect of a full or partial Fiscal Year during the period beginning on the Closing Date and ending on the last day of the applicable Measurement Period for each funded defined benefit Pension plan in which the Company or any of its Subsidiaries participates, the amount determined by multiplying (a) (i) the amount of any employer contribution made during such full or partial Fiscal Year to such funded defined benefit Pension plan, minus (ii) the Net Periodic Pension Cost for such full or partial Fiscal Year for such plan, by (b) one minus the tax rate applicable in the jurisdiction in question to the contribution so made. Each Pension Differential Contribution may be either a positive or negative amount. Each Pension Differential Contribution shall initially be expressed in the relevant local currency but shall be converted into dollars as of the last day of each Fiscal Year (and, if the applicable Measurement Period is not a Fiscal Year, the last day of such Measurement Period). Each such conversion shall be calculated using (1) the applicable exchange rate as published in the “Cross-Rates and Derivatives: Exchange Cross-Rates” (or any successor column), as appearing in the Financial Times on the last day of the applicable Fiscal Year or Measurement Period, or (2) if the Financial Times is not published or such column does   18 -------------------------------------------------------------------------------- not appear on such date, the applicable exchange rate on the immediately preceding date on which the Financial Times is so published and such column appears, or (3) if an exchange rate for the relevant local currency is not so published, such rate as the Company’s independent auditors and Unilever’s independent auditors shall mutually agree by reference to generally accepted, published exchange rates for such currency into dollars as at, or as near as possible to, the last day of the applicable Fiscal Year or Measurement Period. For purposes of this definition, “Pension” means defined benefit pension and other similar post-retirement benefit obligations. “Pension Plan Amendment” means the amendment, without the Unilever Stockholder’s prior written consent, of benefit levels provided under a Shared Pension Plan, which amendment results in an increase in the Net Periodic Pension Cost of benefits of the Company Group under such Plan in excess of 10% of the Prior Net Periodic Pension Cost, calculated using the same assumptions, methodology and funded status of such Plan as was used to calculate such Prior Net Periodic Pension Cost and exclusive of any increases (including healthcare premium, prescription plan and other provider costs) attributable to general market increases in the cost of providing the same or comparable benefits or third party cost and premium increases applicable to then existing terms and conditions. “Pension Plan Amendment Adjustment” means the cumulative aggregate amount, without duplication, of all Pension Plan Amendment Differential Costs incurred by the Company Group prior to the last day of the applicable Measurement Period, other than any such Pension Plan Amendment Differential Costs, the effect of which is or has been at any time eliminated from Applicable EBITDA in accordance with Exhibit 4. “Pension Plan Amendment Differential Costs” means, in respect of a full or partial Fiscal Year prior to the last day of the applicable Measurement Period, the amount of the increased cost of benefits under a Shared Pension Plan (a) resulting from a Pension Plan Amendment and (b) in excess of 10% of the Prior Net Periodic Pension Cost, calculated using the same assumptions, methodology and funded status and exclusive of any increases (including healthcare premium, prescription plan and other provider costs) attributable to general market increases in the cost of providing the same or comparable benefits or third party cost and premium increases applicable to then existing terms and conditions. Each Pension Plan Amendment Differential Cost shall initially be expressed in the relevant local currency but shall be converted into dollars as of the last day of each Fiscal Year (and, if the applicable Measurement Period is not a Fiscal Year, the last day of such Measurement Period). Each such conversion shall be calculated using (1) the applicable exchange rate as published in the “Cross-Rates and Derivatives: Exchange Cross-Rates” (or any successor column), as appearing in the Financial Times on the last day of the applicable Fiscal Year or Measurement Period, or (2) if the Financial Times is not published or such column does not appear on such date, the applicable exchange rate on the immediately preceding date on which the Financial Times is so published and such column appears, or (3) if an exchange rate for the relevant local currency is not so published, such rate as the Company’s independent auditors and Unilever’s independent auditors shall mutually agree by reference to generally accepted, published exchange rates for such currency into dollars as at, or as near as possible to, the last day of the applicable Fiscal Year or Measurement Period.   19 -------------------------------------------------------------------------------- “Permitted Transferee” means any Person to whom Shares are Transferred in a Transfer not in violation of this Agreement and who is required to, and does, enter into an Assumption Agreement and become bound by the terms of this Agreement, and includes any Person to whom a Permitted Transferee of any Stockholder (or a Permitted Transferee of a Permitted Transferee) further Transfers Shares and who is required to, and does, enter into an Assumption Agreement and become bound by the terms of this Agreement. “Person” means any individual or Entity, and the heirs, executors, administrators, legal representatives, successors and assigns of such individual or Entity. “Polymer” means Johnson Polymer, LLC, a Wisconsin limited liability company and a wholly-owned subsidiary of CMI, together with its Subsidiaries. “Polymer Business” has the meaning set forth in Section 8.13. “Post Measurement Period Special Program” has the meaning set forth in Exhibit 4. “Pre-Closing Period” means the period commencing on the date an Initial Put Notice or Call Notice, as the case may be, is given in accordance with this Agreement, and ending on the applicable Put Closing Date or Call Closing Date. “Premium” has the meaning set forth in Section 7.3. “Primary Structure” has the meaning set forth in Section 7.9. “Prior Net Periodic Pension Cost” means the Net Periodic Pension Cost of benefits of the Company Group under a Shared Pension Plan for the Fiscal Year preceding a Pension Plan Amendment. “Private Placement” has the meaning set forth in Section 8.13. “Professional End-Users” means commercial, industrial or institutional or other non-domestic end-users. “Public Offering” means the sale, either in an SEC registered public offering or a Rule 144A offering, of equity securities of the Company resulting in net proceeds to the Company in excess of $20 million, and listing of such equity securities on one or more national securities exchanges, the NASDAQ National Market System or equivalent exchanges. “Purchase Agreement” has the meaning set forth in the second recital to this Agreement. “Put Closing” has the meaning set forth in Section 8.3. “Put Closing Date” has the meaning set forth in Section 8.3. “Put Notes” has the meaning set forth in Section 8.1.   20 -------------------------------------------------------------------------------- “Put Notice” has the meaning set forth in Section 8.1. “Put Option” has the meaning set forth in Section 8.1. “Put Price” has the meaning set forth in Section 8.2. “Put Securities” has the meaning set forth in Section 8.1. “Put Shares” has the meaning set forth in Section 8.1. “Qualified Candidate” means, with respect to any Person, (a) the chief executive officer, chief operating officer, chief financial officer, chief administrative officer, any senior vice president, any executive vice president or any member of the board of directors of such Person, or (b) any other individual who would be an Independent Director, but for the provisions of clause (y) of the definition of such term. A Unilever Director shall cease to remain a Qualified Candidate and shall be replaced by the Unilever Stockholder if such Unilever Director fails to attend in accordance with the Bylaws at least 50% of all regular meetings of the Board during any 12-month period without good cause. “Refinancing” means any financing, refinancing, restructuring, recapitalization or similar transaction which is undertaken for the purpose or with the effect of generating cash proceeds sufficient to enable the Company to pay (a) all, or any portion in excess of 50% of, the Put Price for the Put Securities in connection with the exercise of the Put Option, or (b) all of the Put Price for the Call Shares subject to the exercise of the Call Option; provided, however, that no Refinancing need be undertaken or consummated by the Company prior to the Eighth Year (x) if, after giving effect to such Refinancing, the Company’s Indebtedness to EBITDA Ratio would exceed 4.6, or (y) if the Net Proceeds would be insufficient to pay at least 50% of the Put Price for the Put Securities; provided, however, that, notwithstanding anything to the contrary contained in this definition or any other provision of this Agreement, so long as any obligation, amount or commitment is outstanding under any Credit Document, any such financing, refinancing, restructuring, recapitalization, or similar transaction shall only constitute a “Refinancing” for the purposes of the condition set forth in Section 8.4(a) if, as a result thereof, all obligations and amounts owing under such Credit Documents shall have been paid in full in cash and the obligations and commitments of the lenders (and their affiliates) thereunder shall have been terminated. “Refinancing Period” has the meaning set forth in Section 8.4. “Related Person” means the Company or any of its Affiliates, any Unilever Group Member or any Holdco Group Member. “Relevant Transferee” has the meaning set forth in Section 7.3. “Remaining Unilever Shares” has the meaning set forth in Section 8.2. “Remaining Put Securities” has the meaning set forth in Section 8.4.   21 -------------------------------------------------------------------------------- “Repurchase Expenses” means all out-of-pocket expenses and fees incurred, accrued or payable by any Company Group Member or on its behalf in connection with the exercise of the Put Option or the Call Option or an Approved Sale (including, without limitation, (a) fees and expenses of banks, investment banking firms, other financial institutions and their agents and counsel in connection with (i) the arranging, committing to provide or providing of any financing, or (ii) the structuring, negotiation or consummation of a Refinancing, any action in connection with a Partial Repurchase, an Eighth Year Action, an Approved Sale or any agreements relating thereto; (b) fees of counsel, accountants, experts and consultants to the Company; and (c) all printing and advertising expenses); provided, however, that the aggregate amount of Repurchase Expenses subtracted from the Base Value pursuant to clause (a)(iii) of the definition of “Fair Market Value” herein and from the Share Price pursuant to Section 8.2(b), without duplication, shall not exceed the sum of (x) $45 million, plus (y) the aggregate amount of the costs described in Section 8.11(e). “Requisite Vote” means the affirmative vote of holders of Shares representing in the aggregate more than 90% of the outstanding Shares. “Revolving Credit Limits” has the meaning set forth in Section 4.10. “ROFR Notice” has the meaning set forth in Section 7.3. “ROFR Price” has the meaning set forth in Section 7.3. “SCJ Competitor” has the meaning set forth in Section 7.3. “Secondary Structures” has the meaning set forth in Section 7.9. “Securities Act” means the Securities Act of 1933, as amended. “Senior Credit Debt” means the loans and all other amounts, obligations, covenants and duties owing to the administrative agent, the collateral agent or any lender party to the Credit Agreement, any affiliate of any of them, or any indemnitee under any Credit Document, of every type and description (whether by reason of an extension of credit, opening or amendment of a letter of credit or payment of any draft drawn thereunder, loan, guaranty, indemnification, foreign exchange or currency swap transaction, interest rate hedging transaction or otherwise), present or future, arising under the Credit Agreement or any other Credit Document, any hedging agreement, foreign exchange or currency swap agreement, any agreement for cash management services entered into in connection with the Credit Agreement or any other Credit Document, whether direct or indirect (including those acquired by assignment), absolute or contingent, due to or become due, now existing or hereafter arising and however acquired and whether or not evidenced by any note, guaranty or other instrument or for the payment of money, and includes all letter of credit, cash management and other fees, interest (including interest which, but for the filing of a petition in bankruptcy with respect to any borrower under the Credit Agreement, would have accrued on any obligation constituting Senior Debt hereunder, whether or not a claim is allowed against such borrower for such interest in the related bankruptcy proceeding), charges, expenses, fees, attorneys’ fees and disbursements and other sums chargeable to any borrower under the Credit Agreement, any other Credit Document, any hedging agreement, foreign exchange or currency swap agreement, any agreement for cash   22 -------------------------------------------------------------------------------- management services entered into in connection with the Credit Agreement or any other Credit Document. To the extent any payment of Senior Debt (whether by or on behalf of the borrowers under the Credit Agreement, as proceeds of security or enforcement or any right of setoff or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to a trustee, receiver or other similar party under any bankruptcy, insolvency, receivership or similar law, then if such payment is recovered by, or paid over to, such trustee, receiver or other similar party, the Senior Debt or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred. “Senior Debt” means (a) the Senior Credit Debt, and (b) all other Indebtedness under the Financing Agreements or, to the extent the Financing Agreements (including any Senior Credit Debt) have been amended, restated, supplemented or replaced in connection with a Refinancing, Indebtedness under such amended, restated, supplemented or replacement agreements or arrangements. “Seventh Year” means the seventh anniversary of the Closing Date. “Share Price” has the meaning set forth in Section 8.2. “Shared Pension Plans” means the following employee benefit plans: (a) Johnson Wax Limited/S.C. Johnson Professional Limited Retirement and Life Assurance Plan, consisting of the Money Purchase Section and the Final Salary Section, with the Final Salary Section replacing SERPS (also referred to as Johnson Wax Retirement and Life Assurance Plan) (U.K.), (b) Pension Plan for Employees of S.C. Johnson and Son, Limited, as amended and restated effective July 1, 1992, including amendments effective January 1, 1996, updated February 29, 1996 to incorporate changes requested by Revenue Canada to the 1992 Income Tax Act (Canada), and (c) S.C. Johnson Pension Fund (Netherlands). “Shares” means the Class A Shares and the Class B Shares. “Special Bankruptcy Committee” means a committee (a) comprising all the Independent Directors and no other Directors, and (b) constituted for the purpose of acting, and having the authority of the Board to the extent permitted by the DGCL, with respect to the matters described in Section 4.14. “Special Committee” has the meaning set forth in Section 8.13. “Special Items” has the meaning set forth in Exhibit 4. “Stockholders” has the meaning set forth in the introductory paragraph to this Agreement. “Stockholders’ Meeting” means (a) any annual or special meeting of the Stockholders or (b) any action by written consent of the Stockholders. “Strategic Plan” has the meaning set forth in Section 4.12.   23 -------------------------------------------------------------------------------- “Subject Securities” means the Put Securities, Partially Put Securities or Call Securities, as the case may be. “Subsidiary” means, with respect to any Person, any Entity of which (a) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (b) if a limited liability company, partnership, association or other business entity, a majority of the partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes of this definition, a Person or Persons shall be deemed to have a majority ownership interest in an Entity other than a corporation if such Person or Persons shall be allocated a majority of such Entity’s gains or losses or shall be or control any managing member or general partner of such Entity. “Supermajority Approval” has the meaning set forth in Section 4.10. “Total Voting Power” means, at any time, the aggregate number of votes which may be cast by holders of outstanding common stock and any other securities issued by an Entity that are entitled to vote generally for the election of directors of such Entity (other than securities having such powers only upon the occurrence of a contingency unless that contingency is satisfied at that time). “Transaction Documents” means this Agreement, the Purchase Agreement, all agreements the forms of which, or terms sheets for which, are attached as exhibits or schedules hereto or thereto and all other documents, instruments and agreements executed in connection with the Purchase Agreement or the transactions contemplated thereby. “Transfer” means any sale, transfer, assignment, pledge, mortgage, exchange, hypothecation, grant of a security interest or other direct or indirect disposition or encumbrance of an interest (including, without limitation, by operation of law) or the acts thereof. The terms “Transferee,” “Transferor,” “Transferred,” and other forms of the word “Transfer” shall have correlative meanings. “Unilever” means Unilever NV and/or Unilever PLC. “Unilever Director” means a Director nominated by the Unilever Stockholder pursuant to Section 4.3(a)(i). “Unilever Group” means Unilever NV, Unilever PLC and their respective Affiliates from time to time. “Unilever Group Member” means any member of the Unilever Group. “Unilever NV” has the meaning set forth in the introductory paragraph to this Agreement.   24 -------------------------------------------------------------------------------- “Unilever PLC” means Unilever PLC, a company organized under the laws of England and Wales. “Unilever Required Control” means, with respect to a Person, (a) (i) if a corporation, the aggregate beneficial ownership by Unilever of securities representing at least 80% of the Total Voting Power in such Person and (ii) if an Entity other than a corporation, the aggregate beneficial ownership by Unilever of at least 80% of the partnership or other similar voting interest, and (b) the right to elect a majority of such Person’s board of directors or comparable governing body. “Unilever Sale” has the meaning set forth in Section 8.13. “Unilever Shares” means the Class B Shares originally issued to or hereafter acquired by any Unilever Group Member. “Unilever Stockholder” means, collectively, the Unilever Group Members who from time to time hold Class B Shares. “Unilever Valuation Report” has the meaning set forth in Section 8.9. “Valuation Principles” means objective, generally accepted financial and valuation procedures utilized in determining the enterprise value of companies and businesses similarly situated to the Company Group, taking into account the following factors: (a) The businesses of the Company Group (in each case taking into account any long term and contingent liabilities) shall be valued (i) as if 100% of such businesses were being sold as of the last day of the applicable Measurement Period without, for the avoidance of doubt, any premium or discount being applied to reflect the Ownership Interests being sold or transferred, (ii) on the basis of an open market sale occurring on the last day of the applicable Measurement Period between a willing seller and a willing, knowledgeable and arm’s length buyer of such businesses as a whole receiving warranties and indemnities equivalent to those set forth in the Purchase Agreement, (iii) assuming that the Company Group has working capital equal to the Company Group’s average working capital during the applicable Measurement Period which formed the basis of the Applicable EBITDA and the Base Value computations, measured on a consistent basis, and (iv) assuming that the Company Group has no Indebtedness or Cash. (b) Appropriate adjustment shall be made to take into account the impact on valuation of the difference between Non-Arm’s Length Terms and arm’s length terms and, where EBITDA is the basis for the enterprise value, only to the extent such impact has not already been taken into account as an adjustment to Applicable EBITDA. “Value” means (a) the price per share obtained by the Unilever Stockholder in the sale of all of its Class B Shares on a Final Exit Date, or (b) if no such sale has occurred as of the Additional Shares Exercise Date, the Share Price per share as of such date, as calculated in accordance with the provisions of this Agreement.   25 -------------------------------------------------------------------------------- “Veto Matter” has the meaning set forth in Section 4.10. “Whitmire” means Whitmire Micro-Gen Research Laboratories, a Delaware corporation and a wholly-owned subsidiary of CMI, together with its Subsidiaries. “Wholly-Owned Subsidiary” means, with respect to any Person, a Subsidiary of which 100% of the outstanding equity securities or partnership or other similar ownership interests (other than director-qualifying shares or interests, shares or interests held by trustees and nominal share interests held by individuals or other entities, including, for the avoidance of doubt, the one share of CMI held by S.C. Johnson & Son, Inc.) thereof is at the time owned by that Person or one or more Wholly-Owned Subsidiaries of that Person or a combination thereof. 1.2 Construction. As used in this Agreement, the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular paragraph, subparagraph, Section, subsection, Article or other subdivision, and, unless the context otherwise requires, all references to parties, Sections, Articles, Exhibits or Schedules are to parties to this Agreement and Sections and Articles of and Exhibits and Schedules to this Agreement. The table of contents and section headings of this Agreement and titles given to Exhibits and Schedules to this Agreement are for reference purposes only and are to be given no effect in the construction or interpretation of this Agreement. Whenever the context may require, any pronoun used in this Agreement will include the corresponding masculine, feminine or neuter forms, the singular form of nouns, pronouns and verbs will include the plural and vice versa and, except as otherwise expressly provided in this Agreement, each term used herein which is defined in GAAP is used herein as so defined. Any rule of construction to the effect that any ambiguities are to be resolved against the drafting party will not be employed in the interpretation or construction of this Agreement. 1.3 Currency. References to “$” are to United States dollars. All financial amounts and calculations thereof referred to in this Agreement, and all payments pursuant to this Agreement, shall be in United States dollars. ARTICLE II ORGANIZATION 2.1 Certificate of Incorporation and Bylaws. As of the date of effectiveness of this Agreement, the Certificate of Incorporation of the Company (the “Certificate”) and the Bylaws of the Company (the “Bylaws”) shall be in the forms attached hereto as Exhibits 5 and 6, respectively. The rights and obligations of the Stockholders with respect to the Company shall be determined pursuant to the DGCL, the Certificate, the Bylaws and this Agreement. To the extent that the rights or obligations of a Stockholder are different by reason of any provision of this Agreement than they would be in the absence of such provision, this Agreement, to the extent permitted by the DGCL and the Certificate, shall control. 2.2 Headquarters. The worldwide corporate headquarters and principal office of the Company shall be at such place as the Board may designate from time to time. From and after the Closing Date, until changed by action of the Board, the worldwide corporate   26 -------------------------------------------------------------------------------- headquarters and principal office of the Company will be located at the Company’s current headquarters in Sturtevant, Wisconsin, U.S.A. ARTICLE III STOCKHOLDERS 3.1 Stockholders. The name and business, mailing or residence address of each Stockholder of the Company and the number and class of Shares held by such Stockholder are set forth on Schedule A. Henceforth, the Board shall cause Schedule A to be amended from time to time to reflect the addition or retirement of Stockholders, or the issuance, purchase or Transfer of Shares, in each case in accordance with the terms of this Agreement. 3.2 Purchase of Shares. On the Closing Date, Marga paid the Subscription Payment, in an amount set forth on Schedule A, in consideration for the issue of the Unilever Shares. ARTICLE IV MANAGEMENT OF THE COMPANY 4.1 The Board. (a) The business and affairs of the Company will be managed by or under the direction of the Board, and the Board shall have all powers, subject to subsection (c) of this Section 4.1, and rights necessary, appropriate or advisable to effectuate and carry out the purposes and business of the Company. No Stockholder, by reason of its status as such, shall have any authority to act for or bind the Company or otherwise take part in the management of the Company. (b) Without limiting the generality of subsection (a) of this Section 4.1, but subject to Section II.A.2.b of Article Fourth of the Certificate, subsection (c) of this Section 4.1 and Sections 4.5 and 4.10, the Board, and the committees thereof constituted in accordance with Article IV of the Bylaws and Section 4.5, will be responsible for directing the oversight of the management of the Company, including, without limitation, the following matters: (i) Hiring the Chief Executive Officer, Chief Financial Officer and the chief operating and administrative officers of the Company, evaluating their performance and planning for their succession; (ii) Establishing compensation and benefits policies and plans for employees of the Company, including profit sharing; (iii) Reviewing and approving Company strategies, the Business Plans and the Strategic Plan;   27 -------------------------------------------------------------------------------- (iv) Reviewing and approving significant external business opportunities for the Company, including, without limitation, acquisitions, mergers and divestitures; (v) Reviewing external and internal audits and management responses thereto; (vi) Approving dividends and distributions to Stockholders; (vii) Reviewing and approving policies of the Company in the areas of environmental responsibility, employee safety and health and community, government, employee and customer relations; and (viii) Reviewing and approving any individual capital expenditure in excess of $5 million. (c) Any action of the Board with respect to a Veto Matter shall be subject to the requirements of Section II.A.2.b of Article Fourth of the Certificate and Section 4.10 with respect to obtaining Stockholder approval in accordance therewith, and no such Veto Matter shall become effective until such approval, if required, has been obtained. 4.2 Size of the Board; Term. The Company shall take such actions as are necessary, and each of the Stockholders shall vote its Shares and shall take such other actions as are necessary, to cause the Board at all times from and after the Closing Date, subject to Sections 4.3(a)(iii) and 4.4(a)(ii), to consist of eleven Directors in accordance with the Bylaws. The Board shall not be classified and shall be elected annually. Each Director shall hold office until a successor is duly elected and qualified or until his or her earlier death, resignation or removal in accordance with the Bylaws and this Agreement. 4.3 Nomination of Directors. (a) The Company shall take such actions as may be lawful and necessary, and each of the Stockholders (subject to subsection (c) of this Section 4.3) shall vote its Shares and shall take such other actions as may be necessary, to cause the Board, at all times from and after the Closing Date, to include the following Directors nominated and elected as follows: (i) Unilever Directors. If and so long as Unilever has Unilever Required Control of the Unilever Stockholder: (A) If and so long as the Unilever Stockholder has the Full Representation Holding, the Unilever Stockholder shall be entitled to nominate as Unilever Directors two Qualified Candidates of any Unilever Group Member to the Board; and (B) If the Unilever Stockholder does not have the Full Representation Holding but continues to have the Minimum Representation Holding, the Unilever Stockholder shall be entitled to nominate as a Unilever Director one Qualified Candidate of any Unilever Group Member to the Board.   28 -------------------------------------------------------------------------------- If the Unilever Stockholder ceases to maintain the Full Representation Holding or Minimum Representation Holding, as the case may be, the vacancy resulting from such event shall be filled by an individual nominated by the Holdco Stockholder, in each case, as more fully set forth in Section 4.4(a). (ii) Holdco Directors. Except as otherwise provided in Section 4.4(a), the Holdco Stockholder shall be entitled to nominate four individuals to the Board. (iii) Independent Directors. The Holdco Stockholder shall be entitled to nominate five additional individuals to the Board, each of whom shall satisfy the requirements to be an Independent Director; provided, that as of the date hereof, the Incumbent Independent Directors shall continue to serve on the Board pursuant to this subsection (iii). (b) The Unilever Stockholder shall, prior to the nomination of any Unilever Director (including the nomination of any Director chosen to fill a vacancy pursuant to Section 4.4(b)(i)), give the Holdco Stockholder a reasonable opportunity to raise any objections as to his or her suitability, and the Holdco Stockholder shall, prior to the nomination of any Holdco Director (including the nomination of any Director chosen to fill a vacancy pursuant to Section 4.4(a)(i), (a)(ii) or (b)(ii)), give the Unilever Stockholder a reasonable opportunity to raise any objections as to his or her suitability. The Holdco Stockholder shall, prior to the nomination of any Independent Director (other than Incumbent Independent Directors but including the nomination of any Independent Director chosen to fill a vacancy pursuant to Section 4.4(a)(i), (a)(ii), (a)(iii) or (b)(iii)), deliver to the Unilever Stockholder a copy of an Independence Questionnaire for such Independent Director demonstrating such Independent Director’s compliance with the criteria set forth in the definition of “Independent Director” herein and give the Unilever Stockholder a reasonable opportunity to raise any objections as to his or her suitability and, upon reasonable notice and during normal business hours, to interview such Independent Director at a mutually convenient location. The Holdco Stockholder shall also deliver to the Unilever Stockholder no later than one week prior to the Election Meeting at which Independent Directors (other than Incumbent Independent Directors) shall be elected or re-elected (as the case may be) or at the Unilever Stockholder’s reasonable request, but not more frequently than once every Fiscal Year in respect of any particular Independent Director, copies of Independence Questionnaires for such Independent Directors. (c) Notwithstanding the foregoing, nothing in this Agreement shall require the Unilever Stockholder to vote the Unilever Shares or act by written consent to elect any Holdco Director or Independent Director nominated by the Holdco Stockholder pursuant to this Section 4.3 or Section 4.4. (d) The Unilever Stockholder shall provide, at the Company’s reasonable request, any information about a Unilever Director or any member of the Unilever Group as may be required to enable the Company or its Affiliates to comply with the Exchange Act, the Securities Act and the rules and regulations thereunder. (e) Notwithstanding the foregoing, the Unilever Stockholder’s right to continued Board representation pursuant to this Agreement shall be subject to compliance with Section 8 of the Clayton Act relating to interlocking directorates.   29 -------------------------------------------------------------------------------- 4.4 Vacancies; Removal. (a) (i) If the Unilever Stockholder ceases to have the Full Representation Holding but continues to have the Minimum Representation Holding, then one of the Unilever Directors (as designated by the Unilever Stockholder in its sole discretion, or, in the absence of such designation, designated by the Holdco Stockholder) shall be deemed to have resigned effective immediately upon the occurrence of such event, and the Unilever Stockholder, the Holdco Stockholder and the Company shall take all actions necessary to give effect to such resignation. Any vacancy resulting from any such resignation described in this subsection (i) shall be filled with either an Holdco Director or an Independent Director nominated by the Holdco Stockholder. (ii) If the Unilever Stockholder ceases to have the Minimum Representation Holding, then any and all Unilever Directors then remaining as Directors shall be deemed to have resigned effective immediately upon the occurrence of such event, and the Unilever Stockholder, the Holdco Stockholder and the Company shall take all actions necessary to give effect to such resignation. If following such resignation, the Unilever Stockholder continues to own Unilever Shares, any vacancy resulting from any such resignation described in this subsection (ii) shall be filled with an Independent Director nominated by the Holdco Stockholder to the extent necessary to maintain a majority of Independent Directors on the Board but otherwise (x) such vacancy may be filled with a Holdco Director nominated by the Holdco Stockholder or (y) the number of Directors may be reduced to eliminate such vacancy. (iii) If an Independent Director (other than an Incumbent Independent Director) ceases to qualify as an Independent Director hereunder, as determined by reference to such Independent Director’s Independence Questionnaire, such Independent Director shall not be nominated for reelection at the Election Meeting following receipt by the Company of such Independence Questionnaire and the resulting vacancy shall be filled with an Independent Director nominated by the Holdco Stockholder. (b) If a vacancy on the Board occurs as a result of a death, disability, resignation, removal or otherwise of a Director (other than the resignation of a Unilever Director pursuant to subsection (a)(i) or (ii) of this Section 4.4 but including any replacement pursuant to subsection (a)(iii) of this Section 4.4), such vacancy shall be filled as follows, and the provisions of Section 4.3, as relevant (including with respect to the raising of objections but excluding any shareholder vote), shall apply to the filling of such vacancy: (i) If such vacancy results from the death, disability, resignation, removal or otherwise of a Unilever Director, such vacancy shall be filled by the Unilever Stockholder. (ii) If such vacancy results from the death, disability, resignation, removal or otherwise (including pursuant to Section 4.3(a)(iii)) of a Holdco Director, such vacancy shall be filled by the Holdco Stockholder.   30 -------------------------------------------------------------------------------- (iii) If such vacancy results from the death, disability, resignation, removal or otherwise of an Independent Director, such vacancy shall be filled with another Independent Director nominated by the Holdco Stockholder. (c) (i) Subject to subsection (ii) of this Section 4.4(c), the Directors elected under Section 4.3(a) shall hold office until the next election of Directors and until their successors shall have been elected and qualified. (ii) Each Director (including an Independent Director) may be removed and replaced, with or without cause, at any time by the Stockholder that nominated him or her, but, except as provided in this Section 4.4, may not be removed or replaced by any other means. The Holdco Stockholder shall notify the Unilever Stockholder of, and consult with the Unilever Stockholder with respect to, its intent to remove or replace any Independent Director prior to such removal or replacement, but such removal or replacement shall be at Holdco’s sole discretion. A Stockholder who removes one or more of its Directors from the Board or whose nominee otherwise is no longer a Director will promptly notify the other Stockholders as to the name of its replacement Director. Any Stockholder who removes a Director from office, or whose nominee vacates office under this Section 4.4, shall, jointly and severally, with any other Stockholder voting for such removal, indemnify each other Stockholder and the Company against any claim, whether for compensation for loss of office, wrongful dismissal or otherwise, which arises out of that Director ceasing to hold office. 4.5 Committees. (a) Subject to the exercise by the Board of its fiduciary duties, the Company and each of the Stockholders shall take such actions as are necessary to cause the following committees of the Board to be constituted in accordance with Article IV of the Bylaws: (i) An Audit Committee constituted solely of Independent Directors, which shall operate in accordance with the Audit Committee Charter. The Unilever Stockholder may appoint one of the Unilever Directors as an observer to attend, but not vote at, meetings of the Audit Committee. Such observer shall be provided the same rights with respect to the receipt of materials, advance notification of meetings and participation in meetings as are afforded to members of the Audit Committee. (ii) A Compensation Committee, which shall operate in accordance with the Compensation Committee Charter. The Compensation Committee shall include one of the Unilever Directors, but shall otherwise be constituted solely of Independent Directors. (b) All other committees of the Board (other than (i) committees constituted (A) for the purpose of assessing or determining any matter in which any Unilever Group Member or Unilever Director has any interest materially adverse to any interest of any Company Group Member, including, without limitation, the rights of the Unilever Stockholder under this Agreement, the Purchase Agreement or any Ancillary Document, (B) solely of Independent Directors in order to comply with, or to be afforded protections under Delaware law, including the DGCL (including, without limitation, Sections 144 and 145 of the DGCL), or (C) pursuant to   31 -------------------------------------------------------------------------------- Section 8.13(e), or (ii) any Special Bankruptcy Committee) shall include one of the Unilever Directors as a member. 4.6 Election Meetings. Subject to Section 4.3(c), at each and every Election Meeting held after the Closing Date, each Stockholder hereby agrees to vote or act by written consent with respect to (or cause to be voted or acted upon by written consent) (i) all Shares held of record or beneficially owned by such Stockholder at the time of such vote or action by written consent and (ii) all Shares as to which such Stockholder at the time of such vote or action by written consent has voting control, in each case in favor of the election of the Directors nominated in accordance with Section 4.3 to serve on the Board. 4.7 Chairman of the Board. The Holdco Stockholder shall be entitled to appoint one of the Holdco Directors to act as the Chairman, who shall preside at any Stockholders’ Meeting at which he or she is present. 4.8 Board Meetings. (a) Except as otherwise set forth in the Bylaws, all actions of the Board will be taken at meetings of the Board in accordance with this Section 4.8. (b) As soon as practicable after the election of Directors as provided in Section 4.3, the Board will meet for the purpose of organization and the transaction of other business as provided in the Bylaws. (c) Regular meetings of the Board will be held at such times as are provided in the Bylaws, but no less frequently than once each Fiscal Quarter. (d) Special meetings of the Board will be held whenever called by the Chairman, the Chief Executive Officer or any Stockholder that is entitled to nominate at least one Director. Any and all business may be transacted at a special meeting that may be transacted at a regular meeting of the Board. (e) The Board may hold its meetings at such place or places as the Board may from time to time by resolution determine or as may be designated in the respective notices or waivers of notice thereof. The Company will use reasonable efforts to schedule the time and place of each meeting of the Board so as to ensure that a quorum and at least one Director nominated by each Stockholder will be present at each such meeting. Members of the Board or any committee thereof may participate in and act at any meeting of the Board or such committee through video conference or the use of a conference telephone or other communications equipment, in each case by means of which all persons participating in the meeting can hear each other, and participation in the meeting by such means shall constitute presence in person at the meeting. (f) Notices of regular meetings of the Board or of any adjourned regular meeting will be given at least four weeks prior to such meeting, unless otherwise agreed in writing by each Stockholder. Notices of special meetings of the Board or of any adjourned special meeting will be faxed by the Secretary or an Assistant Secretary to each Director addressed to him or her at his or her residence or usual place of business, so as to be received at   32 -------------------------------------------------------------------------------- least five Business Days (excluding days on which the principal office of the Company is not open for business) before the day on which such meeting is to be held. Such notice will include the purpose, time and place of such meeting and will set forth in reasonable detail the matters to be considered at such meeting. However, notice of any such meeting need not be given to any Director if such notice is waived by him or her in writing, whether before or after such meeting is held, or if he or she is present at such meeting (unless such Director objects, before any business is conducted thereat, to the holding of such meeting without due notice), or with respect to regular meetings scheduled at a meeting of the Board held at least 30 calendar days prior to the date of a subsequent meeting. (g) Meetings of the Board will be presided over by the Chairman or, if the Chairman is not present, a Director designated by the Chairman. The Secretary of the Company or, in the case of his or her absence, any Person whom the Person presiding over the meeting may appoint, will act as secretary of such meeting and keep the minutes thereof. 4.9 Compensation. Unless the Stockholders otherwise agree in writing, no Director will be entitled to any compensation from the Company in connection with his or her services as a Director, except that Independent Directors will be entitled to compensation for their service as such, the amount and nature of which will be determined from time to time by the Board. 4.10 Veto Matters. (a) Subject to subsections (b) and (c) of this Section 4.10, each of the following matters, and only the following matters, will constitute a “Veto Matter,” and the Company shall not, and, to the extent restrictions apply, the Company shall cause its Subsidiaries to not, without the prior approval of the Stockholders by the Requisite Vote taken in accordance with Section II.A.2.b of Article Fourth of the Certificate (the “Supermajority Approval”), take any of the following actions: (i) The entering into by the Company of any transaction or transactions of a type specified in this Section 4.10(a)(i) or the entering into by any Subsidiary of the Company of any transaction or transactions of a type specified in this Section 4.10(a)(i) (other than, in any such case, any such transaction between or among any Wholly-Owned Subsidiary of the Company, on the one hand, and the Company or any other Wholly-Owned Subsidiary of the Company, on the other hand): (A) except as otherwise provided in Section 7.2 or subsection (c)(i) of this Section 4.10, any acquisition or disposition (whether by way of distribution, sale, merger, consolidation, combination, lease, assignment, license, transfer or other disposition) of any Entity, property or assets (including intellectual property), any joint venture, alliance or capital project, in any such case involving the Company or any of its Subsidiaries and having an aggregate fair market value or which pursuant to the terms thereof will result in aggregate expenditures or payments in excess of (1) $50 million individually, or (2) $10 million individually and $100 million collectively with other such transactions entered into in the immediately preceding twelve months, other than any of the foregoing relating to feeders   33 -------------------------------------------------------------------------------- or dosing equipment provided to customers (including such equipment so provided on a leased or free on loan basis) or acquired in the Ordinary Course of Business; (B) the issuance of any additional shares of capital stock, including Shares and Common Stock Equivalents, or other equity or equity-related interests (other than performance-based cash compensation of employees under employee benefit plans), including any of the foregoing held in treasury, to any Person (including any Stockholder or pursuant to a Public Offering) after the date hereof, other than the issuance of any of the foregoing by any Subsidiary of the Company to either the Company or any other Subsidiary of the Company; (C) except as otherwise provided in Section 7.2 or subsection (c)(i) of this Section 4.10, any merger, consolidation or similar business combination or any sale of all or substantially all of the assets or equity or any reorganization or recapitalization having similar effect, in each case, of the Company or any Subsidiary of the Company; (D) the liquidation or dissolution of the Company or any Subsidiary (other than a Wholly-Owned Subsidiary) of the Company; and (E) the purchase or investment by the Company or any Subsidiary of the Company of a minority equity investment or investment in the nature of Indebtedness in any Entity if such purchase or investment has a fair market value or pursuant to the terms thereof will result in payments exceeding $10 million; (ii) The entering into by the Company or any Subsidiary of the Company of any material line of business unrelated to the Business; (iii) The closing, winding-up, discontinuation or other exiting or termination (other than by way of any disposition of the type described in subsection (i)(A) of this Section 4.10(a)) by the Company or any of its Subsidiaries of any line of business that the Company or any of its Subsidiaries is engaged in as of the date hereof, if such line of business generated more than $5 million of EBITDA during the four full Fiscal Quarters immediately preceding the date on which the Supermajority Approval is sought with respect to such closing, winding-up, discontinuation or other exiting or termination and such closing, winding-up, discontinuation or other exiting or termination is commenced after such Supermajority Approval has been obtained; (iv) The amendment, supplement or other modification of the principles or policies governing the amount, timing, frequency or method of calculation of dividends or distributions to the Stockholders from that described on Exhibit 7 (the “Agreed Dividend Policy”) or the declaration by the Company of dividends or distributions in violation of the Agreed Dividend Policy, other than pro rata dividends or distributions to holders of Common Stock as may be required, and which are used, to enable the Holdco Stockholder to effect repurchases from employees of the Company and its Subsidiaries, pursuant to the Management Plan Documents, of shares of Holdco’s capital stock issued pursuant to grants approved by the Compensation Committee of the Board;   34 -------------------------------------------------------------------------------- (v) The Incurrence by the Company or any of its Subsidiaries after the date hereof of Indebtedness, other than (A) Indebtedness in the nature of revolving credit or working capital Indebtedness up to the aggregate principal amount available under the revolving credit facility included in the Credit Agreement on the date hereof (the “Revolving Credit Limits”), (B) Indebtedness under the Accounts Receivable Securitization Facility up to (1) the aggregate principal amount available thereunder as of the date of the Purchase Agreement, or (2) such higher amounts available thereafter, provided, that the difference between (1) and (2) are subtracted from either the Revolving Credit Limits or other Indebtedness permitted to be Incurred hereunder (including term debt under the Credit Agreement), (C) any additional Indebtedness over the aggregate principal amount outstanding as of the date hereof, other than Indebtedness permitted to be Incurred pursuant to clauses (A) and (B) of this Section 4.10(a)(v), of no more than $50 million, provided, however, that in determining whether Indebtedness exceeds the $50 million described in this clause (C) at any time, the amortization of discount of the Note shall not be taken into account, and (D) Indebtedness Incurred in connection with the amendment, refinancing, modification, replacement, renewal, restatement, refunding, deferral, extension, supplement, reissuance or resale (“Indebtedness Replacement”) of (I) the Indebtedness evidenced by the agreements described in clauses (A), (B) or (C) (including in the case of the Credit Agreement, both term and revolving indebtedness), (II) the Note up to the Accreted Value thereof, and (III) the 144A Notes, provided, that the Indebtedness Incurred in connection with the Indebtedness Replacement does not exceed the aggregate amount of the Indebtedness outstanding under the agreements, notes and instruments to which such Indebtedness Replacement relates immediately prior to such Indebtedness Replacement. (vi) The settlement by the Company or any of its Subsidiaries of any action, suit, claim or proceeding, including any investigation by a Governmental Authority, that would impose any material restrictions on the operations of the Company and its Subsidiaries, taken as a whole, or involving amounts in excess of $10 million, other than any such action, suit, claim, proceeding or investigation covered by insurance and for which insurance coverage has not been disclaimed in writing by the insurer; (vii) Any change in the Company’s or any of its Subsidiaries’ independent auditors from Arthur Andersen LLP; (viii) Any Affiliate Transaction; (ix) The redemption, purchase, acquisition, defeasance or retirement of any of the Company’s Common Stock or other equity securities or Common Stock Equivalents except, in each case, as specifically contemplated by this Agreement; (x) Except as may be required by Applicable Law or any changes therein and subject to Section 6.6(b), (A) any repeal or amendment of the Certificate, or (B) any repeal or amendment of, or adoption of any provision inconsistent with or which relates to the subject matter of, any provision in the Bylaws, other than Article I, and Articles V through VIII, of the Bylaws; (xi) (A) The adoption by the Company or any of its Subsidiaries of any stock option or employee stock ownership plan or the issuance of any equity securities pursuant   35 -------------------------------------------------------------------------------- to any such plan, or (B) (1) the adoption by the Company or any of its Subsidiaries in any 12-month period of any new employee benefit plan that individually (a “New Material Benefit Plan”) or plans that in the aggregate would result in an increase in the aggregate annual cost of benefits in excess of 10% of the aggregate annual cost of benefits of the Company Group for the prior Fiscal Year, or (2) the amendment by the Company or any of its Subsidiaries of benefit levels provided under any employee benefit plan set forth on Exhibit 8, which amendment would result in an increase in the annual cost of benefits under such plan in excess of 10% of the annual cost of benefits of the Company Group under such plan for the prior Fiscal Year, exclusive, in each case, of any such increases (including healthcare premium, prescription plan and other provider costs) attributable to general market increases in the cost of providing the same or comparable benefits or third party cost and premium increases applicable to then existing terms and conditions; provided, however, that Exhibit 8 shall be amended from time to time to include any New Material Benefit Plan adopted in accordance with this subsection (xi); (xii) Any amendment of the Compensation Committee Charter, other than an immaterial amendment to such Charter; and (xiii) Any amendment of the Audit Committee Charter, other than any amendment to conform such charter to the recommendations issued from time to time by the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees or similar body performing a comparable function with respect to the composition and functioning of audit committees of boards of directors of United States publicly traded corporations. (b) Subject to subsection (c) of this Section 4.10, neither the Company nor any of its Subsidiaries shall effect any Veto Matter unless such Veto Matter has been submitted to, and approved by, the Board if and to the extent required by the DGCL, and the Stockholders by the Requisite Vote in accordance with Section II.A.2.b of Article Fourth of the Certificate and this Section 4.10; provided, however, that without requirement of further consent, action or approval of the Board or the Stockholders, including any Supermajority Approval, the Company and its Subsidiaries are authorized to (i) enter into each of the Transaction Documents (other than this Agreement), to perform their obligations and exercise any and all of their rights and remedies thereunder and to consummate the transactions contemplated thereby, all of which actions are approved, ratified and confirmed and shall not constitute Veto Matters hereunder, and (ii) enter into each of the Financing Agreements, perform their obligations thereunder and consummate the transactions contemplated thereby, all of which actions are approved, ratified and confirmed. (c) Notwithstanding anything in this Agreement to the contrary, the Company and its Subsidiaries may, without the Supermajority Approval: (i) take such action as may be necessary or appropriate to enable the Company (directly or indirectly and contemporaneously with, or conditional upon the performance of, its obligations under Article VIII) to perform its obligations under Article VIII in connection with a Partial Repurchase, including, without limitation, any Refinancing and any action relating to a Refinancing or the reduction of Indebtedness under the Financing Agreements, and may effect any Veto Matter in connection with a Partial Repurchase, except for the Veto Matters described in Sections 4.10(a)(i)(D) (as to   36 -------------------------------------------------------------------------------- the Company) and (E), (ii), (iv), (vi), (vii), (ix) (except with respect to purchases of the Unilever Shares) and (x) through (xiii), duly approved by the Board in connection therewith, including, without limitation, the sale, transfer or other disposal of part or all of the Company’s Japanese business, divisions, assets or Subsidiaries (including through the public sale of securities); provided, however, that all Net Proceeds of any such Veto Matter effected without the Supermajority Approval are used to enable the Company to perform its obligations under Article VIII; provided, further, that the consummation of any such Veto Matter effected without the Supermajority Approval shall not materially impair the Company’s ability to purchase the Remaining Unilever Shares; provided, further, that the Share Price for the Remaining Unilever Shares shall not, after consummation of any such Veto Matter effected without the Supermajority Approval, be reduced (including pursuant to Section 8.8), as a result of any Veto Matter described in Section 4.10(a)(i)(B) being effected without the Supermajority Approval which dilutes the equity interest of the Unilever Stockholder in the Company and, if such Share Price is fixed in accordance with Article VIII, such fixed amount shall not take account of any such dilution; provided, further, that no Veto Matter shall be effected in connection with a Partial Repurchase without the Supermajority Approval to the extent that, as a result of effecting such Veto Matter, the Unilever Stockholder’s Ownership Interest would be reduced below 10%; (ii) enter into and consummate any Refinancing and any purchase of the Unilever Shares and/or Notes then beneficially owned by the Unilever Stockholder in accordance with Article VIII and take any action and effect any Veto Matter, in each case in connection with the purchase of all such Unilever Shares and/or Notes; (iii) following any event of default under the Note or the Financing Agreements, take any action or enter into any transaction described in Section 4.10(a)(i)(A), (C) and (D), 4.10(a)(iii) or 4.10(a)(v), and with respect to such actions and transactions, each of the Stockholders hereby agrees, consents to and acknowledges the provisions of the Financing Agreements, including the requirement to apply the proceeds of certain sales of capital stock and assets to the reduction of Indebtedness, and the rights, remedies and powers of the lenders or noteholders (other than any Unilever Group Member) and holders of collateral thereunder, and to the exercise thereof by such lenders, noteholders and holders with respect to the Company and its Subsidiaries; (iv) perform the Assumed Liabilities, all liabilities and obligations of the Companies (as defined in the Purchase Agreement) and all leases, subleases, rental agreements, insurance policies, sales orders, licenses (including Intellectual Property licenses), agreements, purchase orders, instruments of indebtedness, guarantees and any and all other contracts or binding arrangements (whether written or oral or through course of dealing, in each case, to the extent binding) of (A) any member of the Unilever Group, relating to the DiverseyLever Business, or (B) any of the Companies, in each case as in effect as of the date of the Purchase Agreement;   37 -------------------------------------------------------------------------------- (v) repay any Indebtedness outstanding after the Closing Date under the $12 million Promissory Note, dated November 5, 1999, issued by CMI in favor of Holdco (the “Holdco Note Indebtedness”); and (vi) effect any purchase of the Unilever Shares in connection with an Early Unilever Sale and take any action and effect any Veto Matter, in each case in connection with the purchase of all such Unilever Shares. (d) In connection with the Company seeking Supermajority Approval of a Veto Matter, such Veto Matter shall be considered at a meeting of the Board called in accordance with this Agreement and the Bylaws prior to any request for such Supermajority Approval. Thereafter, the Company may deliver to the Unilever Stockholder such request accompanied by a form of written consent with respect to such Veto Matter. The Unilever Stockholder shall respond to such request as promptly as practicable but not later than 10 Business Days after its receipt thereof; provided, however, that the Unilever Stockholder’s failure to respond within such 10-Business Day period shall not be deemed to constitute its approval thereof. 4.11 Annual Budgets. As promptly as practicable following the Closing Date for the remaining part of the first Fiscal Year ending at least two months after the Closing Date, and for each Fiscal Year thereafter (including, if a change in the date on which a Fiscal Year ends would result in a fiscal year period of less than 12 months, for such period), the executive officers of the Company will timely prepare or cause to be prepared and submitted to the Board for its review, consideration and approval (a) a capital budget (the “Annual Capital Budget”) for such Fiscal Year, which will set forth in reasonable line item detail the proposed capital expenditures of the Company for such Fiscal Year or part thereof, and (b) an operating budget for the Company for such Fiscal Year or part thereof (displaying anticipated statements of income, certain types of operating costs, cash flows, capital expenditures, balance sheets and key budget assumptions) (the “Annual Operating Budget” and together with the Annual Capital Budget, the “Business Plan”). Each Annual Operating Budget prepared for a Fiscal Year or part thereof ending after the fourth anniversary of the Closing Date shall also identify any Special Items and any Post Measurement Period Special Programs proposed for such Fiscal Year or part thereof. Draft copies of the Business Plan will be provided to each Director not later than 20 calendar days prior to the meeting of the Board at which such Business Plan will be presented for approval. During such 20-day period, the Unilever Stockholder shall have a reasonable opportunity, upon reasonable notice and during normal business hours, to discuss the Business Plan and provide comments thereon to the Company’s management, and, at the Unilever Stockholder’s request, the Company shall communicate any written comments of the Unilever Stockholder on the Business Plan to each member of the Board prior to the meeting of the Board convened for the purpose of considering and voting on such Business Plan (the “Business Plan Meeting”). At each Business Plan Meeting, Special Items and Post Measurement Period Special Programs shall be considered and voted on separately from the Business Plan and a record shall be kept of whether the Capital Directors voted for or against approval thereof. 4.12 Strategic Plan. The executive officers of the Company will timely prepare or cause to be prepared and submitted to the Board for its review, consideration and approval, on a periodic basis (but at least once every three years), a draft strategic plan (the “Strategic Plan”)   38 -------------------------------------------------------------------------------- for the five Fiscal Years following the Closing Date. Draft copies of the Strategic Plan will be provided to each Director not later than 20 calendar days prior to the meeting of the Board at which such Strategic Plan will be presented for approval. During such 20-day period, the Unilever Stockholder shall have a reasonable opportunity, upon reasonable notice and during normal business hours, to discuss the Strategic Plan and provide comments thereon to the Company’s management, and, at the Unilever Stockholder’s request, the Company shall communicate any written comments of the Unilever Stockholder on the Strategic Plan to each member of the Board prior to the meeting of the Board convened for the purpose of considering and voting on such Strategic Plan. The first Strategic Plan shall be prepared and provided to the Unilever Stockholder and each member of the Board before, on or within 12 months after the Closing Date. 4.13 Material Legal Proceedings. The executive officers of the Company will present to the Board for its approval and consideration any plan or proposal to initiate any Material Legal Proceeding by or on behalf of the Company or any Subsidiary of the Company. 4.14 Bankruptcy Events. Any authority of the Board with respect to (a) a case or proceeding to which the Company or any Subsidiary of the Company is a party under any applicable federal, state or foreign bankruptcy, insolvency or other similar law now or hereafter in effect (“Bankruptcy Laws”); (b) the consent to the entry of relief against the Company or any Subsidiary of the Company; (c) the consent to the appointment of a receiver, liquidator, or other similar official, including any assignee, trustee, custodian or sequestrator under any Bankruptcy Laws, or the taking possession by any such official of any substantial part of the property of the Company or any Subsidiary of the Company; or (d) the taking of any corporate action in furtherance of any of the foregoing (each, a “Bankruptcy Event”) shall be exercised by a Special Bankruptcy Committee constituted pursuant to Section 4.3 of the Bylaws. Each Stockholder agrees and acknowledges that, under Applicable Law, the Directors and the Stockholders may have fiduciary duties to parties other than the Company and the Stockholders, including creditors, in connection with a Bankruptcy Event. 4.15 Interview Rights. The Company shall provide any person who would otherwise be eligible to be a Qualified Candidate of any Unilever Group Member and who is designated in writing by the Unilever Stockholder with a reasonable opportunity to interview, at the Unilever Stockholder’s request and sole expense, any candidate being considered by the Compensation Committee for the position of Chief Executive Officer (other than Edward F. Lonergan) or Chief Financial Officer (other than Joseph F. Smorada) prior to his or her approval or election to such position by the Compensation Committee. ARTICLE V REPRESENTATIONS AND WARRANTIES As of the date hereof, and except as set forth on Schedule B, each Stockholder (except with respect to Sections 5.7 and 5.8) and, with respect to Sections 5.1 through 5.5, 5.7 and 5.8, the Company hereby represents and warrants to the Company and/or the other Stockholders, as applicable, that: 5.1 Organization. It is duly organized, validly existing and in good standing and has full power and authority to own and operate its assets and properties and carry on its business as presently being conducted and as presently proposed to be conducted (including in the manner contemplated by this Agreement).   39 -------------------------------------------------------------------------------- 5.2 Authority. It has duly authorized the execution and delivery of this Agreement and the transactions contemplated hereby. It has full power and authority to execute and deliver, and to perform its obligations under, this Agreement. 5.3 Consents and Approvals. Except as may be required pursuant to Sections 8.3, 8.6 and 8.13, and assuming the truth and accuracy of the representations and warranties set forth in, and subject to, Section 5.6, all authorizations, approvals and consents, if any, required to be obtained from, and all registrations, declarations and filings, if any, required to be made with, all governmental authorities and regulatory bodies to permit such Stockholder to acquire the Shares, and for such Stockholder or the Company, as applicable, to execute and deliver, and to perform its obligations under, and the transactions contemplated by, this Agreement, have been obtained or made, as the case may be, and all such authorizations, approvals, consents, registrations, declarations and filings are in full force and effect (in each case under this Section 5.3, including without limitation, the transactions contemplated by Article VIII, but subject to the terms and conditions thereof). 5.4 No Violations. Subject to the provisions of Sections 8.3, 8.6 and 8.13 and the satisfaction of the conditions specified therein: (a) neither the acquisition by such Stockholder of the Shares being acquired by it, nor the execution or delivery by such Stockholder or the Company, as applicable, of this Agreement, or the consummation by such Stockholder or the Company, as applicable, of the transactions herein contemplated, nor the fulfillment by such Stockholder or the Company, as applicable, of the terms and provisions hereof (i) will conflict with, violate or result in a breach of, any of the terms, conditions or provisions of any law, regulation, order, writ, injunction, decree, determination or award of any court, governmental department, board, agency or instrumentality or any arbitrator, applicable to such Stockholder or the Company, as applicable, or (ii) will conflict with, violate or result in a breach of, or constitute a default under any of the terms, conditions or provisions of its charter documents or bylaws, and (b) neither the acquisition by such Stockholder of the Shares being acquired by it, nor the execution or delivery by such Stockholder or the Company, as applicable, of this Agreement, or the consummation by such Stockholder or the Company, as applicable, of the transactions herein contemplated, nor the fulfillment by such Stockholder or the Company, as applicable, of the terms and provisions hereof, (x) will conflict with, violate or result in a breach of, or constitute a default under any of the terms, conditions or provisions of any loan agreement, indenture, trust deed or other agreement or instrument to which it is a party or by which it is bound, or (y) result in the creation or imposition of any lien, charge, security interest or encumbrance of any nature whatsoever upon any of its property or assets. 5.5 Litigation. There is no action, suit or proceeding pending or, to the best of its knowledge, threatened (nor, to the best of its knowledge, is there any pending investigation) against or affecting any of its properties in any court or before or by any governmental department, board, agency or instrumentality or arbitrator which, if adversely determined, would materially impair its ability to perform its obligations under this Agreement, and it is not in   40 -------------------------------------------------------------------------------- default under any applicable order, writ, injunction, decree or award of any court, any governmental department, board, agency or instrumentality, or any arbitrator, other than such violations, if any, which individually or in the aggregate, would not have a material adverse effect on its ability to perform its obligations under this Agreement. 5.6 Securities. (a) Such Stockholder is an “accredited stockholder” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act; (b) it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in the Company and making an informed investment decision with respect thereto; (c) it is able to bear the economic and financial risk of an investment in the Company for an indefinite period of time; (d) it is acquiring interests in the Company for investment only and not with a view to, or for resale in connection with, any distribution to the public or public offering thereof or with any present intention of distributing or selling the same; (e) for the purpose of complying with the Securities Act, including Regulation D thereunder, it is familiar with the business of the Company and has had an opportunity to discuss the Company’s business, management and financial affairs with its management and has had the opportunity to obtain (and has obtained to its satisfaction) such information about the business, management and financial affairs as it has requested; (f) it understands that the interests in the Company have not been registered under the securities laws of any jurisdiction and cannot be Transferred unless they are subsequently registered and/or qualified under applicable securities laws and the provisions of this Agreement have been complied with; (g) it has not been organized, reorganized or recapitalized specifically for the purpose of investing in the Company, or if organized, reorganized or recapitalized specifically for the purpose of investing in the Company, each of the stockholders, partners, members or other owners of such Stockholder is an “accredited stockholder” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act; and (h) it is a resident of the jurisdiction set forth in its address on Schedule A. 5.7 No Registration. Assuming the truth and accuracy of the representations and warranties in Section 5.6, neither the Company nor, to its knowledge, any Persons acting on its behalf has (a) engaged in any form of general solicitation or general advertising (within the meaning of Rule 502(c) under the Securities Act) in connection with the offer or sale of the Shares in the United States, or (b) taken any action which would require the registration of the Shares under the Securities Act. 5.8 Investment Company Act. The Company is not, as a result of the transactions contemplated hereby or the Financing Agreements or the receipt or application of the proceeds therefrom, an investment company under the Investment Company Act of 1940, as amended, it being understood that this representation does not cover any attributes of, or the result of the acquisition of, the DiverseyLever Business, the Shares (as defined in the Purchase Agreement) or the Assets. 5.9 Survival. The representations and warranties of the Company and the Stockholders hereunder shall terminate on the respective dates set forth below, in each case following the date hereof:   Section 5.1    Six years Section 5.2    Indefinitely Section 5.3    Six years Section 5.4(a)    Six years Section 5.4(b)    Two years Section 5.5    Two years Section 5.6    Two years Section 5.7    Two years   41 -------------------------------------------------------------------------------- ARTICLE VI COVENANTS 6.1 Financial Statements and Other Information. The Company shall deliver to each Director: (a) as soon as available but in any event within 30 calendar days after the end of each monthly accounting period in each Fiscal Year (other than the last monthly accounting period in each Fiscal Year), unaudited consolidated statements of income and cash flows of the Company for such monthly period and for the period from the beginning of the Fiscal Year to the end of such month, and unaudited consolidated balance sheets of the Company as of the end of such monthly period, setting forth in each case comparisons to the Company’s Annual Operating Budget and to the corresponding period in the preceding Fiscal Year; (b) as soon as available but in any event within 50 calendar days after the end of each Fiscal Quarter (other than the last Fiscal Quarter in each Fiscal Year), unaudited consolidated statements of income and cash flows of the Company for the period from the beginning of the applicable Fiscal Year to the end of such Fiscal Quarter, and unaudited consolidated balance sheets of the Company as of the end of such Fiscal Quarter, setting forth in each case comparisons to the Company’s Annual Operating Budget and to the corresponding period and date in the preceding Fiscal Year, all prepared in accordance with GAAP (subject to normal year-end adjustments); and (c) within 90 calendar days after the end of each Fiscal Year, audited consolidated statements of income and cash flows of the Company for such Fiscal Year, and audited consolidated balance sheets of the Company as of the end of such Fiscal Year, setting forth in each case comparisons to the Annual Operating Budget and to the preceding Fiscal Year, all prepared in accordance with GAAP and accompanied by an opinion of a “Big Five” independent public accounting firm; in each case, with substantially the same amount of detail and explanation as is set forth in the financial statements of the Company covering comparable periods prior to September 30, 2001 that have heretofore been provided to Unilever. 6.2 Maintenance of Books. The Company shall keep at its principal office books and records typically maintained by Persons engaged in similar businesses and which shall set forth a true, accurate and complete account of the Company’s business in all material   42 -------------------------------------------------------------------------------- respects. Such books and records shall be kept in accordance with GAAP. The Company shall keep appropriate minutes of the proceedings of its Stockholders, the Board and its committees. 6.3 Biannual Review. The Company shall permit any duly authorized representatives designated in writing by any Stockholder, solely for the purposes of the evaluation of Unilever’s investment in the Company and/or the exercise by Unilever Directors of their fiduciary duties as Directors of the Company and not for any other purpose, including in connection with the operation of the Unilever Group’s business or any of their rights under any Transaction Document, upon reasonable notice and during normal business hours, but not more frequently than twice every Fiscal Year, to (a) perform a reasonable examination of the corporate, tax and financial records of the Company, and (b) have a reasonable opportunity to discuss the business, management, prospects, tax position, finances and accounts of the Company with the Directors, executive officers and independent auditors of the Company; provided, however, that the Unilever Stockholder and its representatives shall not have access, directly or indirectly, to records and information (x) to the extent that such records or information relate to any business of any Holdco Group Member, (y) to the extent that such records or information relate to any business which competes with any Unilever Group Member, or (z) other than those of the Company and its Subsidiaries, and all access by the Unilever Stockholder and its representatives pursuant to this Section 6.3 shall be effected only in accordance with reasonable restricted access or “Chinese Wall” policies and procedures of the Holdco Group designed to restrict such access to the information described in clauses (x), (y) and (z) and to persons who agree to abide by reasonable confidentiality and non-use restrictions in accordance with Section 6.4. 6.4 Confidentiality. (a) Subject to the rights granted to Unilever pursuant to clause 2.1.1 of the Transferred Technology License Agreement, Unilever agrees to maintain, and to cause each other Unilever Group Member and their respective directors, officers, employees and other representatives (including any Unilever Director) to maintain, the confidentiality of, and not to use for any purpose other than the evaluation of Unilever’s investment in the Company and the exercise by Unilever Directors of their fiduciary duties as Directors of the Company, all nonpublic information, documents and materials relating to the Company, its Subsidiaries, any of their Affiliates (including, but not limited to, the Business Plans, the Strategic Plan, business plans, pricing and costs of specific products, customer lists and sales data, proprietary customer data, the identity and other information about product and service sources and quality, performance and management or manufacturing processes, any product development ideas or plans, any information obtained pursuant to Section 6.3 or 8.12 and this Agreement and the terms hereof) (“Confidential Information”) or any other Stockholder, which it now or in the future, until the date on which the Unilever Stockholder ceases to own any Shares, may obtain pursuant to this Agreement or the Exit Note. (b) Unilever shall, and shall cause its Affiliates to, (i) not disclose any such information to any Person other than Unilever Directors or any of its directors, employees, professional advisors, auditors or bankers whose duties include the management or monitoring of the business of the Company and who needs to know such information in order to discharge his or her duties or other responsibilities related thereto and who agrees to abide by the restrictions   43 -------------------------------------------------------------------------------- contained in this Section 6.4; and (ii) not use any such information other than for the purpose of managing or monitoring its investment in the Company; provided, that Unilever shall be liable for any failure by any such Person to keep such information strictly confidential. (c) Notwithstanding the foregoing, the confidentiality obligations of Sections 6.4(a) and (b) shall not apply to information obtained other than in violation of this Agreement: (i) which any Unilever Group Member or any of their respective officers, employees, representatives, consultants or advisors is required to disclose by judicial or administrative process, or by other requirements of Applicable Law or any Governmental Authority, provided that where and to the extent practicable the disclosing party gives the other party reasonable notice of any such requirement and the opportunity to seek appropriate protective measures and cooperates with such party in attempting to obtain such protective measures; (ii) which becomes available to the public other than as a result of a breach of Sections 6.4(a) and (b) or the Confidentiality Agreements; (iii) which has been provided to any Unilever Group Member or any of their respective officers, employees, representatives, consultants or advisors by a third party who obtained such information other than from any such Person or other than as a result of a breach of Sections 6.4(a) and (b) or the Confidentiality Agreements; (iv) disclosed on a strictly confidential basis to Unilever’s professional advisors, auditors and investment bankers provided that Unilever shall be liable for any failure by such Person to keep such information strictly confidential; or (v) required to enable Unilever to enforce its rights hereunder or under any other Transaction Document. (d) Holdco and the Company agree to maintain, and to cause their respective Affiliates, directors, officers, employees and other representatives (other than any Unilever Director) to maintain, the confidentiality of all non-public information, documents and materials relating to any Unilever Group Member that is designated as such by a Unilever Group Member, which it now or in the future may possess. Notwithstanding the foregoing, the confidentiality obligations of this subsection (d) shall not apply to information: (i) which any Holdco Group Member or Company Group Member or any of their respective officers, employees, representatives, consultants or advisors is required to disclose by judicial or administrative process, or by other requirements of Applicable Law or any Governmental Authority, provided that where and to the extent practicable the disclosing party gives the other party reasonable notice of any such requirement and the opportunity to seek appropriate protective measures and cooperates with such party in attempting to obtain such protective measures; (ii) which becomes available to the public other than as a result of a breach of this subsection (d) or the Confidentiality Agreements; (iii) which has been provided to any Holdco Group Member or Company Group Member or any of their respective officers, employees, representatives, consultants or advisors by a third party who obtained such information other than from any such Person or other than as a result of a breach of this subsection (d) or the Confidentiality Agreements; (iv) disclosed on a strictly confidential basis to Holdco’s or the Company’s professional advisors, auditors and investment bankers provided that Holdco or the Company, respectively, shall be liable for any failure by such Person to keep such information strictly confidential; or (v) required to enable Holdco or the Company to enforce its rights hereunder or under any other Transaction Document.   44 -------------------------------------------------------------------------------- (e) The restrictions contained in this Section 6.4 shall continue to apply to each Stockholder for a period of two years following the date such Stockholder ceased to hold Shares, Notes or the Exit Note. 6.5 Public Disclosures. Except to the extent reasonably required in connection with an Approved Sale or Public Offering, the Company and the Stockholders shall not, nor shall the Company or the Stockholders permit any Subsidiary to, disclose any Stockholder’s name or identify any Stockholder as a Stockholder in the Company or its Subsidiaries or disclose the provisions of this Agreement in any press release or other public announcement or in any document or material filed with any governmental or regulatory entity or body, without the prior written consent of such Stockholder, unless such disclosure is required (i) in connection with the Financing Agreements (including in connection with the preparation and circulation of the 144A Offering Documents), or (ii) by Applicable Law, rule or regulation (including any Applicable Law, rule or regulation applicable to the 144A Offering Documents) or by order of a court of competent jurisdiction, in which case prior to making such disclosure the Company or the relevant Stockholder shall give written notice to the other parties describing in reasonable detail the proposed content of such disclosure, shall permit such other parties to review and comment upon the form and substance of such disclosure and to seek appropriate protective measures where and to the extent practicable and supported by applicable legal authority and shall cooperate with such other parties in attempting to obtain such protective measures. 6.6 Directors’ and Officers’ Insurance; Indemnification. (a) The Board shall cause the Company to maintain directors’ and officers’ liability insurance coverage adequate to cover risks of such types and in such amounts as are customary for companies of similar size engaged in similar lines of business. (b) The Company shall maintain in effect during the term of this Agreement all provisions in the Charter Documents that provide for exculpation of director and officer liability and indemnification (and advancement of expenses related thereto) of the officers and Directors of the Company, and such provisions shall not be amended other than in accordance with Section 4.10(a) and except as either required by Applicable Law or to make changes permitted by law that would enhance the rights of officers and Directors. From and after the Closing Date, the Company shall indemnify and hold harmless to the fullest extent permitted by the Charter Documents each Director against all losses, claims, damages, liabilities, costs or expenses (including attorneys’ fees), judgments, fines, penalties and amounts paid in settlement in connection with any claim, action, suit, proceeding or investigation arising out of or pertaining to acts or omissions, or alleged acts or omissions, by them in their capacity as a Director, which acts or omissions occurred after the Closing Date, in each case in accordance with the provisions of Article VI of the Bylaws. 6.7 Compliance with Agreement. Unilever shall cause each other Unilever Group Member to comply with the terms of this Agreement. Holdco shall cause each Company Group Member and each Holdco Group Member to comply with the terms of this Agreement.   45 -------------------------------------------------------------------------------- 6.8 Information. The Unilever Group and the Holdco Group shall each provide all information concerning itself (and confirmation of the accuracy of such information) reasonably required in connection with any Refinancing, Private Placement and any public offering or private sale of debt securities, including high yield debt securities, issued to finance or refinance the consideration paid pursuant to the Purchase Agreement, and the Unilever Group shall refrain from knowingly taking any action that would be reasonably expected to interfere with any such Refinancing, Private Placement, offering or sale. 6.9 Certain Indemnification. The Company and the Unilever Stockholder shall provide the indemnification set forth on Exhibit 10 on the terms and subject to the conditions set forth therein 6.10 Registers of Holders. The Company shall ensure that no register of the Common Stock, the Note or the Exit Note will be kept in the United Kingdom by or on behalf of the Company. 6.11 Tax Residence. The Company shall at all times after Closing be resident for Tax purposes solely in the United States. The Company may change its residence for United States state or local Tax purposes. ARTICLE VII TRANSFERS 7.1 Restrictions on Transfer of Shares. No Stockholder shall Transfer any Shares, except in accordance with this Article VII and Article VIII. 7.2 Approved Sale; Drag Along. (a) Subject to subsections (b) and (c) of this Section 7.2, from and after the fifth anniversary of the Closing Date, if the Stockholders holding a majority of the Shares approve the sale of all or substantially all of the assets of the Company on a consolidated basis or a sale of a majority of the outstanding Shares, including any such sale accomplished by merger, consolidation, recapitalization or otherwise, to any other Person (an “Approved Sale”), each Stockholder shall vote for, consent to and raise no objections against such Approved Sale. If the Approved Sale is structured as a (i) merger or consolidation, each Stockholder holding Shares shall waive any dissenters rights, appraisal rights or similar rights in connection with such merger or consolidation or (ii) sale of Shares, each holder of Shares shall agree to sell all of its Shares and rights to acquire Shares on the terms and conditions approved by the Stockholders described above. Each Stockholder holding Shares shall take all actions reasonably necessary in connection with the consummation of the Approved Sale as reasonably requested by the Stockholders described above. (b) Subject to subsection (c) of this Section 7.2, the obligations of the Stockholders holding Shares with respect to the Approved Sale are subject to the satisfaction of the following conditions: (i) in the case of a sale of a majority of the outstanding Shares, (A) all Stockholders (other than the Unilever Stockholder) shall participate pro rata in the proceeds payable to holders of Common Stock in such sale based on the number of Shares owned by each   46 -------------------------------------------------------------------------------- such Stockholder relative to the aggregate number of Shares then outstanding, and (B) the Unilever Stockholder shall receive the amount described in subsection (c)(i) of this Section 7.2; (ii) upon the consummation of the Approved Sale, each Stockholder shall be entitled to receive the same form of consideration and the same per Share amount of consideration as other Stockholders (other than the Unilever Stockholder who shall be entitled to receive the consideration described in subsection (c) of this Section 7.2); (iii) if any Stockholder is given an option as to the form and amount of consideration to be received, each Stockholder shall be given the same option (other than the Unilever Stockholder who shall be entitled to receive the consideration described in subsection (c) of this Section 7.2); and (iv) no Stockholder shall be required to give any representations and warranties (or indemnification in respect thereof) or be subject to any other liabilities or obligations in connection with any Approved Sale other than representations and warranties (and indemnification in respect thereof) of the type and scope described in Section 8.7(b). (c) Notwithstanding the foregoing, no Approved Sale shall be consummated unless (i) the Unilever Stockholder shall have received prior to, or on completion of, such Approved Sale (A) consideration in cash for all the Unilever Shares in an amount equal to the Share Price (as hereinafter defined) for all such Unilever Shares, and (B) consideration in cash for all the Notes held by Unilever Group Members in an amount equal to the Accreted Value of such Notes on the date on which the Approved Sale is consummated, (ii) all the Unilever Shares and all such Notes are sold in connection with such Approved Sale, and (iii) no other Shares are sold in such Approved Sale before all the Unilever Shares and the Notes held by Unilever Group Members are sold; provided, however, that the Unilever Stockholder may, in its sole discretion, waive any of the foregoing requirements. 7.3 Certain Permitted Transfers. (a) The restriction contained in Section 7.1 shall not apply with respect to any Transfer of all or any Class A Shares by any Holdco Stockholder (i) that is previously approved in writing by the Unilever Stockholder, which approval may be granted or withheld in the Unilever Stockholder’s sole discretion (such approval being deemed to be given by virtue of the execution of this Agreement in respect of any Transfer of Class A Shares made pursuant to Section 7.2), (ii) to any other Holdco Group Member of which Holdco has Holdco Required Control, (iii) in an Approved Sale or (iv) pursuant to Section 7.9; provided, that such restriction shall continue to be applicable to the Class A Shares after any such Transfer, the Transferees of such Class A Shares shall have executed an Assumption Agreement and the Transferring Stockholder promptly notifies the Company and the Unilever Stockholder of the names of such Transferees. (b) The restriction contained in Section 7.1 shall not apply with respect to any Transfer of (1) all or any Class B Shares by the Unilever Stockholder (i) that is previously approved in writing by the Holdco Stockholder, which approval may be granted or withheld in the Holdco Stockholder’s sole discretion (such approval being deemed to be given by virtue of the execution of this Agreement in respect of any Transfer of Class B Shares made pursuant to Section 7.2), (ii) to any other Unilever Group Member of which Unilever has Unilever Required Control, (iii) in an Approved Sale, or (iv) pursuant to Section 7.3(f) or (2) all of the Additional Shares to Holdco pursuant to Section 7.9; provided, that such restriction shall continue to be   47 -------------------------------------------------------------------------------- applicable to the Class B Shares after any such Transfer, the Transferees of such Class B Shares shall have executed an Assumption Agreement and the Transferring Stockholder promptly notifies the Company and the Holdco Stockholder of the names of such Transferees. (c) Notwithstanding the foregoing, subject to such limitations as the non-Transferring Stockholders may reasonably request, the Transfer of Shares by a Stockholder pursuant to subsection (a) or (b) (as the case may be) of this Section 7.3 at any time to a member of such Transferring Stockholder’s Group shall be subject to the Transferring Stockholder entering into an agreement with the other Stockholders providing that so long as such Transferee holds such Transferring Stockholder’s Shares, such Transferee will remain a member of such Transferring Stockholder’s Group. If such Transferee ceases to be such a member, the foregoing Transfer will be deemed, without further action, to have been rescinded. (d) Notwithstanding any other provisions of this Article VII, no Transfer of Shares or any other interest in the Company may be made unless in the opinion of counsel (who may be counsel for the Company), such Transfer would not require registration under the Securities Act or any state or provincial securities or “blue sky” laws applicable to the Company or the interest to be Transferred, or cause the Company to be required to register as an “investment company” under the Investment Company Act of 1940, as amended. (e) The Transferor and Transferee of any Shares or other interest in the Company shall be jointly and severally obligated to reimburse the Company for all reasonable expenses (including attorneys’ fees and expenses) incurred by it in connection with any Transfer or proposed Transfer (other than a Transfer effected pursuant to Section 7.2 or Article VIII), whether or not consummated. (f) During the Initial Sale Period, the Unilever Stockholder shall be entitled, subject to Sections 7.3(g) and 7.3(h), to effect a Unilever Sale of all, but not less than all, of the Unilever Shares then beneficially owned by the Unilever Group Members to no more than one Person (the “Relevant Transferee”) in accordance with the provisions of this Agreement, but in addition to the rights set forth in Section 8.13; provided that (i) all necessary consents and approvals of Governmental Authorities shall have been obtained (each of the Stockholders and the Company agreeing to use all reasonable efforts to obtain such consents and approvals), (ii) the Holdco Stockholder shall have the right to approve any purchaser of such Unilever Shares which approval shall not be unreasonably withheld or delayed, (iii) such sale would not violate or result in a termination or conversion of the brand license agreement, dated as of May 3, 2002, between S.C. Johnson & Son, Inc. and the Company, as amended as of the date hereof (the “Brand License Agreement”), (iv) the Relevant Transferee shall not be an SCJ Competitor (as defined in the Brand License Agreement) (an “SCJ Competitor”) and (v) such Unilever Sale would not constitute a change of control under the Credit Agreement. In connection with any such proposed Unilever Sale (an “Early Unilever Sale”), the Unilever Stockholder may submit to the Company a list of proposed purchasers, and the Company shall use commercially reasonable efforts to review such list with S.C. Johnson & Son, Inc. for the purpose of obtaining S.C. Johnson & Son, Inc.’s consent to such Early Unilever Sale so as to prevent a termination or conversion of the Brand License Agreement and to notify the Unilever Stockholder in writing whether it or S.C. Johnson & Son, Inc. considers that any such purchaser constitutes, at the date of such request, an SCJ Competitor. Notwithstanding the foregoing, if following the receipt of a   48 -------------------------------------------------------------------------------- Put Notice, the Company shall have acquired more than 50% of the Unilever Shares, the Unilever Stockholder’s right to effect an Early Unilever Sale shall be suspended unless and until the Unilever Stockholder shall have given a subsequent Put Notice applicable to the Remaining Unilever Shares. (g) From May 3, 2007 through May 2, 2008, prior to commencing an Early Unilever Sale, the Unilever Stockholder shall deliver a notice (a “First Offer Notice”) to the Company stating (i) its bona fide intention to pursue an Early Unilever Sale, (ii) the number of Unilever Shares then beneficially owned by the Unilever Group Members (the “Noticed Shares”) and (iii) the price per share at which it proposes to sell the Noticed Shares (the “First Offer Price”). For a period of 30 days after receipt of the First Offer Notice, the Company shall have the option, but not the obligation, to elect to purchase all, but not less than all, of the Noticed Shares at the First Offer Price. (i) If the Company elects to purchase all the Noticed Shares pursuant to this Section 7.3(g), it shall give written notice of said election to the Unilever Stockholder within the 30-day period following receipt of the First Offer Notice. The closing of the purchase of the Noticed Shares pursuant to this Section 7.3(g) (a “First Offer Sale”) shall take place at the offices of the Company on a date as the Company shall specify by notice to the Unilever Stockholder, which date shall not be later than 90 calendar days after the later to occur of (i) the date the First Offer Notice is received by the Company or (ii) the date on which any consents or approvals necessary for the purchase of the Noticed Shares shall have been obtained (such date, the “First Offer Closing Date”). On the First Offer Closing Date, the Company shall be entitled to receive the representations and warranties from the Unilever Stockholder described in Section 8.7(b). At the First Offer Closing Date, the Unilever Stockholder shall deliver to the Company a certificate or certificates (properly endorsed or accompanied by stock powers or similar appropriate documentation of authority to transfer) evidencing the number of Noticed Shares then to be purchased by the Company, and the Company shall deliver payment of the First Offer Price for the Noticed Shares by wire transfer of immediately available funds. (ii) If the Company does not elect to purchase the Noticed Shares, or fails to provide written notice of its election to the Unilever Stockholder within the 30-day period following receipt of the First Offer Notice, the Unilever Stockholder may commence an Early Unilever Sale. (h) If, after compliance with Section 7.3(g), the Unilever Stockholder has commenced an Early Unilever Sale to a Relevant Transferee, the Unilever Stockholder shall deliver a notice (a “ROFR Notice”) to the Company stating (i) its bona fide intention to effect an Early Unilever Sale, (ii) the number of Noticed Shares, (iii) the price per share at which it proposes to sell the Noticed Shares (the “ROFR Price”) and the terms of payment for such shares, (iv) the name and address of the proposed Relevant Transferee and (v) all other material terms and conditions of sale. For a period of 30 days after receipt of the ROFR Notice, the Company shall have the option, but not the obligation, to elect to purchase all, but not less than all, of the Noticed Shares. If the Company elects to purchase all the Noticed Shares, it shall give written notice of said election to the Unilever Stockholder within the 30-day period following receipt of the ROFR Notice. The price per share of the Noticed Shares purchased pursuant to this Section 7.3(h) shall be the sum of the ROFR Price and an amount equal to 3.0% of the   49 -------------------------------------------------------------------------------- ROFR Price (the “Premium”); provided that in no event shall the aggregate Premium be less than $10.0 million or more than $15.0 million. Notwithstanding the foregoing, if at any time prior to the date of the ROFR Notice, the Company has purchased more than 50% of the Unilever Shares pursuant to this Agreement, the minimum and maximum limitations applicable to the aggregate Premium under this Section 7.3(h) shall be reduced pro rata based on the relation of the number of Noticed Shares pursuant to the ROFR Notice to the number of Unilever Shares as of the Closing Date. The Premium shall be paid by the Holdco Stockholder. The purchase of the Noticed Shares shall be in all other material respects on the same terms and subject to the same conditions as those set forth in the ROFR Notice. If the Company does not elect to purchase all of the Noticed Shares, then none of such Noticed Shares shall be purchased by the Company, and the Unilever Stockholder may sell all, but not less than all, of such Noticed Shares to the Relevant Transferee named in the ROFR Notice at the price and on the terms and conditions specified in the ROFR Notice, provided that such Early Unilever Sale is consummated within 90 days of the date of the ROFR Notice to the Company (the “Early Unilever Sale Period”). Any purported Early Unilever Sale in violation of Section 7.3(g) or this Section 7.3(h) shall be void and ineffective, and shall not operate to transfer any interest in or title to the Unilever Stockholder’s Class B Shares to the purported Relevant Transferee. (i) The Company may elect to assign its rights under Sections 7.3(g) and (h) to the Holdco Stockholder and, if so assigned, all references to the Company in such sections shall be to the Holdco Stockholder. 7.4 Stockholders Leaving Groups. A Holdco Stockholder or a Unilever Stockholder shall Transfer, in a manner and to a Transferee permitted by this Agreement, all the Shares held by it before Holdco or Unilever, respectively, ceases to have Required Control of such Stockholder. 7.5 Termination of Restrictions. The restriction set forth in Section 7.1 shall continue with respect to each Share following any Transfer thereof; provided, that such restriction shall terminate on the first to occur of an Approved Sale resulting in the Unilever Group ceasing to hold any Shares or Notes or a Public Offering in respect of which Unilever’s consent, including by way of the Supermajority Approval, has been obtained. 7.6 Void Transfers. Any attempted Transfer by any Stockholder of any Shares or other interest in the Company in contravention of this Agreement (including, without limitation, the failure of the Transferee, including a Relevant Transferee, to execute an Assumption Agreement) shall be void and of no effect and shall not bind or be recognized by the Company or any other party. No purported transferee shall have any voting rights or any right to any profits, losses or distributions of the Company. 7.7 Legend. Each certificate representing Shares will bear the following legend: THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE   50 -------------------------------------------------------------------------------- SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN COMPLIANCE THEREWITH. In addition, during the term of this Agreement, each certificate representing Shares will bear the following legend: THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO ADDITIONAL TERMS AND CONDITIONS SPECIFIED IN A STOCKHOLDERS’ AGREEMENT, DATED AS OF MAY 3, 2002, A COPY OF WHICH IS ON FILE AND MAY BE OBTAINED FROM THE CORPORATION. NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH STOCKHOLDERS’ AGREEMENT. 7.8 Lock-up; Registration Rights. In connection with the Company seeking Supermajority Approval of a Public Offering, the Unilever Stockholder hereby agrees to negotiate in good faith the terms of (a) a customary lock-up agreement with the Company, and (b) a waiver of the Unilever Stockholder’s rights under Section 8.1 in exchange for customary registration rights for the Unilever Shares; provided, however, that the Unilever Stockholder may withhold its approval of such Public Offering and may withhold its agreement to any such lock-up or waiver in its sole discretion and for any reason whatsoever. 7.9 Transfer of Additional Shares. (a) On the earlier of (x) May 3, 2010, and (y) the Final Exit Date (such earlier date, the “Additional Shares Exercise Date”), the Unilever Stockholder shall purchase from Holdco (in accordance with Section 7.9(h)), and Holdco shall sell to the Unilever Stockholder (in accordance with Section 7.9(h)), that number of Class A Shares (the “Additional Shares”) equal to the lesser of (i) 1.5% percent of the total number of Class A Shares and Class B Shares issued and outstanding as of such date (such number of Additional Shares to be rounded downwards to the nearest whole number) and (ii) the largest whole number of Class A Shares, the aggregate Value of which does not exceed $40,000,000, in either case at a purchase price of $0.01 per Additional Share. (b) The closing of the purchase of the Additional Shares by the Unilever Stockholder pursuant to Section 7.9(a) shall take place at a mutually agreed upon place on the Additional Shares Exercise Date, or (if required) such later date on which the Share Price per Additional Share as of the Additional Shares Exercise Date shall have been agreed to by the Unilever Stockholder and Holdco or otherwise determined in accordance with Sections 8.9, 8.10 and 8.11 (such later date, the “Additional Shares Closing Date”). At closing, Holdco shall represent and warrant to Unilever as to the matters set forth in Section 8.7(b) (with the “Unilever Stockholder,” “Unilever Group Members” and “Subject Securities” being, for the purposes of such representations and warranties, Holdco, the Holdco Group Members and the Additional Shares, respectively). At closing, Holdco shall deliver to the Unilever Stockholder (in   51 -------------------------------------------------------------------------------- accordance with Section 7.9(h)) a certificate or certificates (properly endorsed or accompanied by stock powers or similar appropriate documentation of authority to transfer) evidencing the number of Additional Shares against payment therefor by the Unilever Stockholder. (c) The Unilever Stockholder shall require Holdco to purchase (in accordance with Section 7.9(h)) from the Unilever Stockholder all, but not less than all, of the Additional Shares on the Additional Shares Exercise Date or, if applicable, the Additional Shares Closing Date. The aggregate purchase price (the “Additional Shares Purchase Price”) of the Additional Shares purchased by Holdco (in accordance with Section 7.9(h)) shall be equal to the aggregate Value of the Additional Shares. (d) The closing of the purchase of the Additional Shares by Holdco (in accordance with Section 7.9(h)) pursuant to Section 7.3(c), shall take place at a mutually agreed upon place and on the Additional Shares Exercise Date or, if applicable, the Additional Shares Closing Date. At closing, Holdco shall be entitled to receive the representations and warranties from the Unilever Stockholder described in Sections 8.7(b)(iii),(iv) and (v). At closing, the Unilever Stockholder shall deliver to Holdco (in accordance with Section 7.9(h)) a certificate or certificates (properly endorsed or accompanied by stock powers or similar appropriate documentation of authority to transfer) evidencing all of the Additional Shares against payment of the Additional Shares Purchase Price and any additional payment required pursuant to Sections 7.9(e) and (f) by Holdco in immediately available funds. (e) If the Additional Shares Purchase Price is less than $20,000,000, Holdco (in accordance with Section 7.9(h)) shall make a cash payment to the Unilever Stockholder equal to the difference between $20,000,000 and the Additional Shares Purchase Price (an “Additional Floor Payment”). (f) If the number of Additional Shares was determined by rounding down to the nearest whole number pursuant to Section 7.9(a)(i), Holdco (in accordance with Section 7.9(h)) shall make a cash payment to the Unilever Stockholder equal to the difference between (i) the aggregate Value of the Additional Shares if no such rounding had occurred and (ii) the aggregate Value of the Additional Shares (an “Additional Rounding Payment” and, together with an Additional Floor Payment, the “Additional Payments”). (g) For the avoidance of doubt, save as set forth in Section 7.9(h), the obligations to transfer Additional Shares pursuant to Section 7.9(a) and to repurchase Additional Shares pursuant to Section 7.9(c) are obligations solely of Holdco. Save as set forth in Section 7.9(h), no Company Group Member shall be required to make any payments or have any obligations with respect to the Additional Shares. (h) The transfer of the Additional Shares and payment of any Additional Payments pursuant to this Section 7.9 shall be structured as a transfer and payment through the Company to the Unilever Stockholder, with a simultaneous capital contribution by Holdco (the “Primary Structure”), provided that (i) the Primary Structure shall be economically neutral to the Company, shall not create any liability or obligation of the Company not backed by an equal liability or obligation of Holdco to the Company and shall not conflict with, or result in a violation or breach or event of default under, the Financing Agreements, and (ii) the Primary   52 -------------------------------------------------------------------------------- Structure shall be structured, if possible, to be economically neutral to Holdco, but in no event shall the Primary Structure be effected if it would (x) create any liability or obligation of Holdco in excess of 133% of the sum of (1) the aggregate Value of the Additional Shares and (2) any Additional Payments required by this Section 7.9, and (y) deliver to the Unilever Stockholder net after-tax proceeds of less than the sum of (1) the aggregate Value of the Additional Shares and (2) any Additional Payments required by this Section 7.9 (collectively, the “Alternative Structure Conditions”). If the Primary Structure cannot be effected in accordance with the Alternative Structure Conditions, the Unilever Stockholder, Holdco and the Company shall discuss, in good faith, alternative structures to effect the transfer of the Additional Shares pursuant to this Section so as to optimize tax efficiencies (the “Secondary Structures”), provided that any Secondary Structures must satisfy the Alternative Structure Conditions. If the Primary Structure does not satisfy, and the Unilever Stockholder, Holdco and the Company cannot agree on a Secondary Structure that satisfies, the Alternative Structure Conditions, Holdco shall effect the transfer of the Additional Shares in accordance with Sections 7.9 (a) to (g) and the payment of any Additional Payments in accordance with Sections 7(e) and (f) directly to the Unilever Stockholder and not through the Company, and Holdco shall also reimburse the Unilever Stockholder for the Unilever Stockholder’s tax costs associated with such transfer of the Additional Shares and payment of any Additional Payments in an amount not to exceed 33% of the sum of (1) the aggregate Value of the Additional Shares and (2) any Additional Payments required by this Section 7.9. ARTICLE VIII PUT AND CALL RIGHTS 8.1 Put Right. Subject to the terms of this Article VIII, including Sections 8.4 and 8.13, at any time after the sixth anniversary of the Closing Date, the Unilever Stockholder shall have the right (the “Put Option”), exercisable by giving written notice to the Company (the “Initial Put Notice,” such notice, together with any other notice given by the Unilever Stockholder pursuant to Section 8.4(c), a “Put Notice”), to require the Company to purchase from the Unilever Stockholder, at a price equal to the Put Price, all, but not less than all, of (a) the Unilever Shares then beneficially owned by the Unilever Group Members (the “Put Shares”), and (b) the Notes then beneficially owned by the Unilever Group Members (the “Put Notes” and, together with the Put Shares, the “Put Securities”); provided, however, that, except as otherwise specified herein, no Put Notice shall be effective unless it is given during a Notice Period. Subject to subsections (c) and (d) of Section 8.4, the Put Option may be exercised only once. 8.2 Put Price. (a) The purchase price (i) for Unilever Shares purchased by the Company pursuant to this Agreement shall be equal to the total of (A) the Fair Market Value of such Shares, plus (B) any accrued interest and adjustments pursuant to subsection (b) of this Section 8.2 (collectively, the “Share Price”), and (ii) for Put Notes shall be equal to the Accreted Value thereof on the applicable Put Closing Date, without any payment of premium or penalty, including any premium or penalty that may be provided for in the Put Notes or the Note Indenture (collectively with the Share Price, but subject to subsection (b) of this Section 8.2, the “Put Price”).   53 -------------------------------------------------------------------------------- (b) If the aggregate Share Price for (x) any Unilever Shares to be purchased on any date after a Put Closing Date or Call Closing Date, as the case may be, or (y) all the Unilever Shares (the Unilever Shares referred to in clause (x) or (y) above in either case being the “Remaining Unilever Shares”) is, in either case, fixed in accordance with Section 8.4(d), 8.5(a), 8.5(b) or 8.13(b)(i), then the Share Price of such Shares (i) shall be equal to (A) with respect to the Remaining Unilever Shares referred to in clause (x) above, the Share Price applicable to the Unilever Shares purchased on such Put Closing Date or Call Closing Date, as the case may be, and (B) with respect to the Remaining Unilever Shares referred to in clause (y) above, an amount equal to the Fair Market Value of such Shares based on a deemed Base Value of eight times the Applicable EBITDA pursuant to Section 8.5(b) or the Share Price applicable to the Unilever Shares that the Company has failed to purchase by the Eighth Year, as the case may be, in each case with respect to clauses (A) and (B) on the basis of the number of such Remaining Unilever Shares and the total number of issued and outstanding Shares (on a Fully-Diluted basis) on the date the Initial Put Notice or Call Notice, as the case may be, is given, and (ii) shall be increased by an amount equal to (X) interest on such amount at the Applicable Rate as of the date on which such amount is fixed (the “Fixed Price Date”) accruing from (and including) the Fixed Price Date to (but excluding) the date on which the Share Price is paid by the Company (whether in cash or with the Exit Note) for the Remaining Unilever Shares; provided, however, no interest shall accrue or be payable with respect to that portion of the Share Price attributable to clause (a)(iv) in the definition of Fair Market Value, minus (Y) the sum of (1) the value of any dividends or distributions paid on, or with respect to, the Remaining Unilever Shares with a record date after the Fixed Price Date and through and including the date on which the Remaining Unilever Shares are purchased by the Company, and (2) subject to the proviso to the definition of “Repurchase Expenses” herein, the Unilever Stockholder’s pro rata share of all Repurchase Expenses (measured by the Unilever Stockholder’s Ownership Interest at the time such Repurchase Expenses are incurred) incurred after the Fixed Price Date and through and including the date on which the Remaining Unilever Shares are purchased by the Company. The interest referred to in clause (X) above shall be calculated on the basis of a year of 360 days and the actual number of days for which interest is due. 8.3 Put Closing. Subject to Section 8.4, the closing of the purchase of Put Securities or Partially Put Securities (the “Put Closing”) shall take place at the offices of the Company on a date as the Company shall specify by notice to the Unilever Stockholder, which date shall be as promptly as practicable following the delivery of the applicable Put Notice and in any event not later than (a) 90 calendar days after the later to occur of (i) the date such Put Notice or the Partial Put Notice (as the case may be) is received by the Company, (ii) the date on which the Fair Market Value of the Put Shares shall have been agreed to by the Unilever Stockholder and the Company or otherwise determined pursuant to Sections 8.9, 8.10 and 8.11, (iii) the date on which any consents or approvals of any Governmental Authority necessary for the purchase of the Put Securities shall have been obtained, or (iv) the date on which the Contingent Payment shall have been determined pursuant to Section 3 of Exhibit 9, if applicable, or (b) the last day of the Refinancing Period (such date, the “Put Closing Date”). On the Put Closing Date, the Company shall be entitled to receive the representations and warranties from the Unilever Stockholder described in Section 8.7(b). At the Put Closing, (x) on a Put Closing Date prior to the Eighth Year and, subject to clause (y) below, on a Put Closing Date after the Eighth Year, (i) the Unilever Stockholder shall deliver to the Company, (A) with respect to Put Shares, a certificate or certificates (properly endorsed or accompanied by stock powers or similar   54 -------------------------------------------------------------------------------- appropriate documentation of authority to transfer) evidencing the number of Put Shares then to be purchased by the Company, and (B) with respect to Put Notes, the original of the Note and instruments of transfer complying with the Note Indenture evidencing the amount of the Note to be repurchased by the Company, in exchange for (ii) payment of the Put Price for such Put Securities or Partially Put Securities to the Unilever Stockholder, including any accrued interest and adjustments pursuant to Section 8.2(b), by wire transfer of immediately available funds, and (y) on a Put Closing Date after the Eighth Year where the conditions set forth in Sections 8.4(a)(ii) shall not have been satisfied (an “Eighth Year Put Closing Date”), the Unilever Stockholder shall deliver to the Company a certificate or certificates (properly endorsed or accompanied by stock powers or similar appropriate documentation of authority to transfer) evidencing all the Unilever Shares, in exchange for payment of the Share Price for such Unilever Shares to the Unilever Stockholder, including any accrued interest and adjustments pursuant to Section 8.2(b), by delivery of the Exit Note; provided, however, that the Unilever Stockholder may elect, by written notice given no later than five Business days prior to the Eighth Year Put Closing Date, to retain such Unilever Shares in lieu of the Exit Note. 8.4 Termination and Limitations of Put Rights. (a) Notwithstanding anything to the contrary in this or any other agreement, the right of the Unilever Stockholder to sell and the obligation of the Company to purchase the Put Securities to the Company pursuant to Section 8.1 (i) on a Put Closing Date prior to the Eighth Year, shall be subject to and conditional upon consummation by the Company of a Refinancing, and (ii) for cash on the Eighth Year Put Closing Date, shall be subject to and conditional upon (A) consummation by the Company of a Refinancing or an Eighth Year Action, and (B) such sale and purchase not violating, constituting a breach of, or causing an event of default under (or an event that, after notice or passage of time or both, would constitute such a violation, breach or event of default) the Financing Agreements. For the avoidance of doubt, the delivery of the Exit Note in accordance with Section 8.3 shall not be subject to any of the conditions set out in this Section 8.4. (b) The Company’s obligation to purchase Put Securities or any Partially Put Securities under Sections 8.1 and 8.3 shall be suspended so long as, and to the extent that, immediately after giving effect to such purchase, the Company would violate any provision of the DGCL; provided, however, that such obligation shall revive immediately after the condition referred to in this subsection (b) no longer exists. The Company shall (i) take such steps in accordance with the DGCL, including Sections 160 and 172 thereof, as are necessary to determine whether any such purchase would violate any provision of the DGCL, including instructing its independent auditors to prepare such calculations and financial reports as may be necessary for the Board to make such determination, and (ii) use its reasonable best efforts prior to the Seventh Year and best efforts after the Seventh Year to structure any Refinancing to avoid any such violation; provided, further, that the Company shall not be required to issue Common Stock or other equity securities or Common Stock Equivalents to any Person in connection with any Refinancing. (c) Following the receipt of a Put Notice, the Company shall (i) prior to the Seventh Year, use its reasonable best efforts to consummate a Refinancing (to be consummated on the applicable Put Closing Date), including providing all information concerning itself (and   55 -------------------------------------------------------------------------------- confirmation of the accuracy of such information) reasonably required in connection therewith, and (ii) after the Seventh Year, use its best efforts to consummate such a Refinancing and to take Eighth Year Actions in accordance with Section 8.13. If after receiving a Put Notice at any time prior to the Eighth Year and after having used such efforts, the Company shall not have consummated a Refinancing which will yield Net Proceeds of more than 50% of the Put Price by the 120th calendar day following receipt by the Company of the Initial Unilever Proposals (or the date by which the Unilever Stockholder is required to deliver the Initial Unilever Proposals pursuant to Section 8.9) (the “Refinancing Period”), the Initial Put Notice shall terminate and the right to exercise the Put Option shall be suspended for the period commencing on the last day of the Refinancing Period and ending after the earlier of the first anniversary of the date on which the Initial Put Notice was given or the Eighth Year, at which time the Unilever Stockholder shall have the right to give a new Put Notice; provided, however, that if the Refinancing Period would expire prior to the date on which Fair Market Value shall have been determined pursuant to Sections 8.9, 8.10 and 8.11, the Refinancing Period shall be extended until such date. (d) If the Company can arrange for a Refinancing which will yield Net Proceeds of more than 50% but less than 100% of the Put Price within the Refinancing Period, (i) the Unilever Stockholder shall designate, by written notice given to the Company (the “Partial Put Notice”) within five Business Days of receipt by the Unilever Stockholder of notice of such arrangements, the Partially Put Securities, including its election in respect of clauses (i) and (ii) of the definition of “Partially Put Securities,” (ii) the Company shall be required to purchase only the Partially Put Securities as so elected, (iii) the Initial Put Notice shall terminate and the right to exercise the Put Option shall be suspended with respect to the Put Securities other than the Partially Put Securities (the “Remaining Put Securities”) for the period commencing on the Put Closing Date on which such Partially Put Securities are purchased and ending on the earlier of the date falling 18 months after such Put Closing Date or the Eighth Year, at which time a new Put Notice shall be deemed to have been given in respect of all of the Remaining Put Securities, and the Company shall renew its efforts to arrange a Refinancing, and (iv) the provisions of this Section 8.4 shall apply to the Remaining Put Securities, and the Put Price in relation to the Remaining Put Securities shall be determined in accordance with Section 8.2. Notwithstanding the foregoing, if the Company consummates a Refinancing which will yield less than 100% of the Put Price following the exercise of a Put Option, (x) Unilever may elect, by written notice to the Company given on or prior to the applicable Put Closing Date, to fix the aggregate Share Price for the Remaining Unilever Shares as of such Put Closing Date, and (y) the Unilever Stockholder shall not be required to sell Put Shares pursuant to this subsection (d) to the extent that, as a result of such sale, the Unilever Stockholder’s Ownership Interest would be reduced below 10% without its consent; provided, however, that if the Partially Put Securities include Put Shares and Put Notes, the Company shall not be required to purchase such Shares and Notes in relative amounts other than as described in clause (ii) of the definition of “Partially Put Securities” herein. (e) Each giving or deemed giving of a Put Notice to the Company pursuant to subsection (c) or (d) of this Section 8.4 shall be deemed a separate exercise by the Unilever Stockholder of its Put Option and shall cause the provisions of Sections 8.1, 8.2, 8.3 and this Section 8.4 to apply, mutatis mutandi, to such exercise, as if such Put Notice was the Initial Put Notice given hereunder.   56 -------------------------------------------------------------------------------- (f) If the Company purchases less than all the Put Securities pursuant to this Section 8.4 or Section 8.13(a), the Company shall, in good faith, consider possible alternatives regarding the purchase of the Remaining Put Securities and, at the Unilever Stockholder’s reasonable request, meet in good faith with the Unilever Stockholder from time to time to discuss such alternatives; provided, however, that the Company shall not be required to, and in its sole discretion may elect not to, pursue any such alternatives, and no such meetings or discussions shall be binding in any respect. (g) On the maturity date of the Exit Note, the right of the Unilever Stockholder to exercise the Put Option pursuant to Section 8.1 with respect to Notes beneficially owned by any Unilever Group Member and, to the extent it relates to Put Notes, any outstanding Put Notice shall terminate. (h) Notwithstanding anything to the contrary contained herein, no Holdco Group Member shall be required to make any additional contribution or pay any assessment or other amount to the Company to enable the Company to perform its obligations under this Article VIII. 8.5 Call Right. (a) At any time after the eighth anniversary of the Closing Date, the Company shall have the right (the “Call Option”) exercisable by giving written notice to the Unilever Stockholder (the “Call Notice”) to purchase from the Unilever Stockholder, at a price equal to the Put Price, at least 50% of the Unilever Shares then beneficially owned by the Unilever Group Members (the “Call Shares”) and at least 50% of the aggregate Accreted Value of all the Notes then beneficially owned by the Unilever Group Members (the “Call Notes” and, together with the Call Shares, the “Call Securities”); provided, however, that no Call Notice shall be effective unless it is given during the Notice Period; provided, further, that the relative percentages of such Unilever Shares represented by such Call Shares and of such aggregate Accreted Value represented by such Call Notes (measuring the Call Notes on the basis of their Accreted Value), respectively, shall be as near to equal as possible. The Call Option may be exercised, in whole or in part, and from time to time more than once. Notwithstanding the foregoing, if the Company exercises its Call Option with respect to less than 100% of the Unilever Shares and Notes, in each case then beneficially owned by the Unilever Group Members, (x) the Unilever Stockholder may designate, by written notice to the Company given within five Business Days of receipt by the Unilever Stockholder of the Call Notice, whether the Call Securities (A) comprise the Call Shares and Call Notes specified in the Call Notice, or (B) comprise solely Call Shares with an aggregate Share Price, subject to clause (z) below, equal to the aggregate Put Price of the Call Shares and Call Notes specified in the Call Notice, (y) the Unilever Stockholder may elect, by written notice to the Company given on or prior to the applicable Call Closing Date, to fix the aggregate Share Price for the Remaining Unilever Shares as of such Call Closing Date, and (z) the Unilever Stockholder shall not be required to sell Call Shares pursuant to this Section 8.5 to the extent that, as a result of such sale, the Unilever Stockholder’s Ownership Interest would be reduced below 10% without its consent; provided, however, that if the Call Securities, as designated by the Unilever Stockholder, include Call Shares and Call Notes, the Company shall not be required to purchase such Shares and Notes in relative amounts other than as described in last proviso to the first sentence of this Section 8.5.   57 -------------------------------------------------------------------------------- (b) The Company may, in its sole discretion, elect to terminate a Call Notice and any obligation it may have to purchase Call Securities pursuant to this Agreement by written notice to the Unilever Stockholder and shall not be liable for failing to purchase Call Securities on or prior to the Call Closing Date, and, if the Company does not terminate a Call Notice but fails, for any reason, to consummate the Call Option on or prior to the Call Closing Date determined in accordance with Section 8.6, then such Call Notice will be deemed to have been terminated on such date; provided, however, that the Unilever Stockholder may elect, by written notice to the Company given no later than ten Business Days after the date on which the Applicable EBITDA shall have been determined pursuant to Sections 8.9 and 8.10, to fix the aggregate Share Price for the Remaining Unilever Shares, at an amount equal to the Fair Market Value of such Shares based upon a deemed Base Value of eight times the Applicable EBITDA, as of the Call Closing Date determined in accordance with Section 8.6. 8.6 Call Closing. Subject to Section 8.5(b), the closing of the purchase of the Call Securities pursuant to a Call Option shall take place at the offices of the Company on a date as the Company shall specify in the applicable Call Notice not more than (a) 90 calendar days after the later to occur of (i) the date the Call Notice is received by the Unilever Stockholder, (ii) the date on which the Fair Market Value shall have been agreed to by the Unilever Stockholder and the Company or otherwise determined pursuant to Sections 8.9, 8.10 and 8.11, (iii) the date on which any consents or approvals of governmental authorities necessary for the purchase of the Call Securities shall have been obtained, or (iv) the date on which the Contingent Payment Amount shall have been determined pursuant to Section 2 of Exhibit 9, if applicable, or (b) the last day of the Refinancing Period (such date, the “Call Closing Date”). On the Call Closing Date, the Company shall be entitled to receive the representations and warranties from the Unilever Stockholder described in Section 8.7(b). At the closing, the Unilever Stockholder shall deliver to the Company (x) with respect to Call Shares, a certificate or certificates (properly endorsed or accompanied by stock powers or similar appropriate documentation of authority to transfer) evidencing the number of Call Shares then to be purchased by the Company, and (y) with respect to Call Notes, the original of the Note and instruments of transfer complying with the Note Indenture evidencing the amount of the Note to be repurchased by the Company, in exchange for payment of the Put Price for the Call Securities subject to the Call Option to the Unilever Stockholder, including any accrued interest and adjustments pursuant to Section 8.2(b), by wire transfer of immediately available funds. 8.7 Purchase Terms. The purchase and sale of Subject Securities shall be on the following terms: (a) The Unilever Stockholder shall represent and warrant that assuming (i) that each instrument to be delivered pursuant to Section 8.3 or 8.6 to which the Company is a party is a valid and binding obligation of the Company, enforceable against it in accordance with its terms, (ii) that the Company is duly organized and validly existing under the laws of the State of Delaware and has the requisite corporate power and authority to execute each instrument to be delivered pursuant to Section 8.3 or 8.6 to which the Company is a party, (iii) that all actions required to be taken prior to the Put Closing or Call Closing by the Company under each instrument to be delivered pursuant to Section 8.3 or 8.6 to which the Company is a party or required by Applicable Law have, in each case, been duly taken prior to such Put Closing or Call Closing, (iv) that all actions (including the making of any filings) required to be taken by the   58 -------------------------------------------------------------------------------- Company under each instrument to be delivered pursuant to Section 8.3 or 8.6 to which the Company is a party or required by Applicable Law will, in each case, be duly taken following the Put Closing or Call Closing, and (v) that the Company Group has acted in good faith and does not have notice of any adverse claim with respect thereto, the instruments to be delivered by the Unilever Stockholder to the Company pursuant to Section 8.3 or 8.6 shall be valid and effective to transfer (x) good and valid title to the Subject Securities to the Company free and clear of any claims, security interests, liens, pledges, charges, escrows, options, proxies, rights of first refusal, preemptive or subscription rights, mortgages, hypothecations, prior assignments remaining in effect, title retention agreements, indentures, security agreements or any other encumbrances of any kind, and (y) all rights of any nature attaching to them including all rights to any dividends, interest or other distributions thereafter declared, paid or made after the purchase has been consummated; and (b) The Unilever Stockholder shall warrant in respect of itself and the other Unilever Group Members that: (i) it is the sole legal and beneficial owner of the Subject Securities; (ii) except for the Call Option, the Put Option and the restrictions contained or as referred to in Article VII, there is no option, right to acquire, mortgage, charge, pledge, lien or other form of security or encumbrance or equity on, over or affecting the Subject Securities or any of them and there is no agreement or commitment to give or create any of the foregoing; (iii) it has the requisite power and authority to sell the Subject Securities and do all other things it is required to do in connection with such purchase and sale under this Article VIII; (iv) the instruments of transfer executed pursuant to this Article VIII or Article VII, as the case may be, constitute binding obligations of the Unilever Stockholder in accordance with their terms, except as the same may be limited by applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent transfer or other similar laws of general applicability relating to or affecting creditors’ rights from time to time in effect and general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, regardless of whether in a proceeding in equity or at law; and (v) the performance of its obligations under this Article VIII, or Article VII, as the case may be, will not: (A) result in a breach of any provision of its constitutional documents, (B) result in a breach of or constitute a default under any instrument to which it is a party or by which it is bound, (C) result in a breach of any order, judgment or decree of any court or governmental agency to which it is a party or by which it is bound, or (D) require the consent of its shareholders or any other Person, which consent has not been obtained. 8.8 Adjustment of Fair Market Value. Subject to compliance by the Company with Section 4.10 and 8.13(c), the Company or the Board shall adjust the Fair Market Value as may be necessary to equitably reflect (a) any stock split, stock dividend or similar recapitalization or reorganization of the Company that occurs during the Pre-Closing Period and   59 -------------------------------------------------------------------------------- results in a change in the number of issued and outstanding Shares in order to prevent any dilution or enlargement of Stockholders’ rights and obligations under this Article VIII in connection with the exercise of any Put Option or Call Option hereunder, and (b) the issuance of any Common Stock or Common Stock Equivalents that occurs during the Pre-Closing Period; provided, however, that no such adjustment shall be made for any such transaction effected without the Unilever Stockholder’s consent. 8.9 Determination of Fair Market Value. (a) If the Unilever Stockholder exercises its Put Option pursuant to Section 8.1 or the Company exercises its Call Option pursuant to Section 8.5 or in the case of an Approved Sale in accordance with Section 7.2, the Unilever Stockholder shall have twenty Business Days from the date of the Put Notice, in the case of an exercise of a Put Option, and thirty Business Days from the date of the Call Notice or Approved Sale Notice Date (as the case may be), in which to propose (i) a Base Value (such proposal, the “Initial Valuation Proposal”), which shall be accompanied by a report and analysis of the Unilever Stockholder’s financial advisor (the “Unilever Valuation Report”) supporting the Initial Valuation Proposal, prepared in accordance with the Valuation Principles, and (ii) the Applicable EBITDA (such proposal, the “Initial EBITDA Proposal” and, together with the Initial Valuation Proposal, the “Initial Unilever Proposals”). The Company shall, during such periods, provide access to the Unilever Stockholder, at the Unilever Stockholder’s cost, to the information described in Section 8.12 as is reasonably requested by the Unilever Stockholder in connection with the preparation of the Initial Unilever Proposals and the Unilever Valuation Report (which documentation shall be considered nonpublic information for purposes of Section 6.4). The Initial Unilever Proposals shall be in writing, shall be submitted to the Company within the periods referred to in the first sentence of this Section 8.9 and shall specify the facts and circumstances supporting the reasonableness and propriety of the Initial Valuation Proposal and the Initial EBITDA Proposal under the Valuation Principles and Exhibit 4, respectively. (b) Unless the Unilever Stockholder provides the Initial Unilever Proposals and the Unilever Valuation Report to the Company within the periods referred to in subsection (a) of this Section 8.9, the Base Value for the applicable Measurement Period shall be deemed to be equal to eight times the Applicable EBITDA, the Unilever Stockholder shall have irrevocably waived its rights pursuant to Section 8.11 (including its right to propose any other Base Value for such Measurement Period or to obtain any determination thereunder), and such Base Value shall be final and binding upon the Unilever Stockholder, each other Unilever Group Member and the Company for all purposes of this Agreement. (c) The Company and the Unilever Stockholder shall use their respective best efforts for 30 Business Days after the timely submission of the Initial Unilever Proposals or the expiration of the periods described in Section 8.9(a), as the case may be, to agree upon the Base Value and/or the Applicable EBITDA, as the case may be. Any dispute as to the Base Value that is not resolved by the Company and the Unilever Stockholder during such 30-Business Day period shall be submitted to their respective external financial advisors (the “Financial Advisors”) in accordance with Section 8.11(a), and any dispute as to the Applicable EBITDA that is not resolved by the Company and the Unilever Stockholder during such 30-Business Day period shall be submitted to the Accounting Expert in accordance with Section 8.10(a).   60 -------------------------------------------------------------------------------- 8.10 Expert Determination of Applicable EBITDA. (a) If the Company and the Unilever Stockholder shall not have agreed on (i) the Applicable EBITDA within the periods described in Section 8.9(c) and/or (ii) the Cash Flows for any one or more Fiscal Years within the periods described in Section 1 of Exhibit 9, determination of such Applicable EBITDA and/or Cash Flows, as the case may be, shall be referred to the Accounting Expert. The Accounting Expert shall be requested to make its determination, if practicable, within a period of 30 Business Days after its appointment. (b) Each of the Company and the Unilever Stockholder shall submit to the Accounting Expert a proposed Applicable EBITDA and/or Cash Flows, as applicable, and the basis for its computation thereof in accordance with Exhibit 4 or Exhibit 9, respectively. A copy of any submission or information supplied by the Company or the Unilever Stockholder to the Accounting Expert shall be supplied contemporaneously to the other party. The Accounting Expert shall determine (in its opinion and having requested such further information from the Company and the Unilever Stockholder as it shall require) the Applicable EBITDA prepared in accordance with Exhibit 4 and/or the amount of such Cash Flows prepared in accordance with Exhibit 9, as applicable. The Accounting Expert shall certify to the Company and the Unilever Stockholder (i) that it has considered the respective submissions of the Company and the Unilever Stockholder and has determined the Applicable EBITDA in accordance with Exhibit 4 and/or the amount of such Cash Flows in accordance with Exhibit 9, as applicable, and (ii) the amount of such Applicable EBITDA (the “Certified Applicable EBITDA”) and/or such Cash Flows (the “Certified Cash Flows”). The Certified Applicable EBITDA shall be deemed to be the Applicable EBITDA for the purposes of this Article VIII, and the Certified Cash Flows shall be deemed to be the Cash Flows for the applicable Fiscal Year for the purposes of Exhibit 9. The Accounting Expert shall act as expert and not as arbitrator, and its determination shall be final and binding upon the Company, the Holdco Stockholder and the Unilever Stockholder in the absence of manifest error. 8.11 Expert Determination of Base Value. (a) Subject to Section 8.9(b), if the Company and the Unilever Stockholder shall not have agreed on the Base Value within the periods described in Section 8.9(c), then the Financial Advisors shall use their best efforts for an additional 30 Business Days to agree upon the Base Value. Any Base Value mutually agreed upon by the Financial Advisors within such additional 30-Business Day period shall be final and binding upon the Company and the Unilever Stockholder and shall be deemed to be the Base Value for the applicable Measurement Period for the purposes of this Article VIII. Any dispute as to the Base Value that is not resolved by the Financial Advisors during such additional 30-Business Day period shall be submitted to the Financial Expert in accordance with subsection (b) of this Section 8.11. (b) If the Financial Advisors shall not have agreed on the Base Value within the additional 30-Business Day period described in subsection (a) of this Section 8.11, determination of the Base Value shall be referred to an independent investment banking firm mutually agreed upon by the Financial Advisors (the “Financial Expert” and, together with the Accounting Expert, the “Experts”). The Financial Expert shall be requested to make its determination, if practicable, within a period of 30-Business Days after its appointment.   61 -------------------------------------------------------------------------------- (c) Each of the Company and the Unilever Stockholder shall submit to the Financial Expert a proposed Base Value and the reasons for such value. A copy of any submission or information supplied by the Company or the Unilever Stockholder to the Financial Expert shall be supplied contemporaneously to the other party. The Financial Expert shall determine (in its opinion and having requested such further information from the Company and the Unilever Stockholder as it shall require) the Base Value in accordance with the Valuation Principles. (d) The Financial Expert shall certify to the Company and the Unilever Stockholder (i) that it has considered the respective submissions of the Company and the Unilever Stockholder and has determined the Base Value as of the last day of the applicable Measurement Period according to the principles of this Section 8.11, and (ii) the amount of such Base Value (the “Certified Base Value”). The greater of (x) the Certified Base Value, and (y) eight times the Certified Applicable EBITDA shall be deemed to be the Base Value for the applicable Measurement Period for the purposes of this Article VIII. The Financial Expert shall act as expert and not as arbitrator, and its determination shall be final and binding upon the Company, the Holdco Stockholder and the Unilever Stockholder in the absence of manifest error. (e) The costs of the Experts’ determinations shall be included in the Repurchase Expenses. 8.12 Information. (a) During the period commencing no later than 10 Business Days following the exercise of the Put Option or the Call Option or the Approved Sale Notice Date, as the case may be, and ending on the date of submission of the Initial Unilever Proposals, upon the Unilever Stockholder’s request, the Company will provide the Unilever Stockholder (and its professional advisers, subject to customary confidentiality undertakings) with such historic and prospective information existing on the date on which the Put Option or Call Option is exercised, or the Approved Sale Notice Date (as the case may be) and reasonably requested by the Unilever Stockholder for the purposes of arriving at its valuation, including, inter alia, historical and forecast financial information for the Company and information reasonably required to determine Applicable EBITDA in accordance with Exhibit 4, in each case in the possession of the Company on the date on which the Put Option or Call Option is exercised, or the Approved Sale Notice Date (as the case may be). This same information shall be supplied, if applicable, to the Experts, subject to customary confidentiality undertakings. (b) The information supplied by the Company to the Experts shall be prepared in good faith but otherwise without liability on the part of the Company and any Holdco Group Member or any other party involved in the supply of information. 8.13 Failure by the Company to Acquire Shares. (a) If the closing of the sale and purchase of the Put Shares or the Call Shares, as the case may be, is not consummated on the date described in Section 8.3(a)(i), (a)(ii), (a)(iv) or (b) or Section 8.6(a)(i), (a)(ii), (a)(iv) or (b), as the case may be, by reason that necessary   62 -------------------------------------------------------------------------------- consents and approvals of Governmental Authorities for such sale and purchase have not been obtained (despite all reasonable best efforts to procure such approvals having been used by the Company and the Unilever Stockholder), then: (i) the closing of the sale and purchase of such Put Shares or Call Shares under Section 8.3 or 8.6, respectively, shall be conditional upon obtaining such consents and approvals; and (ii) (A) prior to the Eighth Year, the Company and the Unilever Stockholder shall continue to use all reasonable best efforts to obtain the consents and approvals of any Governmental Authority necessary for the purchase of the Subject Securities as referred to in Section 8.3(a)(iii) and 8.6(a)(iii), including taking such measures as shall be reasonably required, having regard to the interests of the Business, to obtain such consents and approvals, and (B) from and after the Eighth Year, the Company shall use its best efforts to structure the purchase by it of the Put Shares or Call Shares so as to facilitate, or avoid the necessity of, obtaining such consents and approvals, and the Unilever Stockholder will cooperate with and assist the Company in such efforts. (b) If, by the Eighth Year, the Company shall have failed to purchase the Put Securities or the Call Securities for cash pursuant to Section 8.4(a)(ii) or otherwise pursuant to Section 7.3(g) or (h): (i) if the Share Price has not previously been fixed pursuant to Section 8.4(d), 8.5(a) or 8.5(b), the aggregate Share Price as determined in accordance with Sections 8.9, 8.10 and 8.11 for the Remaining Unilever Shares (such determination to be made on the next applicable exercise of the Put Option or Call Option) shall be fixed as of the Eighth Year; and (ii) the Unilever Stockholder’s sole and exclusive remedies (other than remedies for breach of the provisions of this Agreement) shall be, subject in each case to Sections 8.13(c) and 10.17, and without derogation of the Unilever Stockholder’s rights under the Exit Note and, subject to Section 10.16(b), the Note, to elect to: (A) negotiate a sale of any or all of the Unilever Shares and the Notes then beneficially owned by any Unilever Group Member to a third party (a “Unilever Sale”); provided, that (1) the Holdco Stockholder shall have the right to approve any purchaser of such Shares which approval shall not be unreasonably withheld or delayed, and (2) any sale of such Shares shall be made free of the restrictions under Article VII; provided, further, that in connection with any proposed Unilever Sale the Holdco Stockholder shall review, at the Unilever Stockholder’s reasonable request, a list of proposed purchasers and designate which such purchasers it approves and shall otherwise cooperate in all reasonable respects in connection with such Unilever Sale, including by preparing preliminary and final offering memoranda, assisting the Unilever Stockholder in the preparation of a confidential information package for delivery to approved potential purchasers, participating in investors’ meetings, conferences and telephone calls, providing information and projections prepared by the Company or its advisors, and allowing reasonable access to such purchasers to conduct due diligence, subject to customary confidentiality undertakings;   63 -------------------------------------------------------------------------------- (B) cause the Company to arrange for the private placement and sale of Shares (including any or all of the Unilever Shares) or other securities of the Company (a “Private Placement”); provided, that (1) the Company shall consult with the Unilever Stockholder as to the most appropriate method of sale, having regard to the mutual interests of the Company and the Holdco Stockholders in effecting an efficient and orderly sale, but shall otherwise be free to conduct the sale as it sees fit, (2) the Holdco Stockholder shall have the right to approve any purchaser of such Shares or securities, which approval shall not be unreasonably withheld or delayed, and (3) any sale of such Shares shall be made free of the restrictions under Article VII; and/or (C) cause the Company to arrange for the sale of part or all of (1) the Company’s Japanese business, divisions, assets or Subsidiaries (including through the public sale of securities) (the “Japan Business”), and/or (2) Polymer or its assets or Subsidiaries (the “Polymer Business”), and/or (3) if the Polymer Business is sold (in whole or in part) prior to the eighth anniversary of the Closing Date, such other business or division, or businesses or divisions, of the Company, or their assets or Subsidiaries, the identity of which shall be determined by the Company in accordance with Section 8.13(e) (each a “Subsidiary Sale” and, together with a Unilever Sale and a Private Placement, the “Eighth Year Actions”); in each case as shall be necessary to yield Net Proceeds sufficient to pay the Share Price. Subject to subsection (d) of this Section 8.13, upon the Unilever Stockholder making any such election(s) (which shall be communicated to the Company by written notice), the Company shall use its best efforts to consummate such Eighth Year Actions no later than the maturity date of the Exit Note and shall, and shall be entitled to, take all reasonable steps on its part as are necessary to carry out such Eighth Year Actions, including structuring such Eighth Year Actions to avoid any violation of the DGCL. It is expressly agreed and understood that any and all other remedies (other than remedies described in this Section 8.13 and remedies for breach of the provisions of this Agreement), whether arising by this Agreement, any other agreement or operation of law, and whether at law or in equity (other than the Unilever Stockholder’s remedy of enforcing the Exit Note and, subject to subsection (d) of this Section 8.13 and Section 10.16(b), the Note), are hereby expressly waived by Unilever and each other Unilever Stockholder. (c) Subject to subsection (d) of this Section 8.13, Net Proceeds of Eighth Year Actions received before the Eighth Year Put Closing Date shall be applied to the Put Price, and such Net Proceeds received after the Eighth Year Put Closing Date shall be applied to pay or prepay amounts owing under the Exit Note. For the avoidance of doubt, Net Proceeds of any sales of Unilever Shares pursuant to Unilever Sales and/or Private Placements shall belong to the Unilever Stockholder. (d) Each of the Stockholders hereby agrees, consents to and acknowledges that the undertaking and agreements of the Company in this Section 8.13 (other than undertakings and agreements relating to sales of Unilever Shares), including without limitation, any Additional Divestiture, are subject to the provisions of the Financing Agreements, including restrictions on the sale of assets, restrictions on liens, sale of equity, repurchase of Shares and the requirement to apply the proceeds of certain sales of capital stock and assets to the reduction of Indebtedness, and the rights, remedies and powers of the lenders or noteholders (other than any Unilever Group Member) and holders of collateral thereunder, and to the exercise thereof by   64 -------------------------------------------------------------------------------- such lenders, noteholders and holders with respect to the Company and its Subsidiaries and that no right or remedy provided in this Section 8.13 or any provision of this Section 8.13 (other than undertakings and agreements relating to sales of Unilever Shares) shall not be exercised or enforced unless and until such exercise or enforcement shall not conflict with, violate or result in a breach of any of the Financing Agreements. (e) After May 3, 2009 and prior to May 3, 2010, the Company, through a committee of the Company’s Board of Directors comprised solely of Independent Directors (the “Special Comittee”), shall identify (the “Additional Divestiture Identification”) one or more businesses or divisions of the Company or their assets or Subsidiaries (other than the Japan Business and the Polymer Business), which, if sold, would yield Net Proceeds sufficient to enable the Company to pay the Put Price for the Put Securities in connection with a previously exercised Put Option, taking into account the anticipated Net Proceeds that can reasonably be expected from the disposal of the Japan Business (“Additional Divestiture”). The Special Committee shall engage an investment banking firm of national standing to assist with such Additional Divestiture Identification and shall undertake its evaluation and make its recommendations in good faith, taking into account such factors as it shall deem appropriate in its business judgment. Without prejudice to any liability of the Company pursuant to this Agreement, no director of the Company shall have any liability to the Unilever Stockholder or any Relevant Transferee for any acts or omissions taken or failed to be taken in connection with or related to an Additional Divestiture or the Additional Divestiture Identification. 8.14 Priority of Put and Call Rights. Following the delivery of a Call Notice by the Company, the Unilever Stockholder’s right to exercise the Put Option or to effect a Unilever Sale, including an Early Unilever Sale, with respect to the Unilever Shares and Notes then beneficially owned by the Unilever Group Members shall be suspended from the end of the Notice Period during which such Call Notice was delivered until after the earlier of the date on which such Call Notice is terminated pursuant to Section 8.5(b) or the date immediately following the delivery by the Company pursuant to Section 6.1(b) or (c) of financial statements for a period that includes the applicable Call Closing Date, as the case may be. Following the delivery of a Put Notice, a First Offer Notice or a ROFR Notice by the Unilever Stockholder, the Company’s right to exercise the Call Option with respect to the Put Securities subject to the Put Option or the Noticed Shares subject to the First Offer Notice or ROFR Notice, as the case may be, shall be suspended until (1) in the case of a Put Notice, after the earlier of the date on which such Put Notice is terminated pursuant to Section 8.4(c) or the date immediately following the delivery by the Company pursuant to Section 6.1(b) or (c) of financial statements for a period that includes the applicable Put Closing Date, as the case may be, or (2) in the case of a First Offer Notice or ROFR Notice, the termination of the Early Unilever Sale Period. 8.15 Exit Planning. After the fourth, but prior to the fifth, anniversary of the Closing Date, at the Unilever Stockholder’s reasonable request, the Company and the Unilever Stockholder shall meet in good faith from time to time to discuss possible exit strategies with respect to the sale or repurchase of the Unilever Shares and the Notes then beneficially owned by the Unilever Group Members; provided, however, that no such meetings or discussions shall be binding in any respect.   65 -------------------------------------------------------------------------------- 8.16 Agency Adjustment. If (a) upon the expiration of the Agency Agreement, the parties thereto enter into a new agreement with a term (the “Agency Term”) of at least two years (a “New Agency Agreement”), the Agency Adjustment shall be subtracted from the Net Debt Amount applicable to the Share Price payable on the first Put Closing Date or Call Closing Date, as the case may be, following the date of the New Agency Agreement. The Agency Adjustment shall not be taken into account more than once. For the avoidance of doubt, the Company’s liability or obligation to subtract the Agency Adjustment from the Net Debt Amount, if any, shall not be deemed to be Indebtedness. 8.17 Contingent Payments. The Unilever Stockholder shall have the right to receive the Contingent Payments, if any, on the terms and subject to the conditions set forth on Exhibit 9 in recognition of its period of ownership of the Class B Shares. ARTICLE IX TERMINATION 9.1 Termination. This Agreement shall terminate immediately (except for those provisions expressly stated to continue for a longer period of time and without prejudice to any rights or liabilities arising under this Agreement prior to such termination to which Sections 10.11, 10.12 and 10.17 will continue to apply): (a) in respect of Unilever and the Unilever Group, if Unilever (together with the other Unilever Group Members) ceases to have any interest in any Class B Shares, any Notes, and the Exit Note, and (b) in respect of the rights and obligations of any Stockholder, if it and all members of its Group cease to hold any Shares and the Person to whom Shares have been Transferred in accordance with Article VII by that Stockholder and the members of its Group has entered into an Assumption Agreement assuming the role of the Unilever Stockholder under this Agreement (in the case of a transfer of the Unilever Shares) or assuming the role of the Holdco Stockholder (in the case of a transfer of the Holdco Shares). 9.2 Prior Breach. Notwithstanding the foregoing, or any other provision of this Agreement, nothing herein shall relieve the Company or any Stockholder from liability for any prior breach of any provision of this Agreement or impair the right of any party to compel specific performance by another party of its obligations under this Agreement. ARTICLE X GENERAL PROVISIONS 10.1 No Offset. Unless otherwise expressly provided under this Agreement, whenever the Company is to pay any sum to any Stockholder, any amounts that Stockholder owes to the Company shall not be deducted from that sum before payment. 10.2 Notices. Except as expressly set forth to the contrary in this Agreement, all notices, requests and consents provided for or permitted to be given under this Agreement   66 -------------------------------------------------------------------------------- must be in writing and must be given either (a) personally by a reputable courier service that requires a signature upon delivery, (b) by Federal Express or another nationally recognized overnight courier, fees prepaid, (c) by registered or certified first class mail, postage prepaid, return receipt requested, or (d) by facsimile or email transmission with receipt confirmation. Any such notice, request or consent shall be deemed to have been given: (i) if given by courier, as of the date of personal or overnight delivery, (ii) if given by mail, as of the fifth calendar day after its deposit into the custody of the postal service as evidenced by the date-stamped receipt issued upon such deposit, and (iii) if given by facsimile or email, as of the date and time electronically transmitted. All notices, requests and consents to be given to a Stockholder must be sent to or made at the address or facsimile number or email address for that Stockholder set forth on Schedule A, or such other address as that Stockholder may specify by written notice to the other Stockholders. Any notice, request, or consent to the Company or the Board must be given to the Board at the following address or facsimile number or email address and to each other Stockholder; provided, however, that notices given pursuant to Section 4.8 shall not be effective if given solely by email: JohnsonDiversey Holdings, Inc. 8310 16th Street Sturtevant, WI 53177-0902 USA Attention: General Counsel Facsimile: 262.631.4021 Email: [email protected] with copies to: Jones Day 77 West Wacker Drive Chicago, IL 60601-1692 USA Attention: Elizabeth C. Kitslaar, Esq. Facsimile: 312.782.8585 Email: [email protected] Whenever any notice is required to be given by law, the Charter Documents or this Agreement, a written waiver thereof, signed by the Person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. 10.3 Entire Agreement. This Agreement, including the Exhibits and Schedules hereto, the Confidentiality Agreements and the other Transaction Documents constitute the entire agreement of the Stockholders and their Affiliates relating to the subject matter hereof and supersede all prior contracts or agreements with respect to the Company, whether oral or written. 10.4 Effect of Waiver or Consent. A waiver or consent, express or implied, to or of any breach or default by any Person in the performance by that Person of its obligations under this Agreement is not a consent or waiver to or of any other breach or default in the performance by that Person of the same or any other obligations of that Person under this   67 -------------------------------------------------------------------------------- Agreement. Failure on the part of a Person to complain of any act of any other Person or to declare any other Person in default in the performance of such other Person’s obligations under this Agreement, irrespective of how long that failure continues, does not constitute a waiver by that Person of its rights with respect to that default until the applicable statute–of–limitations period has run. 10.5 Amendment, Modification or Waiver. Except as otherwise expressly provided herein, this Agreement may be amended, modified or waived from time to time only by a written instrument signed, in the case of an amendment, by the Company and all of the Stockholders, or in the case of a waiver, by the party against whom the waiver is to be effective; provided that the Board may amend and modify Schedule A to the extent necessary to reflect the Transfer of Shares and Exhibit B to the extent necessary to reflect the adoption of a New Material Benefit Plan, in each case as permitted in accordance with this Agreement. 10.6 Binding Effect. Subject to the restrictions on Transfers set forth in this Agreement, this Agreement is binding on and shall inure to the benefit of the Stockholders and their respective permitted successors, assigns, heirs and legal representatives. Neither Stockholder nor any member of its Group may assign any of its rights or obligations under this Agreement in whole or in part otherwise than pursuant to a Transfer of Shares in accordance with the terms of this Agreement. Notwithstanding anything in the foregoing to the contrary, each party hereto may assign as collateral security all of its rights under this Agreement to any secured creditor of such assigning party, and each party hereto hereby acknowledges and consents to such assignment. 10.7 Specific Performance. The parties agree that any breach by any of them of any provision of this Agreement would irreparably injure the Company and the other Stockholders, as the case may be, and that money damages would be an inadequate remedy therefor. Accordingly, the parties agree that the other parties will be entitled to one or more injunctions enjoining any such breach and requiring specific performance of this Agreement and consent to the entry thereof, in addition to any other remedy to which such other parties are entitled at law or in equity. 10.8 Governing Law; Severability. All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law, rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. If any provision of this Agreement or the application thereof to any Person or circumstance is held invalid or unenforceable to any extent, the remainder of this Agreement and the application of that provision to other Persons or circumstances is not affected thereby and that provision shall be enforced to the greatest extent permitted by law. 10.9 Notice to Stockholders of Provisions. By executing this Agreement or an Assumption Agreement, each Stockholder acknowledges that it has actual notice of (a) all of the provisions hereof (including, without limitation, the restrictions on transfer set forth in Article VII) and (b) all of the provisions of the Charter Documents.   68 -------------------------------------------------------------------------------- 10.10 Counterparts. This Agreement may be executed in multiple counterparts with the same effect as if all signing parties had signed the same document. All counterparts shall be construed together and constitute the same instrument. 10.11 Consent to Jurisdiction and Service of Process. Each party agrees that it will not initiate any suit, action or proceeding arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than (i) the Delaware Chancery Court or (ii) if the Delaware Chancery Court does not have jurisdiction with respect to such action, a federal court sitting in the State of Delaware or a Delaware state court. Each party irrevocably and unconditionally submits to the exclusive jurisdiction of any state or federal court sitting in the State of Delaware over any such suit, action or proceeding and agrees that it will not attempt to deny or defeat personal jurisdiction by motion or other request for leave from any such court. Each party hereby agrees that service of any process, summons, notice or document by registered mail addressed to such party at its address set forth on Schedule A or in Section 10.2, as the case may be, shall be effective service of process for any suit, action or proceeding brought in any such court. Unilever Stockholder also appoints and agrees to maintain The Corporation Trust Company, 1209 Orange Street, Corporation Trust Center, Wilmington, Delaware 19801 as its agent in the State of Delaware for service of process in connection with any dispute or proceeding arising out of this Agreement. Each party irrevocably and unconditionally waives any objection to the laying of venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action, proceeding has been brought in an inconvenient forum. Each party agrees that a final judgment in any such suit, action or proceeding brought in any such court shall be conclusive and binding upon such party and may be enforced in any other courts to whose jurisdiction such party is or may be subject, by suit upon judgment, including, with respect to Unilever, the Dutch and English courts, and, with respect to Holdco, state or federal courts in the State of Wisconsin. 10.12 Waiver of Jury Trial. EACH OF THE STOCKHOLDERS IRREVOCABLY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THE STOCKHOLDERS RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING ESTABLISHED. THE STOCKHOLDERS ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF ANY OF THE OTHER PARTIES. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE STOCKHOLDERS ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. THE STOCKHOLDERS FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS OR HIS, AS THE CASE MAY BE, LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS OR HIS, AS THE CASE MAY BE, JURY TRIAL RIGHTS FOLLOWING   69 -------------------------------------------------------------------------------- CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTION COMPLETED HEREBY. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 10.13 Parties in Interest. Nothing in this Agreement shall confer any rights or remedies under or by reason of this Agreement on any Persons other than the Stockholders and their respective permitted successors and assigns, including the Relevant Transferee to whom the Unilever Stockholder has transferred Class B Shares pursuant to Section 7.3(f), nor shall anything in this Agreement relieve or discharge the obligation or liability of any other Person to any party to this Agreement, nor shall any provision give any other Person any right of subrogation or action over or against any party to this Agreement. If Class B Shares are transferred to any Relevant Transferee, such Relevant Transferee shall execute an Assumption Agreement and shall be considered to be a Permitted Transferee of the Unilever Stockholder and each Stockholder agrees that any such Relevant Transferee shall have all rights which the Unilever Stockholder has under this Agreement and the Certificate and the Bylaws and that for purposes of this Agreement with effect from the time such transfer is effected references to Unilever, Unilever NV or Unilever PLC (including references to Unilever, Unilever NV or Unilever PLC in other defined terms) shall be replaced by references to the ultimate controller of the Relevant Transferee at the time the Class B Shares are transferred to the Relevant Transferee, and the Relevant Transferee shall be considered to be a Stockholder for the purposes of this Agreement. For the avoidance of doubt, this Agreement will not terminate pursuant to Section 9.1(a) and the restrictions in Section 7.1 shall not terminate as described in Section 7.5, in each case, as a result of such transfer. Following such transfer, the Relevant Transferee shall be considered to be the “Stockholder that nominated” any director who was nominated by any Unilever Group Member for the purposes of Section 4.4(c). Notwithstanding the foregoing, following an Early Unilever Sale, the provisions of Section 7.3(f) of this Agreement shall not apply to the Relevant Transferee as if such Revelant Transferee was the Unilever Stockholder. 10.14 Fees and Expenses. Each party hereto shall pay all of its own fees and expenses (including fees and expenses of attorneys, accountants, investment bankers or other representatives and consultants) in connection with this Agreement and the consummation of the transactions contemplated hereby, except as otherwise specified herein or in another Transaction Document. 10.15 No Partnership. Nothing in this Agreement and no action taken by the parties under this Agreement shall constitute a partnership, association or other cooperative entity between any of the parties or constitute any party the agent of any other party, including the Company, for any purpose.   70 -------------------------------------------------------------------------------- 10.16 Supremacy. (a) If any of the provisions of this Agreement conflict with any of the provisions of the Charter Documents, the provisions of this Agreement shall prevail as between the Stockholders. The Stockholders shall: (i) exercise all voting and other rights and powers available to them to give effect to the provisions of this Agreement; and (ii) if necessary, and subject to Applicable Law, ensure that any required amendment is made to the Charter Documents of the Company to give effect to the provisions of this Agreement. (b) If any of the provisions of the Note or the Note Indenture conflict or are otherwise inconsistent with any of the provisions of Article VIII of this Agreement or are in derogation of any party’s rights under Article VIII of this Agreement (such provisions of the Note or the Note Indenture, as the case may be, the “Conflicting Provisions”), the provisions of this Agreement shall prevail as between the Stockholders and their Affiliates with respect to Notes held by such Stockholders and such Affiliates, and each of the Stockholders hereby waives on its own behalf and on behalf of each of its Affiliates that own any Notes from time to time, and, to the extent necessary, shall cause such Affiliates to waive, any rights they may have, or any breaches or other events of default under, any such Conflicting Provisions. For the avoidance of doubt, the rights and obligations under this Agreement are personal to the Stockholders and the Company, and this Agreement, including this subsection (b), shall not apply to any third party purchaser of the Note or any portion thereof. 10.17 Exit Note. So long as the Exit Note is outstanding and held by a Unilever Group Member of which Unilever has Unilever Required Control, (a) the Company shall not effect a Veto Matter without the prior written consent of the holder of the Exit Note, and such holder shall have all the rights given to Stockholders (including all rights granted in favor of the Unilever Stockholder under this Agreement notwithstanding the fact that the Unilever Stockholder no longer holds any Shares), and shall be subject to all obligations to which Stockholders are subject, in each case pursuant to Article VI, and (b) the Company shall not issue any Shares, shall not change its capital structure (including the rights and preferences of the Shares) as in existence on the Eighth Year Put Closing Date, shall maintain all Class B Shares purchased by it in exchange for the Exit Note pursuant to Article VIII in its treasury and shall comply with such provisions of Article IV as shall be necessary to give effect to the rights of the Unilever Stockholder to continued Board representation in accordance with the Exit Note. If and to the extent that such Class B Shares are reissued to the Unilever Stockholder, its rights and obligations shall be as set forth in the Certificate, the Bylaws and this Agreement (other than with respect to any Eighth Year Actions) as in effect on the date the Exit Note was issued, and the Put Price shall be deemed due and payable in full at the time of such reissuance; provided, that the Unilever Stockholder hereby agrees, consents to and acknowledges that the payment by the Company of such Put Price shall not be made until and unless permitted by the provisions of the Financing Agreements and the rights, remedies and powers of the lenders or noteholders (other than any Unilever Group Member) and holders of collateral thereunder; provided, further, that if the Company does not pay such amount at such time but for the provision of the immediately preceding proviso, interest shall accrue on such amount at the Applicable Rate from such time until the date of payment.   71 -------------------------------------------------------------------------------- 10.18 Effectiveness of this Agreement. This Agreement shall not become effective and binding until, and shall be effective and binding immediately upon, the completion of the sale of the Polymer Business pursuant to the terms and conditions of the Asset and Equity Interest Purchase Agreement, dated as of May 1, 2006, by and among Johnson Polymer, LLC, JohnsonDiversey Holdings II B.V. and BASF Aktiengesellschaft in the form approved in writing by the Stockholders (including such amendments as may be made in accordance with that approval). If such sale is not completed in accordance with such form (as may be so amended in accordance with that approval), this Agreement shall not become effective and the provisions of the original Stockholders’ Agreement, dated as of May 3, 2002, by and among the Company and the Stockholders shall remain in full force and effect, save that the amendment set out in Exhibit 11 shall become effective and binding, and the original Stockholders’ Agreement, dated as of May 3, 2002, shall be so amended immediately upon the execution of this Agreement by the parties hereto. * * * * *   72 -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the Stockholders and the Company have executed this Amended and Restated Stockholders’ Agreement as of the date first set forth above.   JOHNSONDIVERSEY HOLDINGS, INC. By:   /s/ Joseph Smorada   Name: Joseph Smorada   Title: Vice President and Chief Financial Officer COMMERCIAL MARKETS HOLDCO, INC. By:   /s/ Joseph Smorada   Name: Joseph Smorada   Title: Vice President MARGA B.V. By:   /s/ Rudy Markham   Name:   Title: -------------------------------------------------------------------------------- EXHIBIT 4 Definition of EBITDA “EBITDA” means, with reference to any Measurement Period, (a) Consolidated Net Income plus, without duplication, to the extent deducted from revenues in determining such Consolidated Net Income, (b) (i) Consolidated Interest Expense, (ii) expense for taxes paid or accrued, or for which a provision is made, (iii) depreciation, (iv) amortization, (v) extraordinary losses, and (vi) capital losses, including losses arising from revaluations, minus, without duplication, to the extent included in Consolidated Net Income, (c) (I) extraordinary gains, and (II) capital gains, including gains arising from revaluations, all calculated for the Company Group in United States dollars on a consolidated basis in accordance with GAAP. For the purposes of making the calculations described in this Exhibit 4, GAAP, including, without limitation, the application of GAAP with respect to accruals, provisions and reserves, pension expenses, the allocation of assets and liabilities used to determine the Net Periodic Pension Cost under Shared Pension Plans, accounting for stock option plans, recognition of income, capitalization of expenses, write-offs of inventory and bad debt reserves, shall be applied on a basis consistent with the Audited CMI Financial Statements for the fiscal year ending June 29, 2001, giving effect only to such changes to the Company’s accounting policies, principles and practices from and after such date as may be required by changes in GAAP or Applicable Law, and/or by the U.S. Securities and Exchange Commission. With regard to actuarial assumptions used for determining pension expense, the above requirement of consistency means that the actuarial assumptions should have the same degree of conservatism relative to typical actuarial assumptions under GAAP as those used for the fiscal year ending June 29, 2001. For the avoidance of doubt, each component of EBITDA shall be adjusted to eliminate any amounts attributable to or arising out of the Agency Agreement. EBITDA shall also be adjusted, without duplication, (a) to give effect to acquisitions and divestitures occurring during such Measurement Period on a pro forma basis as if such acquisitions and divestitures occurred on the first day of such Measurement Period, and (b) to eliminate the material positive and negative effect on EBITDA during such Measurement Period of (i) any Special Items, (ii) any Post Measurement Period Special Programs, (iii) the difference between any Non-Arm’s Length Terms and arm’s length terms, (iv) any Pension Plan Amendment Differential Costs, (v) any Contingent Payments paid during such Measurement Period, and (vi) any Company Indemnification Amounts. “Consolidated Interest Expense” means, with reference to any Measurement Period, the interest expense, net of interest income, of the Company Group set forth in the Company’s financial statements delivered pursuant to Section 6.1(b) and (c) for such Measurement Period and calculated on a consolidated basis for such period in accordance with GAAP, adjusted to eliminate any interest expense, net of interest income, attributable to or arising out of the Agency Agreement. “Consolidated Net Income” means, with reference to any Measurement Period, the net income (or loss) of the Company Group set forth in the Company’s financial statements delivered pursuant to Section 6.1(b) and (c) for such Measurement Period and calculated on a consolidated basis for such period in accordance with GAAP, adjusted to eliminate any net income attributable to or arising out of the Agency Agreement. -------------------------------------------------------------------------------- “Special Items” means (a) items that under GAAP would qualify as special, extraordinary or non-recurring one-time items and/or (b) any other special, extraordinary or non-recurring one-time items arising other than in the Ordinary Course of Business and of the type taken into account in the calculation of EBITDA (as defined in the Purchase Agreement) with respect to the DiverseyLever Business and/or the CMI Business (in each case as defined the Purchase Agreement) as set forth on Schedule F to the Purchase Agreement. “Post Measurement Period Special Programs” means expenditure programs of the Company or any Subsidiary of the Company (other than expenditure programs approved by the Unilever Stockholder pursuant to Section 4.10 or Section II.A.2.b of Article Fourth of the Certificate or by a Unilever Director pursuant to Section 4.11) (a) which are not in the Ordinary Course of Business, (b) to the extent (but only to such extent) such Programs are initiated for the principal purpose of producing a material benefit to the Company Group for periods subsequent to such Measurement Period, (c) to the extent (but only to the extent) such Programs result in increases in expenses during such Measurement Period materially in excess of expenses for similar programs or expenditures during periods prior to such Measurement Period, (d) to the extent (but only to such extent) such Programs result in a negative impact on EBITDA for such Measurement Period and (e) if such Programs are disclosed in writing to a Unilever Director, are objected to by a Unilever Director following any such disclosure, either in writing or by a vote against such Program in connection with any vote taken by the Board on any such Program. “Non-Arm’s Length Terms” means the effect of terms that (a) are materially less favorable to the Company or a Company-Controlled Affiliate than those that could have been obtained in a transaction by the Company or such Company-Controlled Affiliate with a person that is an independent third party, and (b) are included in, or arise out of, non-arms length (as described in clause (a) above) Affiliate Transactions, other than Affiliate Transactions which (i) have been disclosed in writing to Unilever prior to the date of the Purchase Agreement or (ii) have been approved by the Unilever Stockholder or a Unilever Director. “Company Indemnification Amount” means any expense, accrual or provision made during the applicable Measurement Period (a) to the extent that such expense, accrual or provision decreases Applicable EBITDA for such Measurement Period, and (b) to the extent that, subject to the provisions of Article XI of the Purchase Agreement (including provisions relating to minimum and maximum indemnity amounts and time limitations on indemnification), such expense, accrual or provision would entitle a Unilever Indemnified Party to indemnification under Section 6.9(a)(ii) (relating to the Original CMI Business), 11.1(b)(i), 11.1(b)(ii), 11.1(b)(v), 11.1(b)(vi), or 11.1(o) through (v) of the Purchase Agreement. -------------------------------------------------------------------------------- EXHIBIT 7 Agreed Dividend Policy Years 1-3 after Closing: The Company will pay a quarterly dividend to all Stockholders of record (as of the dates set by the Board) of $460.00/Share. Years 4-6 after Closing: The Company will pay a quarterly dividend to all Stockholders of record (as of the dates set by the Board) of an amount not to exceed the lesser of (a) $950.00/Share or (b) a total quarterly dividend not to exceed 16% of the net income of CMI. The amount of dividend is to be approved by a majority vote of the Independent Directors and the Unilever Directors, voting together. This Agreed Dividend Policy is subject to compliance with the DGCL and the terms of the Financing Agreements. CMI and its Subsidiaries will be authorized to upstream to the Company the amount of cash required to pay the declared quarterly dividends. Holdco and the Company agree and acknowledge that 10.5% of all dividends received by Holdco pursuant to this Agreed Dividend Policy shall be allocated for the sole purpose of satisfying obligations to employees under the Management Plan Documents. -------------------------------------------------------------------------------- EXHIBIT 9 Contingent Payments 1. Calculation and Timing of Contingent Payments. Subject to Section 2 hereof, on the applicable Payment Date, the Company shall pay to the Unilever Stockholder an amount in cash (each, a “Contingent Payment”) determined as follows: a. on the Payment Date in 2007, the Contingent Payment (the “2007 Contingent Payment”) shall equal the lesser of (i) $100,000,000, or (ii) (A) 0.25, times (B) the 2006 Cumulative Differential; b. on the Payment Date in 2008, the Contingent Payment (the “2008 Contingent Payment”) shall equal the lesser of (i) (A) $100,000,000, minus (B) any 2007 Contingent Payment, or (ii) (A) 0.25, times (B) the 2007 Cumulative Differential; c. on the Payment Date in 2009, the Contingent Payment (the “2009 Contingent Payment”) shall equal the lesser of (i) (A) $100,000,000, minus (B) (1) any 2007 Contingent Payment, and (2) any 2008 Contingent Payment, or (ii) (A) 0.25, times (B) the 2008 Cumulative Differential; and d. on the Payment Date in 2010, the Contingent Payment shall equal the lesser of (i) (A) $100,000,000, minus (B) (1) any 2007 Contingent Payment, (2) any 2008 Contingent Payment, and (3) any 2009 Contingent Payment, or (ii) (A) 0.25, times (B) the 2009 Cumulative Differential. For the avoidance of doubt, the targets for Cash Flows giving rise to any Contingent Payments were determined expressly in accordance with the definitions set forth in this Exhibit 9. Any deviations from or incongruencies with Valuation Principles or customary corporation finance principles are intentional, as they ensure consistency with the scenarios upon which such targets were based. 2. Limitations on Contingent Payments. Notwithstanding anything to the contrary contained herein: a. The Company shall not pay, and the Unilever Stockholder shall have no right to receive, any Contingent Payment in respect of Cash Flows (or any portion thereof) for any Fiscal Year after the Fiscal Year in which the End Date occurs (such Contingent Payment, if any, the “Final Contingent Payment”), and after such Final Contingent Payment shall have been paid, the Unilever Stockholder shall have no further rights under this Exhibit 9. b. The Unilever Stockholder hereby agrees, consents to and acknowledges that the payment by the Company of the Contingent Payment Amount in this Exhibit 9 shall not be made until and unless permitted by the provisions of the Financing Agreements and the rights, remedies and powers of the lenders or noteholders (other than -------------------------------------------------------------------------------- any Unilever Group Member) and holders of collateral thereunder; provided, further, that such payment shall not be made until and unless the dividends declared in accordance with Section 4.10(a)(iv) of the Agreement, including the Agreed Dividend Policy, shall have been paid; provided, further, that if the Company does not pay the Contingent Payment Amount at any time it would otherwise be obligated to pay such amount but for the provisions of this subsection (b), interest shall accrue on such amount at the Applicable Rate from such time until the date of payment. 3. Determination of Cash Flows. The Cash Flows for each Fiscal Year included in a period described in Section 1 hereof shall be determined by the Company and shall be set forth in an Annual Statement of Cash Flows (an “Annual Statement”). Each Annual Statement shall be accompanied by a certificate from the Company to the effect that such Annual Statement was prepared in accordance with this Exhibit 9. A copy of each such Annual Statement and certificate shall be delivered to the Unilever Stockholder not later than 90 days after the end of the Fiscal Year to which such Annual Statement relates. If the Unilever Stockholder disagrees with the calculation of Cash Flows contained in an Annual Statement, the Unilever Stockholder may, within 15 Business Days after receipt of such Annual Statement, deliver a notice to the Company disagreeing with such calculation and setting forth the Unilever Stockholder’s calculation of such amount (a “Cash Flows Dispute Notice”). Any such Cash Flows Dispute Notice shall specify those items or amounts as to which the Unilever Stockholder disagrees (“Cash Flows Disputed Items”), and the Unilever Stockholder shall be deemed to have agreed with all items and amounts contained in the Annual Statement other than the Cash Flows Disputed Items. In connection with the Unilever Stockholder’s review of an Annual Statement, the Company, at the Unilever Stockholder’s expense, will provide the Unilever Stockholder with reasonable access at reasonable times to all books and records in the control of the Company relevant to such review. If a Cash Flows Dispute Notice shall be delivered in accordance with this Section 3, the parties shall, during the 15 Business Days following such delivery, use their reasonable best efforts to reach agreement on the Cash Flows Disputed Items in order to determine the amount of Cash Flows for the applicable Fiscal Year; provided, that such amount determined by the parties shall not be less than the amount shown on the Annual Statement nor more than the amount shown in the Cash Flows Dispute Notice. If the parties are not able to reach agreement as to the amount of Cash Flows for the applicable Fiscal Year during such additional 15-Business Day period, the determination of such amount shall be referred to the Accounting Expert in accordance with Sections 8.10 and 8.11(e) of the Agreement. 4. Definitions. Except as otherwise provided herein, terms used in this Exhibit 9 with initial capital letters that are not defined in this Exhibit 9 shall have the meanings given to them in the Stockholders’ Agreement. As used in this Exhibit 9, the following terms shall have the following meanings: “2006 Cumulative Differential” means (a) (i) the Cash Flows attributable to the days from and after the Closing Date through December 31, 2002 (the “Remaining 2002 Days”), minus (ii) (A) $22,500,000, times (B) (1) the number of Remaining 2002 Days, divided by (2) 365, plus (b) (i) the sum of the Cash Flows for the four consecutive Fiscal Years ending on or about December 31, 2006, minus (ii) $727,500,000; provided, however, that if the 2006 Cumulative Differential is a negative amount, it shall be deemed to be zero. -------------------------------------------------------------------------------- “2007 Cumulative Differential” means (a) the sum of the Cash Flows for the six consecutive Fiscal Years ending on or about December 31, 2007, minus (b) the 2006 Cumulative Differential, minus (c) $975,000,000; provided, however, that if the 2007 Cumulative Differential is a negative amount, it shall be deemed to be zero. “2008 Cumulative Differential” means (a) the sum of the Cash Flows for the seven consecutive Fiscal Years ending on or about December 31, 2008, minus (b) (i) the 2006 Cumulative Differential, and (ii) the 2007 Cumulative Differential, minus (c) $1,200,000,000; provided, however, that if the 2008 Cumulative Differential is a negative amount, it shall be deemed to be zero. “2009 Cumulative Differential” means (a) the sum of the Cash Flows for the eight consecutive Fiscal Years ending on or about December 31, 2009, minus (b) (i) the 2006 Cumulative Differential, (ii) the 2007 Cumulative Differential, and (iii) the 2008 Cumulative Differential, minus (c) $1,425,000,000; provided, however, that if the 2009 Cumulative Differential is a negative amount, it shall be deemed to be zero. “Capital Expenditures” means, with respect to any particular Fiscal Year, the aggregate of all expenditures by the Company Group for the acquisition or leasing (pursuant to a capital lease) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) that should be capitalized under GAAP on a consolidated balance sheet of the Company Group, but excluding the cash consideration paid for any acquisition or received from any divestiture, in each case of assets comprising all or part of an operating unit, division or product line of a business or all or a portion of the capital stock of a Person. “Cash Flows” means, with respect to any particular Fiscal Year, (a) EBITDA (as defined in the Agreement but calculated with respect to such Fiscal Year), less (b) to the extent added to Consolidated Net Income to calculate such EBITDA, Consolidated Interest Expense, including interest on the Note to the extent cash paid (for the avoidance of doubt, excluding non-cash interest) (as defined in the Agreement but calculated with respect to such Fiscal Year), less (c) to the extent added to Consolidated Net Income to calculate such EBITDA, expense for Taxes (as defined in the Purchase Agreement) paid during such Fiscal Year, less (d) total amounts expended for Capital Expenditures during such Fiscal Year, less (e) dividends paid or accrued to Stockholders during such Fiscal Year, and (f) (i) less the Net Increase in Working Capital for such Fiscal Year or (ii) plus the Net Decrease in Working Capital for such Fiscal Year, in each case, as determined in accordance with Section 3 hereof and calculated in accordance with GAAP applied in a manner consistent with the calculation of EBITDA under the Agreement. “End Date” means the date on which the Unilever Stockholder ceases to have the Minimum Representation Holding. “Fiscal Year” for purposes of this Exhibit 9, subject to the definition of 2006 Cumulative Differential, shall mean a twelve-month period commencing on January 1 and ending on December 31. -------------------------------------------------------------------------------- “Net Decrease in Working Capital” means, with respect to any particular Fiscal Year, the amount by which the Working Capital on the last day of such Fiscal Year is less than the Working Capital on the day immediately preceding the first day of such Fiscal Year. “Net Increase in Working Capital” means, with respect to any particular Fiscal Year, the amount by which the Working Capital on the last day of such Fiscal Year is more than the Working Capital on the day immediately preceding the first day of such Fiscal Year. “Payment Date” means the later of (a) twenty Business Days following the delivery by the Company of the Annual Statement, or (b) five Business Days following the final determination pursuant to Section 3 hereof of Cash Flows, in each case for the previous Fiscal Year, subject to Section 2(b) of this Exhibit 9. “Working Capital” means the aggregate amount expressed in dollars of: (i) Inventory (as defined in the Purchase Agreement) owned by the Company Group (including items which, although subject to retention of title by the relevant seller thereof, are under the control of the relevant Company Group Member); plus (ii) Receivables (as defined in the Purchase Agreement) due to the Company Group (including third party trade debtors), net of reserves, including any Receivables subject to the securitization arrangements of the Company Group; minus (iii) trade and other creditors/accounts payable of the Company Group (including third party trade creditors), in each case including any part of such amounts as related to VAT, sales and use, and similar Taxes (as defined in the Purchase Agreement) each calculated in accordance with GAAP applied in a manner consistent with the preparation of the Annual Statement. -------------------------------------------------------------------------------- EXHIBIT 10 Certain Indemnification SECTION 1. Indemnification. (a) Indemnification of the Unilever Stockholder by the Company. Except as otherwise provided in Section 1(b) of this Exhibit 10, the Company shall indemnify and hold harmless the Unilever Stockholder and its Affiliates, officers, directors and employees (the Unilever Indemnified Parties”) from and against any and all Costs (including, without limitation, any Costs relating to purchases and sales of any securities of the Company or any Company Group Member) arising out of any untrue statement or alleged untrue statement of a material fact contained in any Indemnified Document or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, if, and only to the extent, that such Costs arise from the Unilever Indemnified Party being determined to be a person who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (the “Unilever Indemnification”); provided, however, that the Unilever Indemnification shall not apply to any Costs to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company for inclusion in any Indemnified Document by any Unilever Group Member, including any financial statements delivered pursuant to the Purchase Agreement (collectively, the “Unilever Information”). (b) Indemnification of the Company Group by the Unilever Stockholder. The Unilever Stockholder agrees to indemnify and hold harmless the Company from and against any and all Costs (including, without limitation, any Costs relating to purchases and sales of any securities of the Company or any Company Group Member) arising out of any untrue statement or alleged untrue statement of a material fact contained in any Indemnified Document, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, if and only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in such Indemnified Document in reliance upon and in conformity with the Unilever Information (the “Company Indemnification”). (c) Procedures. The provisions of Section 11.2 of the Purchase Agreement shall apply to claims for indemnification made pursuant to this Agreement. (d) Other Agreements with Respect to Indemnification. The provisions of this Exhibit 10 shall not affect any other agreement between any Company Group Member and any Unilever Group Member with respect to indemnification. SECTION 2. Contribution. If the indemnification provided for in Section 1 hereof is for any reason unavailable or insufficient to hold harmless an indemnified party in respect of any Costs referred to therein, then each indemnifying party shall contribute to the aggregate amount of such Costs incurred by such indemnified party, as incurred, in such proportion as is appropriate to reflect (i) the relative benefits received by the Company Group on -------------------------------------------------------------------------------- the one hand and the Unilever Group on the other from the issuance or sale of securities or (ii) if the allocation provided in clause (i) above is not permitted by Applicable Law, not only the relative benefits referred to in clause (i) above but also the relative fault of the Company Group on the one hand and of the Unilever Group on the other hand in connection with the statements or omissions which resulted in such Costs, as well as any other relevant equitable considerations; provided that, the Unilever Group Members shall not be liable to the Company Group in any case to the extent any Unilever Group Member has furnished in writing to the Company Group, prior to the delivery or circulation of the final prospectus or offering memorandum, as the case may be, or any supplement or amendments thereto, information expressly for use therein which corrected or made not untrue or misleading information previously furnished to the Company Group and the Company failed to include such information therein. The relative fault of the Company Group on the one hand and the Unilever Group on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by a Company Group Member or by a Unilever Group Member and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. SECTION 3. Certain Procedures. In connection with any filing of a Registration Statement or any other Indemnified Documents described in clause (c) of the definition of “Indemnified Documents” (collectively, “Section 3 Documents”) in respect of which the Unilever Group would have a liability or obligation in respect of the Company Indemnification, (a) the Company shall provide the Unilever Group and its outside counsel, at the Unilever’s Stockholder’s sole cost and expense, with (i) the right to participate in such due diligence reviews of the management, auditors, financials, information, books and records of the Company Group as is customarily afforded to counsel to underwriters and as may be reasonably necessary for the Unilever Group to satisfy the standards of investigation applicable to control person liability under Section 15 of the Securities Act or Section 20 of the Exchange Act, (ii) the right to attend working group and due diligence meetings with underwriters at which the Section 3 Document and any other Indemnified Document incorporated by reference therein is prepared or substantively reviewed, discussed and revised, and (iii) copies of drafts and amendments or supplements of the Section 3 Document a reasonable time prior to the filing thereof with the SEC, or in the case of Section 3 Documents that are not to be so filed, dissemination to investors, and (b) the Unilever Stockholder shall, at its sole cost and expense, be provided a reasonable opportunity to review, comment and propose reasonable revisions to the Section 3 Document, but the Company shall retain the sole right to determine the final form and content of such Documents. The Unilever Directors shall be provided with copies of any Indemnified Document that is not a Section 3 Document prior to the filing thereof with the SEC. SECTION 4. Financing Agreements. The Unilever Stockholder hereby agrees, consents to and acknowledges that the payment by the Company of the Unilever Indemnification shall not be made until and unless permitted by the provisions of the Financing Agreements and -------------------------------------------------------------------------------- the rights, remedies and powers of the lenders or noteholders (other than any Unilever Group Member) and holders of collateral thereunder. SECTION 5. Unilever Information. The Unilever Stockholder shall furnish the Company with such information relating to the Unilever Group and the Unilever Directors as the Company may reasonably request, but only to the extent as shall be required by Applicable Law to be included in any Indemnified Documents. SECTION 6. No Prejudice. The inclusion of this indemnity shall not be deemed to be an admission of any control person liability under Applicable Law. -------------------------------------------------------------------------------- EXHIBIT 11 Net Debt Adjustments 1. Subject to Section 2 of this Exhibit 11, the Net Debt Amount shall reflect the following adjustments, on a dollar-for-dollar basis (the “Net Debt Adjustments”): (a) the following amounts shall be added to the Net Debt Amount: (i) the amount of any Grossed Up CMI Working Capital Deficit (including accrued interest on the CMI Working Capital Deficit pursuant to Section 3.6(g)(ii) of the Purchase Agreement); (ii) the amount of any Grossed Up CMI Debt/Cash Deficit (including accrued interest on the CMI Debt/Cash Deficit pursuant to Section 3.6(g)(ii) of the Purchase Agreement); (iii) the aggregate amount of all Buyer Deferred Amounts, other than to the extent a Buyer Deferred Amount has been recovered, offset or the subject of compensation received by the Company Group prior to the end of the applicable Measurement Period (whether through insurance payments, indemnity payments or otherwise), as of the end of the applicable Measurement Period; (iv) the aggregate amount of all Excess Pension Transfer Exit Payments owed by the Company Group to Conopco as of the end of the applicable Measurement Period pursuant to Section 9.16(b) of the Purchase Agreement; and (v) the amount of any Excess Contribution Refund (as defined in Section 9.10 of the Purchase Agreement); and (b) the following amounts shall be subtracted from the Net Debt Amount: (i) the amount of any Grossed Up CMI Working Capital Surplus (including accrued interest on the CMI Working Capital Surplus pursuant to Section 3.6(g)(ii) of the Purchase Agreement); (ii) the amount of any Grossed Up CMI Debt/Cash Surplus (including accrued interest on the CMI Debt/Cash Surplus pursuant to Section 3.6(g)(ii) of the Purchase Agreement); (iii) the aggregate amount of all Conopco Deferred Amounts, other than to the extent a Conopco Deferred Amount has been recovered, offset or the subject of compensation received by the Company Group prior to the end of the applicable Measurement Period (whether through insurance payments, indemnity payments or otherwise), as of the end of the applicable Measurement Period; (iv) the amount of any Accumulated Excess Pension Contributions; -------------------------------------------------------------------------------- (vii) the amount of any Pension Plan Amendment Adjustment; (viii) the amount of any Unfunded Pension Exit Payment (as defined in Section 9.10(e) of the Purchase Agreement) to the extent not paid by the Company on or prior to the last day of the applicable Measurement Period; (ix) the amount of any Cumulative Special Funding Adjustment; (x) the amount of any Excess Contribution Payment (as defined in Section 9.10 of the Purchase Agreement); (xi) the aggregate amount of all Contingent Payments paid by the Company on or prior to the last day of the applicable Measurement Period; (xii) the amount of the Agency Adjustment; and (xiii) an amount equal to $39,420,000 plus interest thereon at the Applicable Rate for the period from December 22, 2005 to the Final Exit Date. For the avoidance of doubt, the above amounts are not cumulative, and only one adjustment shall be made for any Put Closing Date or Call Closing Date. For the avoidance of doubt, the Net Debt Amount, as adjusted pursuant to this Exhibit 11, may be either a positive or negative amount. 2. Notwithstanding anything in Section 1 of this Exhibit 11 to the contrary, Net Debt Adjustments to a particular Net Debt Amount shall be made without duplication and only to the extent that the Company’s obligation to pay, or right to receive, as the case may be, an amount is not reflected in the Company’s financial statements as of the last day of the applicable Measurement Period; provided, however, that if the Net Debt Amount is determined more than once in connection with multiple exercises of the Put Option or Call Option where the Share Price has not been fixed in accordance with Section 8.4(d), 8.5(a), 8.5(b), the Net Debt Adjustments shall be made to each such Net Debt Amount, as applicable. 3. Notwithstanding anything herein to the contrary, nothing in this Agreement, including this Exhibit 11, shall prejudice or otherwise affect any party’s rights or obligations under Section 6.9 and Articles IX and XI, including Section 11.8, of the Purchase Agreement.

Exhibit 10.1 SETTLEMENT AGREEMENT THIS SETTLEMENT AGREEMENT (“Agreement”), dated the 14th day of December, 2006 (“Effective Date”), is made by and between SCPIE Holdings Inc., a Delaware corporation (“SCPIE”), on the one hand, and Joseph Stilwell, Stilwell Value LLC and Stilwell Value Partners III, L.P. (collectively, the “Stilwell Group”), on the other hand. WHEREAS, SCPIE and the Stilwell Group have agreed that it is in their mutual interests to enter into this Agreement, among other things, to set forth certain agreements concerning SCPIE’s 2007 Annual Meeting of Stockholders (including all adjournments or postponements thereof (the “2007 Annual Meeting”)), as hereinafter described. NOW, THEREFORE, in consideration of the premises and the representations, warranties, and agreements contained herein, and other good and valuable consideration, the parties hereto mutually agree as follows: 1. Representations and Warranties of Stilwell Group. The Stilwell Group hereby represents and warrants to SCPIE as follows: a. The Stilwell Group has beneficial ownership of 847,400 shares of common stock of SCPIE and has full and complete authority to enter into this Agreement and to bind the entire number of shares of the common stock of SCPIE which it holds, or may hold, including any shares purchased in the future, to the terms of this Agreement. This Agreement constitutes a valid and binding agreement of the Stilwell Group. No “affiliate” or “associate” (as such terms are defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of the Stilwell Group beneficially owns any shares or rights to acquire shares of common stock of SCPIE. b. There are no arrangements, agreements or understandings between the Stilwell Group and SCPIE other than as set forth in this Agreement. 2. Representations and Warranties of SCPIE. SCPIE hereby represents and warrants to the Stilwell Group, as follows: a. SCPIE has full power and authority to enter into and perform its obligations under this Agreement, and the execution and delivery of this Agreement by SCPIE has been duly authorized by the Board of Directors of SCPIE and requires no further Board of Directors or stockholder action. The Board of Directors of SCPIE may be referred to hereinafter as the “Board”. This Agreement constitutes a valid and binding obligation of SCPIE and the performance of its terms does not constitute a violation of its certificate of incorporation or by-laws. b. There are no arrangements, agreements or understandings between the Stilwell Group and SCPIE other than as set forth in this Agreement.   1 -------------------------------------------------------------------------------- 3. Stilwell Group’s Prohibited Conduct. No member of the Stilwell Group or any of their affiliates, associates or other persons acting in concert with them, shall, directly or indirectly, a. solicit (as such term is used in the proxy rules of the Securities and Exchange Commission) proxies or consents, or participate in any manner in the solicitation of proxies or consents, from SCPIE’s stockholders to elect persons to the Board or to approve shareholder proposals, b. make any public statement critical of SCPIE, or its Directors or management, or in favor of any proposal opposed by the Board, c. initiate any litigation against SCPIE or any of its Directors or officers, except to enforce the terms of this Agreement, and duties arising out of their services as Directors, d. make or be the proponent of any shareholder proposal, whether pursuant to Rule 14a-8 of the Exchange Act or otherwise, e. acquire, offer or propose to acquire, or agree to acquire (except, in any case, by way of stock dividends or other distributions or offerings made available to holders of SCPIE common stock generally), directly or indirectly, or retain ownership of any SCPIE common stock, if when taken together with the SCPIE common stock beneficially owned by the Stilwell Group would constitute more than 9.9% of the then outstanding shares of SCPIE; provided that “beneficial ownership” shall have the meaning ascribed thereto under Section 13(d) of the Exchange Act, f. make any public announcement with respect to any proposal or offer involving, or propose to enter into, or assist or encourage any other person with respect to, directly or indirectly, any merger, consolidation, business combination, tender or exchange offer, sale or purchase of assets, sale or purchase of securities, dissolution, liquidation, restructuring, recapitalization or similar transactions of or involving SCPIE, or to propose as a Director any of the foregoing types of transactions, g. form, join or in any way participate in any “group” (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to SCPIE common stock, h. deposit any SCPIE common stock in any voting trust or subject any SCPIE common stock to any arrangement or agreement with respect to the voting of any SCPIE common stock, i. execute any written consent as stockholders with respect to SCPIE or its common stock, except as set forth herein, j. otherwise act, alone or in concert with others, to control or seek to control or influence or seek to influence the stockholders, management, the Board or policies of SCPIE, other than through non-public communications with the Directors of SCPIE; provided, that, subject to clause (f) above, nothing herein shall limit Joseph Stilwell from acting in his capacity as a Director of SCPIE in accordance   2 -------------------------------------------------------------------------------- with his fiduciary duties at any meeting of the Board, including his ability to discuss and vote upon the items in clause (f) above, k. seek, alone or in concert with others, (i) to call a meeting of stockholders, (ii) representation on the Board of SCPIE or its subsidiaries, except as set forth herein, or (iii) the removal of any member of the SCPIE Board or any of its subsidiaries, except if any such action mentioned in this clause (k) is approved by the SCPIE Board as a result of a majority vote of the Directors other than Stilwell, l. make any publicly disclosed proposal regarding any of the foregoing, m. publicly make any request to amend, waive or terminate any provision of this Agreement, n. advise, finance, assist or encourage any other person or entity in connection with any of the foregoing, or o. otherwise take, or cause others to take, any action inconsistent with any of the foregoing. 4. Voting at Meetings of Stockholders. The Stilwell Group shall vote all of the shares of SCPIE common stock beneficially owned by its members for each of SCPIE’s nominees for election to the SCPIE Board and, in other matters, in accordance with the recommendation of the SCPIE Board, or, if so directed by the Board, pro rata with all other stockholders. 5. Directorships and Committees. SCPIE agrees that Joseph Stilwell (“Stilwell”) will be appointed to the Board of SCPIE, effective January 15, 2007, and in accordance with the following terms: a. Stilwell will be appointed to the Class of Directors of SCPIE whose terms expire at the 2007 Annual Meeting and to the Strategic Planning Committee of the SCPIE Board. b. Stilwell will be entitled to receive the identical compensation and benefits being paid to the other non-employee Directors of SCPIE. c. No member of the Stilwell Group shall accept any incentive or compensation that would influence any member of the Stilwell Group to recommend that SCPIE enter into a transaction for the sale of SCPIE or to recommend any other significant initiative affecting SCPIE and its stockholders. For purposes of this subparagraph 5(c), neither an increase in the value of the Stilwell Group’s holdings in SCPIE shares nor any fees earned by Stilwell in connection with managing his limited partnerships shall constitute an incentive or compensation hereunder. d. SCPIE and its Board agree to nominate and support Stilwell for re-election to the Board of SCPIE at the 2007 Annual Meeting for a term that expires at the 2010 Annual Meeting of Stockholders. 6. Litigation. During the term of this Agreement, SCPIE will not, directly or indirectly, initiate any litigation against the Stilwell Group, except to   3 -------------------------------------------------------------------------------- enforce the terms of this Agreement and duties arising out of Stilwell’s service as a Director. 7. Dispositions. The Stilwell Group agrees that any disposition of shares of common stock of SCPIE will be made in open market transactions in a manner designed to effect an orderly disposition of such shares. The Stilwell Group further agrees that it will not transfer or dispose of any shares of SCPIE common stock if, as a result of such disposition or transfer, to the knowledge of any member of the Stilwell Group, the person making such acquisition will beneficially own, together with its affiliates and any member of a “group” (within the meaning of the Exchange Act) in which such acquiror is a party, immediately following such acquisition, 5% or more of the SCPIE common stock then outstanding. 8. Certification of Ownership. The Stilwell Group shall, upon request of SCPIE, certify to SCPIE as to the amount of shares it beneficially owns. 9. Termination. a. This Agreement shall terminate and Stilwell shall immediately tender his resignation from the Board of SCPIE, if requested by the Board of SCPIE as a result of a majority vote of the Directors other than Stilwell in favor of such resignation by the Board of SCPIE, upon the earliest of (i) the Stilwell Group having beneficial ownership of less than five percent of the outstanding shares of common stock of SCPIE; (ii) any person becoming the beneficial owner of more than 50% of SCPIE’s voting stock, including as a result of any merger, acquisition or other type of business combination; (iii) the death or incapacity of Joseph Stilwell; (iv) the third anniversary of the Effective Date; and (v) the dissolution, merger or any other transaction which results in the failure of Stilwell Value LLC or Stilwell Value Partners III, L.P. to exist as a legal entity; provided that, with respect to the preceding clause (v), at the option of SCPIE, this Agreement shall be binding on their respective successors and it shall be a condition of such dissolution or other transaction that such successor so agree. b. This Agreement shall terminate if Stilwell resigns from the Board. If Stilwell resigns from the Board prior to January 1, 2008, then, notwithstanding the provisions of paragraph 3(k)(ii), the Stilwell Group shall not be precluded hereunder from duly noticing an intent to nominate Directors for SCPIE’s 2008 Annual Meeting of Stockholders, if the deadline for such notice falls before January 1, 2008. c. If this Agreement terminates prior to January 1, 2008, then paragraphs 3, 4 and 12 through 24 shall survive and remain effective until January 1, 2008. d. If Stilwell is required to resign from the Board pursuant to sub-paragraph 9(a), then any public announcement of such resignation by the parties hereto shall state that such resignation is being tendered pursuant to the terms hereof and not as a result of any disagreement with the Board or management of SCPIE. Notwithstanding the foregoing sub-paragraph 9(a), the Stilwell Group’s obligations under this paragraph 9 shall not be triggered if it becomes the beneficial owner of less than five percent of the outstanding common stock of SCPIE as the result of an   4 -------------------------------------------------------------------------------- issuance of common stock by SCPIE which, by increasing the number of shares outstanding, decreases the proportionate number of shares beneficially owned by the Stilwell Group; provided, however, that if the Stilwell Group shall become the beneficial owner of less than five percent of the common stock of SCPIE then outstanding by reason of a share issuance by SCPIE and shall, after such share issuance by SCPIE, sell or dispose of a proportionate amount of SCPIE common stock that would have otherwise lowered the Stilwell Group’s percentage ownership of SCPIE to less than 5% of the number of shares of common stock of SCPIE outstanding as of the Effective Date, then the Stilwell Group’s obligations under this paragraph 9 shall be triggered. e. The Stilwell Group hereby forever waives and releases, and covenants not to sue, any of SCPIE’s current Directors or current Officers, for any claim or cause of action based on any act, omission, or failure to act by SCPIE’s current Directors or current Officers, which occurred prior to the Effective Date, however, this waiver and release and covenant not to sue does not include the right to sue to enforce the terms of this Agreement and does not extend to acts which are criminal. The Stilwell Group is not aware of the existence of any claims it currently possesses against SCPIE. The Stilwell Group also agrees that no member of the Stilwell Group will make any public statement which directly or indirectly impugns the character, integrity or personal reputation of any of SCPIE’s current Directors. The release contained above shall survive the termination of the Agreement. 10. Public Announcement. The parties shall promptly disclose the existence of this Agreement after its execution pursuant to a joint press release in a form reasonably satisfactory to Stilwell; provided, however, neither party shall disclose the existence of this Agreement until the press release is issued. Stilwell shall be deemed to have approved and consented to the public disclosure of the press release attached hereto as Attachment A for all purposes under this Agreement. 11. Material Nonpublic Information. In connection with this Agreement and the Stilwell Group’s ongoing relationship with SCPIE, there may be instances in which material nonpublic information concerning SCPIE will be divulged to members of the Stilwell Group or its affiliates or associates who are not at that time members of the SCPIE Board by SCPIE, Stilwell or other SCPIE representatives or agents. The Stilwell Group expressly acknowledges that federal and state securities laws prohibit any person who misappropriates material nonpublic information about a company from purchasing or selling securities of such company, or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities. The Stilwell Group further acknowledges that Stilwell will be subject to SCPIE’s insider trading and disclosure policies, as in effect from time to time, at any time while he is on the Board to the same extent as the other Directors of SCPIE. To the extent SEC Regulation FD may apply, in accordance with Section 243.100 (2)(ii) of Regulation FD, the Stilwell Group expressly agrees to maintain material nonpublic information concerning SCPIE in confidence. 12. Remedies. SCPIE and the Stilwell Group acknowledge and agree that a breach or threatened breach by either party may give rise to irreparable injury inadequately compensable in damages, and accordingly each party shall be entitled to injunctive relief to prevent a breach of the provisions hereof and to enforce   5 -------------------------------------------------------------------------------- specifically the terms and provisions hereof in any state or federal court having jurisdiction, in addition to any other remedy to which such aggrieved party may be entitled to at law or in equity. In the event either party institutes any legal action to enforce such party’s rights under, or recover damages for breach of, this Agreement, the prevailing party or parties in such action shall be entitled to recover from the other party or parties all costs and expenses, including but not limited to reasonable attorneys’ fees, court costs, witness fees, disbursements and any other expenses of litigation or negotiation incurred by such prevailing party or parties. 13. Notices. All notice requirements and other communications shall be deemed given when delivered or on the following business day after being sent by overnight courier with a nationally recognized courier service such as Federal Express, addressed to the Stilwell Group and SCPIE as follows: SCPIE: SCPIE Holdings Inc. 1888 Century Park East Los Angeles, CA 90067 Attention: General Counsel With a copy to: Milton A. Miller, Esq. Latham & Watkins LLP 633 W. 5th Street, Suite 4000 Los Angeles, CA 90071 The Stilwell Group: Mr. Joseph Stilwell 26 Broadway, 23rd Floor New York, New York 10004 With a copy to: Spencer L. Schneider, Esq. 70 Lafayette Street New York, NY 10013 14. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions of the parties in connection therewith not referred to herein. 15. Counterparts; Facsimile. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, and signature pages may be delivered by facsimile, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.   6 -------------------------------------------------------------------------------- 16. Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 17. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without regard to choice of law principles that would compel the application of the laws of any other jurisdiction. 18. Severability. In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 19. Successors and Assigns. This Agreement shall not be assignable by any of the parties to this Agreement. This Agreement, however, shall be binding on successors of the parties hereto. 20. Survival of Representations, Warranties and Agreements. All representations, warranties, covenants and agreements made herein shall survive the execution and delivery of this Agreement. 21. Amendments. This Agreement may not be modified, amended, altered or supplemented except upon the execution and delivery of a written agreement executed by all of the parties hereto. 22. Further Action. Each party agrees to execute any and all documents, and to do and perform any and all acts and things necessary or proper to effectuate or further evidence the terms and provisions of this Agreement. 23. Consent to Jurisdiction. Each of the parties hereby irrevocably submits to the exclusive jurisdiction of any United States Federal or state court sitting in the State of Delaware in any action or proceeding arising out of or relating to this Agreement and each of the parties hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in any such court. 24. Expenses. Each party agrees to bear its own expenses in connection with the transactions contemplated hereby. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]   7 -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.   SCPIE HOLDINGS INC. By:   /s/ Donald J. Zuk   Donald J. Zuk President and CEO   JOSEPH STILWELL   /s/ Joseph Stilwell   STILWELL VALUE LLC By:   /s/ Joseph Stilwell   JOSEPH STILWELL Managing and Sole Member   STILWELL VALUE PARTNERS III, L.P. By:   /s/ Joseph Stilwell   STILWELL VALUE LLC General Partner, by Joseph Stilwell, Managing and Sole Member   8 -------------------------------------------------------------------------------- ATTACHMENT A   (Investors)    Robert B. Tschudy Senior Vice President and CFO SCPIE Holdings Inc. 310/557-8739 e-mail: [email protected]   Roger Pondel PondelWilkinson Inc. 310/279-5980 e-mail: [email protected]    (Media)    Howard Bender Vice President/Communications SCPIE Holdings Inc. 310/551-5948 E-MAIL: [email protected] SCPIE HOLDINGS TO ADD INVESTOR JOSEPH STILWELL TO ITS BOARD OF DIRECTORS Los Angeles, California – December 15, 2006 – SCPIE Holdings Inc. (NYSE:SKP) announced today that Joseph Stilwell will be joining SCPIE’s Board of Directors on January 15, 2007. He is replacing Donald (Pat) Newell, who is resigning from the Board on the same date. Stilwell is a New York-based private investor, and his Stilwell Group is one of SCPIE’s largest stockholders. In connection with Stilwell’s appointment, the Stilwell Group and SCPIE have entered into a three-year settlement agreement, which provides that the Stilwell Group will support SCPIE’s slate of nominees at its 2007 Annual Meeting of Stockholders. SCPIE will nominate Stilwell at the meeting for a three-year term. Additionally, the Stilwell Group will support SCPIE’s slate of directors at its 2008 and 2009 Annual Meetings of Stockholders, unless prior to such meetings Stilwell resigns from the Board or the settlement agreement is otherwise terminated. SCPIE also announced that Stilwell has been appointed to the Strategic Planning Committee of the Board of Directors, effective January 15, 2007. “We are pleased to welcome Joseph Stilwell to our Board,” said Donald J. Zuk, SCPIE President and Chief Executive Officer. “We have maintained an ongoing dialogue with Joe as his group has increased its position in the Company. His experience with board affiliations on companies similar to SCPIE will make him an excellent addition to our Board. “In turn, I want to thank Pat Newell for his years of service on our Board, and recognize him for his many contributions. His three decades with SCPIE are most appreciated; he will be missed.”   9 -------------------------------------------------------------------------------- About SCPIE Holdings SCPIE Holdings Inc. is a leading provider of healthcare liability insurance for physicians, oral and maxillofacial surgeons, and other healthcare providers, as well as medical groups and healthcare facilities. Since the company was founded in 1976, it has carved out a significant niche in the insurance industry by providing innovative products and services specifically for the healthcare community. ### Forward-Looking Statements In addition to historical information, this news release contains forward-looking statements that are based upon SCPIE’s estimates and expectations concerning future events and are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Forward-looking statements include statements herein regarding SCPIE’s future annual meeting of stockholders. In light of the significant uncertainties inherent in the forward-looking information herein, the inclusion of such information should not be regarded as a representation by SCPIE or any other person that SCPIE’s objectives or plans will be realized.   10

  EXHIBIT 10.91 2003 INCENTIVE AWARD PLAN EMPLOYEE STOCK OPTION AGREEMENT           THIS AGREEMENT, dated the Grant Date set forth on the Stock Option Grant Notice (“Grant Notice”) (the terms of which are incorporated by reference and made a part of this Agreement), is made by and between Gen-Probe Incorporated, a Delaware corporation, hereinafter referred to as the “Company,” and the Employee of the Company, or a Subsidiary of the Company, identified on the Grant Notice and hereinafter referred to as “Optionee.”           WHEREAS, the Company wishes to afford the Optionee the opportunity to purchase shares of its Common Stock, par value $0.0001 per share; and           WHEREAS, the Company wishes to carry out The 2003 Incentive Award Plan of Gen-Probe Incorporated (the “Plan”) (the terms of which are hereby incorporated by reference and made a part of this Agreement); and           WHEREAS, the Committee, appointed to administer the Plan, has determined that it would be to the advantage and best interest of the Company and its stockholders to grant the Stock Option (the “Option”) provided for herein to the Optionee as an inducement to enter into or remain in the service of the Company or its Subsidiaries and as an incentive during such service, and has advised the Company thereof and instructed the undersigned officer to issue said Option.           NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows: ARTICLE I DEFINITIONS           1.1 General. Wherever the following terms are used in this Agreement they shall have the meanings specified below, unless the context clearly indicates otherwise.           1.2 Board. “Board” shall mean the Board of Directors of the Company.           1.3 Cause. “Cause” shall mean (a) the Optionee’s failure or refusal to perform specific and lawful directions with respect to the Optionee’s employment with the Company or a Subsidiary, (b) the commission by the Optionee of a felony or the perpetration by the Optionee of an act of fraud, dishonesty, or misrepresentation against, or breach of fiduciary duty toward, the Company or a Subsidiary or (c) any willful act or omission by the Optionee which is injurious in any material respect to the financial condition or business reputation of the Company or a Subsidiary.           1.4 Code. “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time. 1. --------------------------------------------------------------------------------             1.5 Committee. “Committee” shall mean the Compensation Committee of the Board, or a subcommittee of the Board, appointed as provided in Section 9.1 of the Plan.           1.6 Common Stock. “Common Stock” shall mean the Common Stock of the Company, par value $0.0001 per share.           1.7 Company. “Company” shall mean Gen-Probe Incorporated, a Delaware corporation.           1.8 Director. “Director” shall mean a member of the Board, whether such Director is an Employee or an Independent Director (as defined in the Plan).           1.9 Employee. “Employee” shall mean any officer or other employee (as defined in accordance with Section 3401(c) of the Code) of the Company, or of any Subsidiary.           1.10 Exchange Act. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.           1.11 Fair Market Value. “Fair Market Value” shall mean, as of any date, the value of the Common Stock determined as follows:           (a) If the Common Stock is listed on any established stock exchange or traded on The Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the last market trading day prior to the day of determination, as reported by The Nasdaq Stock Market or such other source as the Board deems reliable.           (b) In the absence of such markets for the Common Stock, the Fair Market Value shall be determined in good faith by the Board.           1.12 Option. “Option” shall mean the Stock Option granted under this Agreement and Article IV of the Plan.           1.13 Optionee. “Optionee” shall mean the Employee granted the Option under this Agreement and the Plan.           1.14 Plan. “Plan” shall mean The 2003 Incentive Award Plan of Gen-Probe Incorporated.           1.15 Retirement. “Retirement” shall mean the Optionee’s resignation after the Optionee has attained age 60 and completed ten (10) or more years of employment with the Company and the Subsidiaries.           1.16 Secretary. “Secretary” shall mean the Secretary of the Company. 2. --------------------------------------------------------------------------------             1.17 Securities Act. “Securities Act” shall mean the Securities Act of 1933, as amended.           1.18 Subsidiary. “Subsidiary” shall mean any corporation in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.           1.19 Termination of Employment. “Termination of Employment” shall mean the time when the employee-employer relationship between the Optionee and the Company or any Subsidiary is terminated for any reason, with or without Cause, including, but not by way of limitation, a termination by resignation, discharge, death, disability or Retirement; but excluding (a) a termination where there is a simultaneous reemployment or continuing employment of the Optionee by the Company or any Subsidiary or a parent corporation thereof (within the meaning of Section 422 of the Code), (b) at the discretion of the Committee, a termination which results in a temporary severance of the employee-employer relationship, and (c) at the discretion of the Committee, a termination which is followed by the simultaneous establishment of a consulting relationship by the Company or a Subsidiary with the former employee. The Committee, in its absolute discretion, shall determine the effect of all matters and questions relating to Termination of Employment, including, but not by way of limitation, the question of whether a Termination of Employment resulted from a discharge for Cause, and all questions of whether particular leaves of absence constitute Terminations of Employment; provided, however, that, if this Option is designated as an Incentive Stock Option, unless otherwise determined by the Administrator in its discretion, a leave of absence, change in status from an employee to an independent contractor or other change in the employee-employer relationship shall constitute a Termination of Employment if, and to the extent that, such leave of absence, change in status or other change interrupts employment for the purposes of Section 422(a)(2) of the Code and the then applicable regulations and revenue rulings under said Section. Notwithstanding any other provision of the Plan or this Agreement, the Company or any Subsidiary has an absolute and unrestricted right to terminate the Optionee’s employment at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in writing. ARTICLE II GRANT OF OPTION      2.1 Grant of Option. In consideration of the Optionee’s agreement to remain in the employ of the Company or its Subsidiaries and for other good and valuable consideration, effective as of Date of Grant set forth on the Grant Notice, the Company irrevocably grants to the Optionee the option to purchase any part or all of an aggregate of the number of shares of Common Stock set forth on the Grant Notice, upon the terms and conditions set forth in this Agreement. The Option shall be either an Incentive Stock Option or a Non-Qualified Stock Option, as set forth on the Grant Notice.      2.2 Purchase Price. The purchase price of the shares of Common Stock subject to the Option per share shall be as set forth on the Grant Notice, without commission or other charge; provided, however, that if this Option is designated as an Incentive Stock Option 3. --------------------------------------------------------------------------------   the price per share of the shares subject to the Option shall not be less than the greater of (i) 100% of the Fair Market Value of a share of Common Stock on the Date of Grant, or (ii) 110% of the Fair Market Value of a share of Common Stock on the Date of Grant in the case of an Optionee then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or any Subsidiary or parent corporation thereof (within the meaning of Section 422 of the Code).           2.3 Consideration to the Company. In consideration of the granting of the Option by the Company, the Optionee agrees to render faithful and efficient services to the Company or any Subsidiary, with such duties and responsibilities as the Company shall from time to time prescribe. Nothing in the Plan or this Agreement shall confer upon the Optionee any right to continue in the employ of the Company or any Subsidiary or shall interfere with or restrict in any way the rights of the Company and its Subsidiaries, which are hereby expressly reserved, to discharge the Optionee at any time for any reason whatsoever, with or without Cause. ARTICLE III PERIOD OF EXERCISABILITY           3.1 Commencement of Exercisability.           (a) Subject to Sections 3.3 and 5.11, the Option shall become exercisable in such amounts and at such times as are set forth on the Grant Notice.           (b) No portion of the Option which has not become exercisable at Termination of Employment shall thereafter become exercisable, except as may be otherwise provided by the Committee.           3.2 Duration of Exercisability. The installments provided for in Section 3.1(a) and the Grant Notice are cumulative. Each such installment which becomes exercisable pursuant to Section 3.1 shall remain exercisable until it becomes unexercisable under Section 3.3.           3.3 Expiration of Option. The Option may not be exercised to any extent by anyone after the first to occur of the following events:           (a) The expiration of seven (7) years from the Date of Grant; or           (b) If this Option is designated as an Incentive Stock Option and the Optionee owned (within the meaning of Section 424(d) of the Code), at the time the Option was granted, more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Subsidiary or parent corporation thereof (within the meaning of Section 422 of the Code), the expiration of five (5) years from the date the Option was granted; or           (c) The expiration of thirty (30) days following the date of the Optionee’s Termination of Employment, unless such Termination of Employment occurs by reason of the Optionee’s discharge for Cause, or by reason of the Optionee’s death, Retirement or disability (within the meaning of Section 22(e)(3) of the Code); or 4. --------------------------------------------------------------------------------             (d) The expiration of one (1) day following the date of the Optionee’s Termination of Employment by reason of the Optionee’s discharge for Cause; or           (e) The expiration of six (6) months following the date of the Optionee’s Termination of Employment by reason of the Optionee’s death or disability (within the meaning of Section 22(e)(3) of the Code); or           (f) The expiration of one (1) year following the date of the Optionee’s Termination of Employment by reason of the Optionee’s Retirement.           3.4 Special Tax Consequences. The Optionee acknowledges that, to the extent that the aggregate Fair Market Value of stock with respect to which “incentive stock options” (within the meaning of Section 422 of the Code, but without regard to Section 422(d) of the Code), including the Option, are exercisable for the first time by the Optionee during any calendar year (under the Plan and all other incentive stock option plans of the Company, any Subsidiary and any parent corporation thereof (within the meaning of Section 422 of the Code)) exceeds $100,000, the Option and such other options shall be treated as not qualifying under Section 422 of the Code but rather shall be taxed as non-qualified stock options. The Optionee further acknowledges that the rule set forth in the preceding sentence shall be applied by taking options into account in the order in which they were granted. For purposes of these rules, the Fair Market Value of stock shall be determined as of the time the option with respect to such stock is granted. ARTICLE IV EXERCISE OF OPTION           4.1 Person Eligible to Exercise. Subject to Section 5.2, during the lifetime of the Optionee, only the Optionee may exercise the Option or any portion thereof. After the death of the Optionee, any exercisable portion of the Option may, prior to the time when the Option becomes unexercisable under Section 3.3, be exercised by the Optionee’s personal representative or by any person empowered to do so under the Optionee’s will or under the then applicable laws of descent and distribution.           4.2 Partial Exercise. Any exercisable portion of the Option or the entire Option, if then wholly exercisable, may be exercised in whole or in part at any time prior to the time when the Option or portion thereof becomes unexercisable under Section 3.3; provided, however, that each partial exercise shall be for not less than ten (10) shares and shall be for whole shares only.           4.3 Manner of Exercise. The Option, or any exercisable portion thereof, may be exercised solely by delivery to the Secretary or the Secretary’s office of all of the following prior to the time when the Option or such portion thereof becomes unexercisable under Section 3.3:           (a) An Exercise Notice in writing signed by the Optionee or the other person then entitled to exercise the Option or portion thereof, stating that the Option or portion thereof is thereby exercised, such notice complying with all applicable rules established by the Committee. 5. --------------------------------------------------------------------------------   Such notice shall be substantially in the form attached as Attachment III to the Grant Notice (or such other form as is prescribed by the Committee); and      (b) (i) Full payment (in cash or by check) for the shares with respect to which the Option or portion thereof is exercised, to the extent permitted under applicable laws; or            (ii) With the consent of the Committee, such payment may be made, in whole or in part, through the delivery of shares of Common Stock which have been owned by the Optionee for at least six months, duly endorsed for transfer to the Company with a Fair Market Value on the date of delivery equal to the aggregate exercise price of the Option or exercised portion thereof; or            (iii) To the extent permitted under applicable laws, through the delivery of a notice that the Optionee has placed a market sell order with a broker with respect to shares of Common Stock then issuable upon exercise of the Option, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the Option exercise price, provided, that payment of such proceeds is then made to the Company upon settlement of such sale; or            (iv) With the consent of the Committee, any combination of the consideration provided in the foregoing subparagraphs (i), (ii) and (iii); and               (c) A bona fide written representation and agreement, in such form as is prescribed by the Committee, signed by the Optionee or other person then entitled to exercise such Option or portion thereof, stating that the shares of Common Stock are being acquired for the Optionee’s own account, for investment and without any present intention of distributing or reselling said shares or any of them except as may be permitted under the Securities Act and then applicable rules and regulations thereunder, and that the Optionee or other person then entitled to exercise such Option or portion thereof will indemnify the Company against and hold it free and harmless from any loss, damage, expense or liability resulting to the Company if any sale or distribution of the shares by such person is contrary to the representation and agreement referred to above. The Committee may, in its absolute discretion, take whatever additional actions it deems appropriate to ensure the observance and performance of such representation and agreement and to effect compliance with the Securities Act and any other federal or state securities laws or regulations. Without limiting the generality of the foregoing, the Committee may require an opinion of counsel acceptable to it to the effect that any subsequent transfer of shares acquired on an Option exercise does not violate the Securities Act, and may issue stop-transfer orders covering such shares. Share certificates evidencing Common Stock issued on exercise of the Option shall bear an appropriate legend referring to the provisions of this subsection (c) and the agreements herein. The written representation and agreement referred to in the first sentence of this subsection (c) shall, however, not be required if the shares to be issued pursuant to such exercise have been registered under the Securities Act, and such registration is then effective in respect of such shares; and              (d) Full payment to the Company (or other employer corporation) of all amounts which, under federal, state or local tax law, it is required to withhold upon exercise of 6. --------------------------------------------------------------------------------   the Option. With the consent of the Committee, (i) shares of Common Stock owned by the Optionee for at least six months duly endorsed for transfer or (ii) shares of Common Stock issuable to the Optionee upon exercise of the Option, having a Fair Market Value at the date of Option exercise equal to the statutory minimum sums required to be withheld, may be used to make all or part of such payment; and           (e) In the event the Option or portion thereof shall be exercised pursuant to Section 4.1 by any person or persons other than the Optionee, appropriate proof of the right of such person or persons to exercise the Option.           4.4 Conditions to Issuance of Stock Certificates. The shares of Common Stock deliverable upon the exercise of the Option, or any portion thereof, may be either previously authorized but unissued shares or issued shares which have then been reacquired by the Company. Such shares shall be fully paid and nonassessable. The Company shall not be required to issue or deliver any certificate or certificates for shares of Common Stock purchased upon the exercise of the Option or portion thereof prior to fulfillment of all of the following conditions:           (a) The admission of such shares to listing on all stock exchanges on which such Common Stock is then listed; and           (b) The completion of any registration or other qualification of such shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which the Committee shall, in its absolute discretion, deem necessary or advisable; and           (c) The obtaining of any approval or other clearance from any state or federal governmental agency which the Committee shall, in its absolute discretion, determine to be necessary or advisable; and           (d) The receipt by the Company of full payment for such shares, including payment of all amounts which, under federal, state or local tax law, the Company (or other employer corporation) is required to withhold upon exercise of the Option; and           (e) The lapse of such reasonable period of time following the exercise of the Option as the Committee may from time to time establish for reasons of administrative convenience.           4.5 Rights as Stockholder. The holder of the Option shall not be, nor have any of the rights or privileges of, a stockholder of the Company in respect of any shares purchasable upon the exercise of any part of the Option unless and until certificates representing such shares shall have been issued by the Company to such holder. 7. --------------------------------------------------------------------------------   ARTICLE V OTHER PROVISIONS           5.1 Administration. The Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Committee in good faith shall be final and binding upon the Optionee, the Company and all other interested persons. No member of the Committee shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan, this Agreement or the Option. In its absolute discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee under the Plan and this Agreement.           5.2 Option Not Transferable.           (a) The Option may not be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution or, subject to the consent of the Committee, pursuant to a “DRO” (as defined in the Plan), unless and until the Option has been exercised, or the shares underlying such Option have been issued, and all restrictions applicable to such shares have lapsed. Neither the Option nor any interest or right therein shall be liable for the debts, contracts or engagements of the Optionee or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence.           (b) During the lifetime of the Optionee, only the Optionee may exercise the Option (or any portion thereof), unless it has been disposed of with the consent of the Committee pursuant to a DRO. After the death of the Optionee, any exercisable portion of an Option may, prior to the time when such portion becomes unexercisable under the Plan or the Option Agreement, be exercised by the Optionee’s personal representative or by any person empowered to do so under the deceased Optionee’s will or under the then applicable laws of descent and distribution.           (c) Notwithstanding the foregoing provisions of this Section 5.2, if designated as a Non-Qualified Stock Option, the Option may be transferred by the Optionee, in writing and with prior written notice to the Committee, to any one or more Permitted Transferees (as defined below), subject to the following terms and conditions: (i) the Option, as transferred to a Permitted Transferee, shall not be assignable or transferable by the Permitted Transferee other than by will or the laws of descent and distribution; (ii) the Option, as transferred to a Permitted Transferee, shall continue to be subject to all the terms and conditions of the Option as applicable to the Optionee (other than the ability to further transfer the Option); and (iii) the Optionee and the Permitted Transferee shall execute any and all documents requested by the Committee, including, without limitation documents to (A) confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements for an exemption for the transfer under 8. --------------------------------------------------------------------------------   applicable federal and state securities laws and (C) evidence the transfer. For purposes of this subsection (c), “Permitted Transferee” shall mean, with respect to the Optionee, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Optionee’s household (other than a tenant or employee), a trust in which these persons (or the Optionee) control the management of assets, and any other entity in which these persons (or the Optionee) own more than fifty percent (50%) of the voting interests, or any other transferee specifically approved by the Committee after taking into account any state or federal tax or securities laws applicable to transferable Non-Qualified Stock Options.           5.3 Lock-Up Period. The Optionee hereby agrees that, if so requested by the Company or any representative of the underwriters (the “Managing Underwriter”) in connection with any registration of the offering of any securities of the Company under the Securities Act, the Optionee shall not sell or otherwise transfer any shares of Common Stock or other securities of the Company during such period as may be requested in writing by the Managing Underwriter and agreed to in writing by the Company (which period shall not be longer than 180 days) (the “Market Standoff Period”) following the effective date of a registration statement of the Company filed under the Securities Act.           5.4 Restrictive Legends and Stop-Transfer Orders.           (a) The share certificate or certificates evidencing the shares of Common Stock purchased hereunder shall be endorsed with any legends that may be required by state or federal securities laws.           (b) The Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.           (c) The Company shall not be required: (i) to transfer on its books any shares of Common Stock that have been sold or otherwise transferred in violation of any of the provisions of this Agreement, or (ii) to treat as owner of such shares of Common Stock or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such shares shall have been so transferred.           5.5 Shares to Be Reserved. The Company shall at all times during the term of the Option reserve and keep available such number of shares of Common Stock as will be sufficient to satisfy the requirements of this Agreement.           5.6 Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of the Secretary, and any notice to be given to the Optionee shall be addressed to the Optionee at the address given beneath the Optionee’s signature hereto. By a notice given pursuant to this Section 5.9, either party may hereafter designate a different address for notices to be given to that party. Any notice which is required to be given to the Optionee shall, if the Optionee is then deceased, be given to the Optionee’s 9. --------------------------------------------------------------------------------   personal representative if such representative has previously informed the Company of such representative’s status and address by written notice under this Section 5.9. Any notice shall be deemed duly given when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service.           5.7 Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.           5.8 Stockholder Approval. The Plan will be submitted for approval by the Company’s stockholders within twelve (12) months after the date the Plan was initially adopted by the Board. The Option may not be exercised to any extent by anyone prior to the time when the Plan is approved by the stockholders, and if such approval has not been obtained by the end of said twelve month period, the Option shall thereupon be canceled and become null and void.           5.9 Notification of Disposition. If this Option is designated as an Incentive Stock Option, the Optionee shall give prompt notice to the Company of any disposition or other transfer of any shares of stock acquired under this Agreement if such disposition or transfer is made (a) within two (2) years from the Date of Grant with respect to such shares or (b) within one (1) year after the transfer of such shares to him. Such notice shall specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by the Optionee in such disposition or other transfer.           5.10 Construction. This Agreement shall be administered, interpreted and enforced under the laws of the State of California without regard to conflicts of laws thereof.           5.11 Conformity to Securities Laws. The Optionee acknowledges that the Plan is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, and state securities laws and regulations. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Option is granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.           5.12 Amendments. This Agreement may not be modified, amended or terminated except by an instrument in writing, signed by the Optionee or such other person as may be permitted to exercise the Option pursuant to Section 4.1 and by a duly authorized representative of the Company. 10. --------------------------------------------------------------------------------   2003 INCENTIVE AWARD PLAN STOCK OPTION AGREEMENT           THIS AGREEMENT, dated the Grant Date set forth on the Stock Option Grant Notice (“Grant Notice”) (the terms of which are incorporated by reference and made a part of this Agreement), is made by and between Gen-Probe Incorporated, a Delaware corporation, hereinafter referred to as the “Company,” and the Independent Director identified on the Grant Notice and hereinafter referred to as “Optionee.”           WHEREAS, the Company wishes to afford the Optionee the opportunity to purchase shares of its Common Stock, par value $0.0001 per share; and           WHEREAS, the Company wishes to carry out The 2003 Incentive Award Plan of Gen-Probe Incorporated (the “Plan”) (the terms of which are hereby incorporated by reference and made a part of this Agreement); and           WHEREAS, the Board has determined that it would be to the advantage and best interest of the Company and its stockholders to grant the Stock Option (the “Option”) provided for herein to the Optionee as an inducement to enter into or remain in the service of the Company and as an incentive during such service, and has advised the Company thereof and instructed the undersigned officer to issue said Option.           NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows: ARTICLE I DEFINITIONS           1.1 General. Wherever the following terms are used in this Agreement they shall have the meanings specified below, unless the context clearly indicates otherwise.           1.2 Board. “Board” shall mean the Board of Directors of the Company.           1.3 Cause. “Cause” shall mean (a) the commission by the Optionee of a felony or the perpetration by the Optionee of an act of fraud, dishonesty, or misrepresentation against, or breach of fiduciary duty toward, the Company or a Subsidiary or (b) any willful act or omission by the Optionee which is injurious in any material respect to the financial condition or business reputation of the Company or a Subsidiary.           1.4 Code. “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.           1.5 Committee. “Committee” shall mean the Compensation Committee of the Board, or a subcommittee of the Board, appointed as provided in Section 9.1 of the Plan.  1. --------------------------------------------------------------------------------             1.6 Common Stock. “Common Stock” shall mean the Common Stock of the Company, par value $0.0001 per share.           1.7 Company. “Company” shall mean Gen-Probe Incorporated, a Delaware corporation.           1.8 Director. “Director” shall mean a member of the Board, whether such Director is an Employee or an Independent Director (as defined in the Plan).           1.9 Employee. “Employee” shall mean any officer or other employee (as defined in accordance with Section 3401(c) of the Code) of the Company, or of any Subsidiary.           1.10 Exchange Act. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.           1.11 Fair Market Value. “Fair Market Value” shall mean, as of any date, the value of the Common Stock determined as follows:           (a) If the Common Stock is listed on any established stock exchange or traded on The Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the last market trading day prior to the day of determination, as reported by The Nasdaq Stock Market or such other source as the Board deems reliable.           (b) In the absence of such markets for the Common Stock, the Fair Market Value shall be determined in good faith by the Board.           1.12 Option. “Option” shall mean the Stock Option granted under this Agreement and Article IV of the Plan.           1.13 Optionee. “Optionee” shall mean the Independent Director granted the Option under this Agreement and the Plan.           1.14 Plan. “Plan” shall mean The 2003 Incentive Award Plan of Gen-Probe Incorporated.           1.15 Retirement. “Retirement” shall mean the Optionee’s resignation after the Optionee has attained age 60 or completed ten (10) or more years of service with the Company and the Subsidiaries.           1.16 Secretary. “Secretary” shall mean the Secretary of the Company.           1.17 Securities Act. “Securities Act” shall mean the Securities Act of 1933, as amended.  2. --------------------------------------------------------------------------------             1.18 Subsidiary. “Subsidiary” shall mean any corporation in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.           1.19 Termination of Directorship. “Termination of Directorship” shall mean the time when the Optionee ceases to be a Director for any reason, including, but not by way of limitation, a termination by resignation, removal, failure to be reelected, death, disability or retirement. The Board, in its sole and absolute discretion, shall determine the effect of all matters and questions relating to Termination of Directorship of the Optionee. ARTICLE II GRANT OF OPTION           2.1 Grant of Option. In consideration of the Optionee’s agreement to remain in the employ of the Company or its Subsidiaries and for other good and valuable consideration, effective as of Date of Grant set forth on the Grant Notice, the Company irrevocably grants to the Optionee the option to purchase any part or all of an aggregate of the number of shares of Common Stock set forth on the Grant Notice, upon the terms and conditions set forth in this Agreement.           2.2 Purchase Price. The purchase price of the shares of Common Stock subject to the Option per share shall be as set forth on the Grant Notice, without commission or other charge.           2.3 Consideration to the Company. In consideration of the granting of the Option by the Company, the Optionee agrees to render faithful and efficient services as a Director. Nothing in the Plan or this Agreement shall confer upon the Optionee any right to continue as a Director. ARTICLE III PERIOD OF EXERCISABILITY           3.1 Commencement of Exercisability.           (a) Subject to Sections 3.3 and 5.11, the Option shall become exercisable in such amounts and at such times as are set forth on the Grant Notice.           (b) No portion of the Option which has not become exercisable at Termination of Directorship shall thereafter become exercisable, except as may be otherwise provided by the Board.           3.2 Duration of Exercisability. The installments provided for in Section 3.1(a) and the Grant Notice are cumulative. Each such installment which becomes exercisable pursuant to Section 3.1 shall remain exercisable until it becomes unexercisable under Section 3.3.  3. --------------------------------------------------------------------------------             3.3 Expiration of Option. The Option may not be exercised to any extent by anyone after the first to occur of the following events:           (a) The expiration of seven (7) years from the Date of Grant; or           (b) The expiration of three (3) months from the date of the Optionee’s Termination of Directorship, unless such Termination of Directorship occurs by reason of the Optionee’s death, Retirement or disability (within the meaning of Section 22(e)(3) of the Code); or           (c) The expiration of twelve (12) months following the date of the Optionee’s Termination of Directorship by reason of the Optionee’s death, Retirement, or disability (within the meaning of Section 22(e)(3) of the Code). ARTICLE IV EXERCISE OF OPTION           4.1 Person Eligible to Exercise. Subject to Section 5.2, during the lifetime of the Optionee, only the Optionee may exercise the Option or any portion thereof. After the death of the Optionee, any exercisable portion of the Option may, prior to the time when the Option becomes unexercisable under Section 3.3, be exercised by the Optionee’s personal representative or by any person empowered to do so under the Optionee’s will or under the then applicable laws of descent and distribution.           4.2 Partial Exercise. Any exercisable portion of the Option or the entire Option, if then wholly exercisable, may be exercised in whole or in part at any time prior to the time when the Option or portion thereof becomes unexercisable under Section 3.3; provided, however, that each partial exercise shall be for not less than ten (10) shares and shall be for whole shares only.           4.3 Manner of Exercise. The Option, or any exercisable portion thereof, may be exercised solely by delivery to the Secretary or the Secretary’s office of all of the following prior to the time when the Option or such portion thereof becomes unexercisable under Section 3.3:           (a) An Exercise Notice in writing signed by the Optionee or the other person then entitled to exercise the Option or portion thereof, stating that the Option or portion thereof is thereby exercised, such notice complying with all applicable rules established by the Board. Such notice shall be substantially in the form attached as Attachment III to the Grant Notice (or such other form as is prescribed by the Board); and       (b) (i) Full payment (in cash or by check) for the shares with respect to which the Option or portion thereof is exercised, to the extent permitted under applicable laws; or          (ii) With the consent of the Board, such payment may be made, in whole or in part, through the delivery of shares of Common Stock which have been  4. --------------------------------------------------------------------------------   owned by the Optionee for at least six months, duly endorsed for transfer to the Company with a Fair Market Value on the date of delivery equal to the aggregate exercise price of the Option or exercised portion thereof; or         (iii) To the extent permitted under applicable laws, through the delivery of a notice that the Optionee has placed a market sell order with a broker with respect to shares of Common Stock then issuable upon exercise of the Option, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the Option exercise price, provided, that payment of such proceeds is then made to the Company upon settlement of such sale; or         (iv) With the consent of the Board, any combination of the consideration provided in the foregoing subparagraphs (i), (ii) and (iii); and           (c) A bona fide written representation and agreement, in such form as is prescribed by the Board, signed by the Optionee or other person then entitled to exercise such Option or portion thereof, stating that the shares of Common Stock are being acquired for the Optionee’s own account, for investment and without any present intention of distributing or reselling said shares or any of them except as may be permitted under the Securities Act and then applicable rules and regulations thereunder, and that the Optionee or other person then entitled to exercise such Option or portion thereof will indemnify the Company against and hold it free and harmless from any loss, damage, expense or liability resulting to the Company if any sale or distribution of the shares by such person is contrary to the representation and agreement referred to above. The Board may, in its absolute discretion, take whatever additional actions it deems appropriate to ensure the observance and performance of such representation and agreement and to effect compliance with the Securities Act and any other federal or state securities laws or regulations. Without limiting the generality of the foregoing, the Board may require an opinion of counsel acceptable to it to the effect that any subsequent transfer of shares acquired on an Option exercise does not violate the Securities Act, and may issue stop-transfer orders covering such shares. Share certificates evidencing Common Stock issued on exercise of the Option shall bear an appropriate legend referring to the provisions of this subsection (c) and the agreements herein. The written representation and agreement referred to in the first sentence of this subsection (c) shall, however, not be required if the shares to be issued pursuant to such exercise have been registered under the Securities Act, and such registration is then effective in respect of such shares; and           (d) Full payment to the Company (or other employer corporation) of all amounts which, under federal, state or local tax law, it is required to withhold upon exercise of the Option. With the consent of the Board, (i) shares of Common Stock owned by the Optionee for at least six months duly endorsed for transfer or (ii) shares of Common Stock issuable to the Optionee upon exercise of the Option, having a Fair Market Value at the date of Option exercise equal to the statutory minimum sums required to be withheld, may be used to make all or part of such payment; and           (e) In the event the Option or portion thereof shall be exercised pursuant to Section 4.1 by any person or persons other than the Optionee, appropriate proof of the right of such person or persons to exercise the Option.  5. --------------------------------------------------------------------------------             4.4 Conditions to Issuance of Stock Certificates. The shares of Common Stock deliverable upon the exercise of the Option, or any portion thereof, may be either previously authorized but unissued shares or issued shares which have then been reacquired by the Company. Such shares shall be fully paid and nonassessable. The Company shall not be required to issue or deliver any certificate or certificates for shares of Common Stock purchased upon the exercise of the Option or portion thereof prior to fulfillment of all of the following conditions:           (a) The admission of such shares to listing on all stock exchanges on which such Common Stock is then listed; and           (b) The completion of any registration or other qualification of such shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which the Board shall, in its absolute discretion, deem necessary or advisable; and           (c) The obtaining of any approval or other clearance from any state or federal governmental agency which the Board shall, in its absolute discretion, determine to be necessary or advisable; and           (d) The receipt by the Company of full payment for such shares, including payment of all amounts which, under federal, state or local tax law, the Company (or other employer corporation) is required to withhold upon exercise of the Option; and           (e) The lapse of such reasonable period of time following the exercise of the Option as the Board may from time to time establish for reasons of administrative convenience.           4.5 Rights as Stockholder. The holder of the Option shall not be, nor have any of the rights or privileges of, a stockholder of the Company in respect of any shares purchasable upon the exercise of any part of the Option unless and until certificates representing such shares shall have been issued by the Company to such holder. ARTICLE V OTHER PROVISIONS           5.1 Administration. The Board shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Board in good faith shall be final and binding upon the Optionee, the Company and all other interested persons. No member of the Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan, this Agreement or the Option. In its absolute discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Board under the Plan and this Agreement.           5.2 Option Not Transferable.  6. --------------------------------------------------------------------------------             (a) The Option may not be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution or, subject to the consent of the Board, pursuant to a “DRO” (as defined in the Plan), unless and until the Option has been exercised, or the shares underlying such Option have been issued, and all restrictions applicable to such shares have lapsed. Neither the Option nor any interest or right therein shall be liable for the debts, contracts or engagements of the Optionee or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence.           (b) During the lifetime of the Optionee, only the Optionee may exercise the Option (or any portion thereof), unless it has been disposed of with the consent of the Board pursuant to a DRO. After the death of the Optionee, any exercisable portion of an Option may, prior to the time when such portion becomes unexercisable under the Plan or the Option Agreement, be exercised by the Optionee’s personal representative or by any person empowered to do so under the deceased Optionee’s will or under the then applicable laws of descent and distribution.           (c) Notwithstanding the foregoing provisions of this Section 5.2, if designated as a Non-Qualified Stock Option, the Option may be transferred by the Optionee, in writing and with prior written notice to the Board, to any one or more Permitted Transferees (as defined below), subject to the following terms and conditions: (i) the Option, as transferred to a Permitted Transferee, shall not be assignable or transferable by the Permitted Transferee other than by will or the laws of descent and distribution; (ii) the Option, as transferred to a Permitted Transferee, shall continue to be subject to all the terms and conditions of the Option as applicable to the Optionee (other than the ability to further transfer the Option); and (iii) the Optionee and the Permitted Transferee shall execute any and all documents requested by the Board, including, without limitation documents to (A) confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements for an exemption for the transfer under applicable federal and state securities laws and (C) evidence the transfer. For purposes of this subsection (c), “Permitted Transferee” shall mean, with respect to the Optionee, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Optionee’s household (other than a tenant or employee), a trust in which these persons (or the Optionee) control the management of assets, and any other entity in which these persons (or the Optionee) own more than fifty percent (50%) of the voting interests, or any other transferee specifically approved by the Board after taking into account any state or federal tax or securities laws applicable to transferable Non-Qualified Stock Options.           5.3 Lock-Up Period. The Optionee hereby agrees that, if so requested by the Company or any representative of the underwriters (the “Managing Underwriter”) in connection with any registration of the offering of any securities of the Company under the Securities Act, the Optionee shall not sell or otherwise transfer any shares of Common Stock or other securities of the Company during such period as may be requested in writing by the Managing Underwriter  7. --------------------------------------------------------------------------------   and agreed to in writing by the Company (which period shall not be longer than 180 days) (the “Market Standoff Period”) following the effective date of a registration statement of the Company filed under the Securities Act.           5.4 Restrictive Legends and Stop-Transfer Orders.           (a) The share certificate or certificates evidencing the shares of Common Stock purchased hereunder shall be endorsed with any legends that may be required by state or federal securities laws.           (b) The Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.           (c) The Company shall not be required: (i) to transfer on its books any shares of Common Stock that have been sold or otherwise transferred in violation of any of the provisions of this Agreement, or (ii) to treat as owner of such shares of Common Stock or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such shares shall have been so transferred.           5.5 Shares to Be Reserved. The Company shall at all times during the term of the Option reserve and keep available such number of shares of Common Stock as will be sufficient to satisfy the requirements of this Agreement.           5.6 Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of the Secretary, and any notice to be given to the Optionee shall be addressed to the Optionee at the address given beneath the Optionee’s signature hereto. By a notice given pursuant to this Section 5.6, either party may hereafter designate a different address for notices to be given to that party. Any notice which is required to be given to the Optionee shall, if the Optionee is then deceased, be given to the Optionee’s personal representative if such representative has previously informed the Company of such representative’s status and address by written notice under this Section 5.6. Any notice shall be deemed duly given when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service.           5.7 Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.           5.8 Stockholder Approval. The Plan will be submitted for approval by the Company’s stockholders within twelve (12) months after the date the Plan was initially adopted by the Board. The Option may not be exercised to any extent by anyone prior to the time when the Plan is approved by the stockholders, and if such approval has not been obtained by the end of said twelve month period, the Option shall thereupon be canceled and become null and void.           5.9 Notification of Disposition. If this Option is designated as an Incentive Stock Option, the Optionee shall give prompt notice to the Company of any disposition or other  8. --------------------------------------------------------------------------------   transfer of any shares of stock acquired under this Agreement if such disposition or transfer is made (a) within two (2) years from the Date of Grant with respect to such shares or (b) within one (1) year after the transfer of such shares to him. Such notice shall specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by the Optionee in such disposition or other transfer.           5.10 Construction. This Agreement shall be administered, interpreted and enforced under the laws of the State of California without regard to conflicts of laws thereof.           5.11 Conformity to Securities Laws. The Optionee acknowledges that the Plan is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, and state securities laws and regulations. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Option is granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.           5.12 Amendments. This Agreement may not be modified, amended or terminated except by an instrument in writing, signed by the Optionee or such other person as may be permitted to exercise the Option pursuant to Section 4.1 and by a duly authorized representative of the Company.  9. --------------------------------------------------------------------------------   Gen-Probe Incorporated Stock Option Grant Notice (2003 Equity Incentive Plan) Gen-Probe Incorporated (the “Company”), pursuant to its 2003 Equity Incentive Plan (the “2003 Plan”), hereby grants to Optionholder an option to purchase the number of shares of the Company’s Common Stock set forth below. This option is subject to all of the terms and conditions as set forth herein and in the Stock Option Agreement, the 2003 Plan and the Notice of Exercise, all of which are attached hereto and incorporated herein in their entirety.                             Optionholder:                       Date of Grant:                       Vesting Commencement Date:                       Number of Shares Subject to Option:       shares                   Exercise Price Per Share:   $                      per share         Expiration Date:                                 Type of Grant:   o Incentive Stock Option   o Nonstatutory Stock Option           Exercise Schedule:   þ Same as Vesting Schedule               Vesting Schedule:                   Payment:   By one or a combination of the following items (described in the Stock Option Agreement):               By cash or check         Pursuant to a Regulation T Program if the Shares are publicly traded Additional Terms/Acknowledgements: The undersigned Optionholder acknowledges receipt of, and understands and agrees to, this Grant Notice, the Stock Option Agreement and the 2003 Plan. Optionholder further acknowledges that as of the Date of Grant, this Grant Notice, the Stock Option Agreement and the 2003 Plan set forth the entire understanding between Optionholder and the Company regarding the acquisition of stock in the Company and supersede all prior oral and written agreements on that subject with the exception of (i) options previously granted and delivered to Optionholder under the 2003 Plan, and (ii) the following agreements only:                     Other Agreements:   þ None.         o See Attached Sheet.               Gen-Probe Incorporated        Optionee                                                 By:                                           Signature       Signature                         Title:           Date:                                                     Date:                                           Attachments: Stock Option Agreement, 2003 Equity Incentive Plan and Notice of Exercise   --------------------------------------------------------------------------------   Notice of Exercise Gen-Probe Incorporated 10210 Genetic Center Drive San Diego, California 92121-1589 Attention: Corporate Secretary           Re:   Exercise of Stock Option Ladies and Gentlemen: 1. Exercise of Option. The undersigned Optionee,                                         , was granted an option (the “Option”) to purchase shares of the Common Stock, par value $0.0001 per share (“Common Stock”), of Gen-Probe Incorporated, a Delaware corporation (the “Company”), effective as of                     , pursuant to a Stock Option Grant Notice dated                      (the “Grant Notice”). The undersigned hereby elects to exercise the Option as follows: (a)   The undersigned hereby elects to exercise the Option as to                      shares of the Common Stock, in accordance with Section 3.1 of the Stock Option Agreement (the “Shares”).   (b)   This date of this exercise is                                       ,         . 2. Payment. The undersigned has enclosed herewith                      (representing full payment for such Shares in accordance with Section 4.3 of the Option Agreement). The undersigned authorizes payroll withholding and otherwise will make adequate provision for the tax withholding obligations of the Company, if any, with respect to such exercise. 3. Binding Effect. The undersigned agrees that the Shares are being acquired in accordance with and subject to the terms, provisions and conditions of the Option Agreement set forth therein, to all of which the undersigned hereby expressly assent. This Agreement shall inure to the benefit of and be binding upon the heirs, executors, administrators, successors and assigns of the undersigned. The undersigned understands that he or she is purchasing the Shares pursuant to the terms of the Option Agreement, a copy of which the undersigned has received and carefully read and understands.                               Receipt of the above is hereby acknowledged GEN-PROBE INCORPORATED, a Delaware corporation By:                                         Title:                                          

Exhibit 10(a) [Tenet Healthcare Corporation Letterhead] May 3, 2006 Personal & Confidential Mr. Biggs C. Porter 75 Burr Drive Needham, Massachusetts  02492 Dear Biggs: I am pleased to confirm the details of our offer to you to become Tenet’s Chief Financial Officer with a start date of June 5, 2006.  You will report to Trevor Fetter, Chief Executive Officer and you will office at Tenet’s Corporate Office in Dallas, Texas. 1.               Compensation and Benefits a.                           Base Compensation:  Your base salary rate will be $550,000 per year, payable bi-weekly.  Your salary will be reviewed during the next applicable merit cycle. b.                          Annual Incentive Plan:  Your position is eligible for an annual incentive bonus according to the terms of the Tenet Annual Incentive Plan (AIP).  Your Target Award under the AIP is 70% of your annual base salary.  You are eligible for an AIP award for the portion of the 2006 plan year beginning on your start date.  This award will be paid at the same time as all other AIP awards for the 2006 plan year.  In no event will your AIP award for the portion of the 2006 plan year during which you serve as Tenet’s Chief Financial Officer be less than $210,000 or exceed two times your Target award. c.                           Car Allowance: You will receive an annual automobile allowance of $18,100.00 paid bi-weekly. d.                          Stock Incentives:  Your position is eligible for stock incentives.  The Company’s target award level for your position in 2006 was 156,667 Stock Options and 31,333 RSUs.  Grants are considered periodically by the company’s Compensation Committee of the Board of Directors.  All stock-based awards are subject to the review and approval of the Compensation Committee of the Board of Directors and are governed by the shareholder approved plan under which they are issued. You are being recommended for an initial grant of Restricted Stock Units (RSUs) with a RSU Target Award Value of $2,700,000 and non-qualified Stock Options with an Option Target Award Value of $472,500 which will be granted at fair market value on the date of grant and made effective upon the Compensation Committee’s approval.  This award of Stock Options and RSUs will vest at 1/3 per year on the first three anniversary dates of the award unless a different schedule of vesting applies pursuant to the Tenet Executive Severance Protection Plan (TESPP), as referenced in subparagraph (g) herein, in which case the TESPP controls. -------------------------------------------------------------------------------- i.                  The actual number of RSUs will be determined by dividing the RSU Target Award Value by the average closing price of Tenet common stock on the twenty (20) trading days immediately preceding your hire date. ii.               The actual number of non-qualified Stock Options will be determined by dividing the Option Target Award Value by the average closing price of Tenet common stock on the twenty (20) trading days immediately preceding your hire date, and multiplied by a factor used to estimate the fair market value of Tenet common stock on the date of grant. e.                           Sign-On Cash Bonus:  You will receive a one-time bonus of $300,000 payable in three $100,000 installments over 3 years, with the first installment to be paid upon your start date and the two subsequent payments to be made on the first and second anniversary dates of your start date, provided that you remain employed in your position with the Company on those subsequent anniversary dates. f.                             Benefits:  You are eligible to participate in the TenetSelect benefit program which provides health, life, dental, vision and disability insurance coverage. g.                          Severance Protection Agreement: You will participate in the Tenet Executive Severance Protection Plan (TESPP) which provides severance equal to two times base salary and benefits continuation for a qualifying termination without “cause.”  No severance is due in the event of a termination for “cause” described below or voluntary termination except as provided under the Plan for “good reason.”  Your copy of the TESPP is enclosed herewith. h.                          SERP:  You will be named to the Supplemental Executive Retirement Plan (SERP) which provides enhanced retirement, disability and life insurance benefits.  Details of that plan will be provided under separate cover. i.                              Relocation:  Tenet’s goal is to make your relocation process as smooth as possible.  Therefore, it is very important that you first contact Shelley Giles, Tenet’s Relocation Director, at 469-893-6131, to initiate your relocation benefits, prior to any relocation activities, e.g. marketing and/or selling your home. An itemized list of your relocation benefits is attached. After review, please initial these pages and return with your signed offer letter. If you voluntarily terminate your employment within twenty-four (24) months of your start date in the new position, you will be required to reimburse Tenet on a pro-rated basis for such relocation expenses paid to you or on your behalf (including any gross-up).  The amount due is reduced 1/24th for each full month you remain employed by Tenet within the initial 24-month period (for example, 50% in the case of a voluntary termination at the end of one year). 2.               Employment Status a.                           Compliance with Tenet Policies, Rules and Regulations:  By signing this letter below, you agree to abide by all Tenet Human Resources and other policies, procedures, rules and regulations currently in effect or that may be adopted from time to time, including the Tenet Performance Management policy and the Tenet Standards of Conduct.  To the extent that any such policies, rules or regulations, or any benefit plans in which you are a participant, conflict with the terms of this letter, the actual terms of those policies or plans shall control. b.                          Ethics Training: All Tenet employees are required to attend an initial ethics class within their first 120 days of employment, as well as a refresher course every fiscal year.  Please 2 -------------------------------------------------------------------------------- see your Human Resources representative for more information on class times and dates, or access the company Intranet site (eTenet) for additional information.   c.                           Standards of Conduct:  As an employee of Tenet, you agree to abide by Tenet’s Standards of Conduct, which reflect Tenet’s basic values of high-quality, cost-effective health services; honesty, trustworthiness, and reliability in all relationships; leadership in the development of partnership arrangements with providers of health services; good corporate citizenship of the communities where Tenet provides services; pursuit of fiscal responsibility and growth; compliance with all applicable rules, regulations, policies and procedures; and fair treatment of employees. d.                          Conflict Resolution:  As a condition of employment, you agree to abide by Tenet’s Fair Treatment Process which includes final and binding Arbitration as a resolution to any grievance that results out of your employment or termination of employment with Tenet Employment Inc. Finally, your employment with the company will be on an at-will basis which means that either you or the company may terminate the employment relationship with or without notice or with or without cause at any time.  The term “cause” as used above shall include dishonesty, fraud, willful misconduct, self dealing or violation of the company’s Standards of Conduct, breach of fiduciary duty (whether or not involving personal profit), conflict of interest, failure, neglect or refusal to perform your duties in any material respect, violation of law (except traffic violations or similar minor infractions), or other wrongful conduct of a similar nature and degree.  Notwithstanding, a failure to achieve or meet business objectives, as defined by the Company, shall not be considered “cause” so long as you have devoted your best and good faith efforts and attention to the achievement of those objectives. Biggs, assuming these terms are agreeable, please sign this letter indicating your acceptance and return to me in Human Resources by May 23, 2006 – 469/893-8170 Confidential Fax. This is a terrific opportunity for you.  We are enthusiastic about you accepting this position.  Please call me if you have any questions. Sincerely, ACCEPTED AND AGREED TO:         /s/ Joseph A. Bosch /s/ Biggs C. Porter 5/22/06     Biggs C. Porter Date Joseph A. Bosch     SVP, Human Resources       3 --------------------------------------------------------------------------------

Exhibit 10.1 AMENDMENT TO EMPLOYMENT AGREEMENT Between Denny’s Corporation and Nelson J. Marchioli This Amendment to Employment Agreement (“Amendment”) is being entered on the 10th day of November, 2006, between Denny’s Corporation, a Delaware corporation (“the Company”), together with its wholly-owned subsidiary, Denny’s Inc., a California corporation (“Denny’s) and Nelson J. Marchioli (the “Executive”), residing at 2110 Cleveland Street Ext., Greenville, SC 29607. WITNESSETH: WHEREAS, the Board of Directors (the “Board”) of the Company and the Executive entered into an employment agreement (the “Agreement”) on May 11, 2005, which was scheduled to end at Midnight on December 31, 2007; and WHEREAS, the Board and the Executive wish to amend the Agreement to reflect the new terms set forth herein. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties do hereby agree as follows: 1.   The first sentence of Section 1 of the Agreement shall be modified to read as follows: Employment. The Executive shall be deemed an employee of Denny’s. His employment under the terms of this Agreement shall commence on the date of execution as evidenced above (the “Effective Date”), and shall continue until Noon on May 20, 2009, unless terminated earlier pursuant to Section 5 (such period of employment under this Agreement is hereinafter referred to as the “Employment Term”). 2.   The following sentence shall be added to the end of Section 3 (a): It is expressly agreed and understood that the Compensation and Incentives Committee (the “Compensation Committee”) of the Board shall have the right to review the Executive’s Base Salary on an annual basis and to increase the Base Salary, if such an increase is deemed warranted based upon the performance of the Executive during each such annual period being reviewed. 3. Section 5(b)(ii) shall be modified to read as follows:   In the event of a termination as a result of the Executive’s Permanent Disability, for each year of the two year period that immediately follows the date of such termination of the Executive’s employment, (A) the Executive and/or his Family shall be entitled to receive and participate in the Welfare Benefits in addition to any continuation coverage which the Executive and/or his Family is entitled to elect under 4980B of the Code; and (B) the Executive shall be paid (x) one-half of the Base Salary in effect at such date of termination, payable in monthly installments, and (y) one-half of the Annual Bonus that would be payable under Section 3(b) for such period, payable as and when annual incentive bonuses with respect to such period are paid by the Company to other senior executives of the Company. 4. Section 5(d) shall be added to the Agreement to read as follows:   (d)Compliance with Code section 409A. Notwithstanding any other provision of this Agreement, in the case of any payment or benefit that is determined to be deferred compensation subject to Code section 409A, no payment required to be made under this Agreement as a result of the Executive’s Termination of service other than by death or Disability shall be made earlier than the date that is six months after such Termination, and (if required by the regulations or other guidance issued under section 409A) any Welfare Benefits provided to the Executive will be paid for under COBRA (and eligible for reimbursement by the Company, on the first business day of the first month that commences following the end of the six-month period following Termination).   5. All provisions of the Agreement not hereby amended, are hereby ratified and confirmed and shall continue in full force and effect. IN WITNESS WHEREOF, the parties hereto have executed this Amendment the day and year first above written.   Denny's Corporation     Denny's Inc.           By: /s/ Vera King Farris   By: /s/ Rhonda J. Parish Name: Vera King Farris   Name: Rhonda J. Parish Title: Chairman of the Compensation and   Title: Executive Vice President,   Incentives Committee of the     Chief Legal Officer,   Board of Directors     and Secretary                      By: /s/ Nelson J. Marchioli         Nelson J. Marchioli      

  EXHIBIT 10.1 EXECUTION COPY AMENDMENT NO. 1 TO THE CREDIT AGREEMENT           Dated as of January 20, 2006           AMENDMENT NO. 1 TO THE CREDIT AGREEMENT among Del Monte Corporation, a Delaware corporation (the “Borrower”), Del Monte Foods Company, a Delaware corporation (“Holdings”), each lender from time to time party thereto (collectively, the “Lenders” and individually, a “Lender”), and Bank of America, N.A., as administrative agent (the “Administrative Agent”) for the Lenders.           PRELIMINARY STATEMENTS:           (1) The Borrower, Holdings, the Lenders, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Morgan Stanley Senior Funding, Inc., as Syndication Agent and JPMorgan Chase Bank, N.A., Harris Trust and Savings Bank and Suntrust Bank, as Co-Document Agents have entered into a Credit Agreement dated as of February 8, 2005 (the “Credit Agreement”). Capitalized terms not otherwise defined in this Amendment have the same meanings as specified in the Credit Agreement.           (2) The Borrower and the Required Lenders have agreed to amend the Credit Agreement as hereinafter set forth.           SECTION 1. Amendments to Credit Agreement. The Credit Agreement is, effective as of the date hereof and subject to the satisfaction of the conditions precedent set forth in Section 2, hereby amended as follows:      (a) Section 1.01 is amended to add the following definitions in the appropriate alphabetical position:      “Major Disposition” has the meaning specified in Section 2.05(b).      “Approved Bank” has the meaning specified in the definition of “Cash Equivalents”.      (b) Section 1.01 is further amended to substitute for the definition of “Cash Equivalents” set forth therein the following:      “ “Cash Equivalents” means any of the following types of Investments, to the extent owned by the Borrower or any of its Subsidiaries: (a) obligations issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof having maturities of not more than three years from the date of acquisition thereof; provided that the full faith and credit of the United States of America is pledged in support thereof; (b) deposits, time deposits, eurodollar time deposits or overnight bank deposits with, or certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is a Lender or an   --------------------------------------------------------------------------------   Affiliate of a Lender or (B) is organized under the laws of the United States of America, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States of America, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, or under the laws of a foreign country (or political subdivision thereof) in which a Subsidiary making such deposits operates its business and (ii) (A) has combined capital and surplus of at least $250,000,000, (B) whose senior unsecured debt is rated at least A-1 by S&P and at least P-1 by Moody’s; or (C) has a short-term commercial paper rating (at the time of acquisition of such security) by S&P of at least “A-1” or the equivalent thereof (each commercial bank referred to in this clause (b), being an “Approved Bank”); (c) deposits, time deposits, eurodollar time deposits or overnight bank deposits with, or certificates of deposit or bankers’ acceptances of any commercial bank that is organized under the laws of a foreign country but is not an Approved Bank to the extent deposits with such foreign bank do not exceed $1,000,000 outstanding at any time and the aggregate amount of all deposits made pursuant to this clause (c) does not exceed $5,000,000 outstanding at any time; (d) commercial paper and variable or fixed rate notes issued by any Approved Bank or by the parent company of any Approved Bank, (e) commercial paper and variable rate notes issued by, or guaranteed by, any industrial or financial company with a short-term commercial paper rating (at the time of acquisition of such security) of at least “A-1” or the equivalent thereof by S&P or at least “P-1” or the equivalent thereof by Moody’s, or issued by, or guaranteed by any industrial company with a long-term unsecured debt rating (at the time of acquisition of such security) of at least “AA” or the equivalent thereof by S&P or at least “Aa” or the equivalent thereof by Moody’s and in each case maturing within one year after the date of acquisition; (f) commercial paper in an aggregate amount of no more than $2,000,000 per issuer and not more than $10,000,000 in the aggregate outstanding at any time issued by any Person organized under the laws of any state of the United States of America and rated at least “Prime-2” (or the then equivalent grade) by Moody’s or at least “A-2” (or the then equivalent grade) by S&P, or carrying an equivalent rating by a nationally recognized rating agency if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, in each case with maturities of not more than 180 days from the date of acquisition thereof; (g) repurchase obligations of any Approved Bank, having a term of not more than 30 days, with respect to securities issued or fully guaranteed or insured by the United States government; (h) repurchase agreements with any Lender or any primary dealer maturing within one year from the date of acquisition that are fully collateralized by investment instruments that would otherwise be Cash Equivalents; provided that the terms of such repurchase agreements comply with the guidelines set forth in the “Federal Financial Institutions Examination Council Supervisory Policy — Repurchase Agreements of Depository Institutions With Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985”; (h) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory , political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s; (i) securities with maturities of one year or less from the date of acquisition backed by standby letters of credit issued by any Approved Bank; (j) obligations of other Persons with maturities of two years or less from the date of acquisition, rated at least AA by S&P and Aa2 by Moody’s; and (k) shares   --------------------------------------------------------------------------------   of money market mutual or similar funds which invest at least 95% of their assets in securities or other investments satisfying the requirements of clauses (a) through (j) of this definition.”      (c) Section 2.03(i) is amended by substituting for the phrase “first Business Day after the end of each January, April, July and October” where it appears therein the phrase “last Business Day of each January, April, July and October”.      (d) Clause (b)(i) of Section 2.05 is amended to read in full as follows: (i) If Holdings or any of its Subsidiaries Disposes of any property or assets (other than any Disposition of any property or assets permitted by Sections 7.05(a) through (i) and (l) and (m)) which in the aggregate results in the realization by Holdings or such Subsidiary of Net Cash Proceeds (determined as of the date of consummation of such Disposition, whether or not such Net Cash Proceeds are then received by Holdings or such Subsidiary, but with the amount of any such Net Cash Proceeds attributable to any time period after the consummation of such Disposition to be determined by an estimate made in good faith by a Responsible Officer), in excess of the lesser of $15,000,000 and 10% of Consolidated Net Tangible Assets (as defined in the New Subordinated Notes Indenture), determined as of the last day of the most recent fiscal quarter for which a consolidated balance sheet of Holdings and its Subsidiaries has been prepared, in any fiscal year, then: (A) with respect to any such Disposition that is consummated on or prior to July 30, 2006 and results in the realization by Holdings or such Subsidiary of Net Cash Proceeds (determined as of the date of consummation of such Disposition, whether or not such Net Cash Proceeds are then received by Holdings or such Subsidiary, but with the amount of any such Net Cash Proceeds attributable to any time period after the consummation of such Disposition with respect to such Disposition to be determined by an estimate made in good faith by a Responsible Officer) in excess of $50,000,000 (such Disposition as described in this Section 2.05(b)(i)(A), a “Major Disposition”), the Borrower shall prepay substantially contemporaneously with the consummation of such Major Disposition pursuant to this Section 2.05(b)(i)(A) an aggregate principal amount of Loans equal to 20% of the Net Cash Proceeds received by Holdings or its Subsidiaries upon the consummation of such Major Disposition; provided that (x) any Net Cash Proceeds remaining after the prepayments required to be made pursuant to the foregoing may be used at the discretion of Holdings or the applicable Subsidiary for general corporate purposes not in contravention of any Law or Loan Document (including, without limitation, the making of any Restricted Payment not in contravention of Section 7.06 hereof) and (y) in the case of any Major Disposition permitted by Section 7.05(k), (I) any such prepayment only shall be required to be made within 180 days of the date of the Disposition, and (II) the amount required to be prepaid   --------------------------------------------------------------------------------   pursuant to this Section 2.05(b)(i)(A) with respect to such Disposition permitted by Section 7.05(k) shall be 50% of the first $200,000,000 of Net Cash Proceeds therefrom and 100% of all Net Cash Proceeds in excess of $200,000,000 received therefrom; (B) with respect to any such Disposition that does not qualify as a Major Disposition, the Borrower shall prepay, within 180 days of the date of such Disposition, an aggregate principal amount of Loans equal to 100% of all Net Cash Proceeds received therefrom on or prior to such date (or, in the case of a Disposition permitted by Section 7.05(k), 50% of the first $200,000,000 of Net Cash Proceeds therefrom and 100% of all Net Cash Proceeds in excess of $200,000,000 received therefrom); provided, however, that, with respect to any Net Cash Proceeds realized under a Disposition described in this Section 2.05(b)(i)(B) (other than Dispositions pursuant to Section 7.05(k)), at the option of the Borrower, and as an alternative to the prepayment requirement set forth in this Section 2.05(b)(i)(B), Holdings or such Subsidiary may reinvest all or any portion of such Net Cash Proceeds in fixed or capital assets to be used in the business of the Borrower and its Subsidiaries so long as such Net Cash Proceeds are used or committed to be so used within 12 months after the Disposition giving rise to the obligations under this Section 2.05(b)(i)(B);      (e) Clause (j)(ii) of Section 7.05 is amended in full to read as follows: “(ii)(A) during the time period beginning October 31, 2005 to and including July 30, 2006, the EBITDA for the Measurement Period immediately preceding the consummation of such Disposition attributable to any property Disposed of in reliance on this Section 7.05(j) shall not exceed, with respect to one or more Dispositions made during such time period in reliance on this Section 7.05(j), 15% of EBITDA of Holdings for the Measurement Period ending on May 1, 2005 (with the EBITDA for each such Disposition being determined by the EBITDA attributable to the applicable property for the Measurement Period immediately preceding the consummation of such Disposition) and (B) from and after July 31, 2006, the aggregate fair market value of all property Disposed of on or after such date in reliance on this Section 7.05(j) shall not exceed $100,000,000; provided, that for purposes of this clause (B), the determination of the fair market value of property Disposed of with respect to any Disposition shall be as determined in good faith by a Responsible Officer as of the date of execution of a definitive agreement for such Disposition (whether or not such Disposition is subject to the satisfaction of any conditions), or, if no such agreement is executed with respect to such Disposition, the date of consummation thereof; and”.      (f) Clause (e) of Section 7.06 is amended in full to read as follows:   --------------------------------------------------------------------------------   “so long as no Default or Event of Default has occurred and is continuing or would result therefrom, the Borrower may pay dividends to Holdings in an aggregate amount not to exceed (i) prior to October 31, 2005, in an aggregate amount not to exceed the sum of (A) $125,000,000 plus (B) 50% of Consolidated Net Income of Holdings determined on a cumulative basis from the beginning of fiscal year 2005 and (ii) on and after October 31, 2005, in an aggregate amount not to exceed the sum of (A) $195,000,000 plus (B) 50% of Consolidated Net Income of Holdings determined on a cumulative basis from October 31, 2005 plus (C) at such time as no more than $25,000,000 in principal amount of Existing Subordinated Notes remains outstanding, $110,000,000; provided that notwithstanding the foregoing, no dividend payment shall be permitted hereunder if the making of such dividend payment would at the time of such payment violate Section 4.10 of the Existing Subordinated Note Indenture or Section 4.10 of the New Subordinated Note Indenture:”.      (g) Clause (g) of Section 7.06 is amended to substitute the words “Section 7.02(m)” for the existing language “Section 7.02(n)” in the fourth line thereof.      (h) Section 7.10(a) is amended in full to read as follows: “(a) Total Debt Ratio. Permit the Total Debt Ratio for any Measurement Period set forth below to be greater than the ratio set forth below opposite such period:       Four Fiscal Quarters Ending   Maximum Total Debt Ratio       Closing Date through January 28, 2007   3.75:1.00       April 29, 2007 through February 1, 2009   3.50:1.00       May 3, 2009 and each fiscal quarter thereafter   3.25:1.00 ”.   --------------------------------------------------------------------------------             SECTION 2. Conditions of Effectiveness. This Amendment shall become effective as of the date first above written when, and only when, the Administrative Agent shall have received counterparts of this Amendment executed by the Borrower and the Required Lenders or, as to any of the Lenders, advice satisfactory to the Administrative Agent that such Lender has executed this Amendment and the consent attached hereto executed by each Guarantor. This Amendment is subject to the provisions of Section 11.01 of the Credit Agreement.           SECTION 3. Reference to and Effect on the Credit Agreement and the Loan Documents. (a) On and after the effectiveness of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each reference in the Notes and each of the other Loan Documents to “the Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement, as amended by this Amendment.           (b) The Credit Agreement, the Notes and each of the other Loan Documents, as specifically amended by this Amendment, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. Without limiting the generality of the foregoing, the Collateral Documents and all of the Collateral described therein do and shall continue to secure the payment of all Obligations of the Loan Parties under the Loan Documents, in each case as amended by this Amendment.           (c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender or the Agent under any of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.           SECTION 4. Costs and Expenses The Borrower agrees to pay on demand all costs and expenses of the Agent in connection with the preparation, execution, delivery and administration, modification and amendment of this Amendment and the other instruments and documents to be delivered hereunder (including, without limitation, the reasonable fees and expenses of counsel for the Administrative Agent) in accordance with the terms of Section 11.04 of the Credit Agreement.           SECTION 5. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment by telecopier shall be effective as delivery of a manually executed counterpart of this Amendment.           SECTION 6. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]   --------------------------------------------------------------------------------             IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.               DEL MONTE CORPORATION               By        /s/ Thomas E. Gibbons                   Name: Thomas E. Gibbons         Title: Senior Vice President and Treasurer               DEL MONTE FOODS COMPANY               By        /s/ Thomas E. Gibbons                   Name: Thomas E. Gibbons         Title: Senior Vice President and Treasurer   --------------------------------------------------------------------------------                 Bank of America, N.A., as Administrative Agent and     as Lender               By:        /s/ William F. Sweeney                   Name: William F. Sweeney         Title: Senior Vice President               PPM America, Inc., as Attorney-in-fact, on behalf of     Jackson National Life Insurance Company               By:        /s/ Chris Kappas                   Name: Chris Kappas         Title: Managing Director               PPM America, Inc., as Collateral Manager, on behalf     of Tuscany CDO, Limited               By:        /s/ Chris Kappas                   Name: Chris Kappas         Title: Managing Director               ING Capital LLC, as Lender               By:        /s/ Marcy S. Lyons                   Name: Marcy S. Lyons         Title: Director   --------------------------------------------------------------------------------                 CoBank, ACB, as Lender               By:        /s/ Lori L. O’Flaherty                   Name: Lori L. O’Flaherty         Title: Senior Vice President               Union Bank of California, N.A., as Lender               By:        /s/ David Jackson                   Name: David Jackson         Title: Vice President               The Bank of New York, as Lender               By:        /s/ Elizabeth T. Ying                   Name: Elizabeth T. Ying         Title: Vice President               Babson Capital Management LLC, as Collateral     Manager, on behalf of Massachusetts Mutual Life     Insurance Company, as Lender               By:        /s/ David P. Wells                   Name: David P. Wells, CFA         Title: Managing Director Del Monte Amendment No.1   --------------------------------------------------------------------------------                 Babson Capital Management LLC, as Collateral     Manager, on behalf of Babson CLO Ltd. 2004-II,     as Lender               By:        /s/ David P. Wells                   Name: David P. Wells, CFA         Title: Managing Director               BNP Paribas, as Lender               By:        /s/ Katherine Wolfe                   Name: Katherine Wolfe         Title: Director               By:        /s/ Jamie Dillon                   Name: Jamie Dillon         Title: Managing Director               INVESCO Senior Secured Management, Inc., as     Asset Manager, on behalf of Avalon Capital Ltd. 3,     as Lender               By:        /s/ Joseph Rotondo                   Name: Joseph Rotondo         Title: Authorized Signatory               INVESCO Senior Secured Management, Inc., as     Investment Advisor, on behalf of Charter View     Portfolio, as Lender               By:        /s/ Joseph Rotondo                   Name: Joseph Rotondo         Title: Authorized Signatory Del Monte Amendment No.1   --------------------------------------------------------------------------------                 INVESCO Senior Secured Management, Inc., as     Investment Adviser, on behalf of Diversified Credit     Portfolio, Ltd., as Lender               By:        /s/ Joseph Rotondo                   Name: Joseph Rotondo         Title: Authorized Signatory               INVESCO Senior Secured Management, Inc., as     Sub-Adviser, on behalf of AIM Floating Rate Fund,     as Lender               By:        /s/ Joseph Rotondo                   Name: Joseph Rotondo         Title: Authorized Signatory               INVESCO Senior Secured Management, Inc., as     Asset Manager, on behalf of Saratoga CLO I,     Limited, as Lender               By:        /s/ Joseph Rotondo                   Name: Joseph Rotondo         Title: Authorized Signatory               Boston Management and Research, as Investment     Advisor, on behalf of Senior Debt Portfolio, as     Lender               By:        /s/ Michael B. Botthof                   Name: Michael B. Botthof         Title: Vice President Del Monte Amendment No.1   --------------------------------------------------------------------------------                 Eaton Vance Management, as Investment Advisor,     on behalf of Eaton Vance Senior Income Trust, as     Lender               By:        /s/ Michael B. Botthof                   Name: Michael B. Botthof         Title: Vice President               Eaton Vance Management, as Investment Advisor,     on behalf of Eaton Vance Institutional Senior Loan     Fund, as Lender               By:        /s/ Michael B. Botthof                   Name: Michael B. Botthof         Title: Vice President               Eaton Vance Management, as Investment Advisor,     on behalf of Eaton Vance CDO III, Ltd., as Lender               By:        /s/ Michael B. Botthof                   Name: Michael B. Botthof         Title: Vice President               Eaton Vance Management, as Investment Advisor,     on behalf of Costantinus Eaton Vance CDO V, Ltd.,     as Lender               By:        /s/ Michael B. Botthof                   Name: Michael B. Botthof         Title: Vice President Del Monte Amendment No.1   --------------------------------------------------------------------------------                 Eaton Vance Management, as Investment Advisor,     on behalf of Eaton Vance CDO VI, Ltd., as Lender               By:      /s/ Michael B. Botthof                   Name: Michael B. Botthof         Title: Vice President               Boston Management and Research, as Investment     Advisor, on behalf of Grayson & Co., as Lender               By:        /s/ Michael B. Botthof                   Name: Michael B. Botthof         Title: Vice President               Eaton Vance Management, as Attorney-in-fact,     through State Street Bank and Trust Company N.A.     as Fiduciary Custodian, on behalf of The     Norinchukin Bank, New York Branch, as Lender               By:        /s/ Michael B. Botthof                   Name: Michael B. Botthof         Title: Vice President               Eaton Vance Management, as Investment Adviser,     on behalf of Eaton Vance Limited Duration Income     Fund, as Lender               By:        /s/ Michael B. Botthof                   Name: Michael B. Botthof         Title: Vice President               Eaton Vance Management, as Investment Adviser,     on behalf of Tolli & Co., as Lender               By:        /s/ Michael B. Botthof                   Name: Michael B. Botthof         Title: Vice President Del Monte Amendment No.1   --------------------------------------------------------------------------------                 Eaton Vance Management, as Investment Adviser,     on behalf of Eaton Vance Senior Floating-Rate     Trust, as Lender               By:        /s/ Michael B. Botthof                   Name: Michael B. Botthof         Title: Vice President               Eaton Vance Management, as Investment Adviser,     on behalf of Eaton Vance Floating-Rate Income     Trust, as Lender               By:        /s/ Michael B. Botthof                   Name: Michael B. Botthof         Title: Vice President               National City Bank, as Lender               By:        /s/ Kenneth M. Blackwell                   Name: Kenneth M. Blackwell         Title: Vice President               Wells Fargo Bank, N.A., as Lender               By:        /s/ Margarita Chichioco                   Name: Margarita Chichioco         Title: Vice President               UBS AG, Stamford Branch, as Lender               By:        /s/ Irja R. Otsa                   Name: Irja R. Otsa         Title: Associate Director, Banking Products           Services, US               By:        /s/ Louis Pistecchia                   Name: Louis Pistecchia         Title: Director, Banking Products Services, US Del Monte Amendment No.1   --------------------------------------------------------------------------------                 Harris N.A., as successor by merger to Harris Trust     and Savings Bank, as Lender               By:        /s/ Nancy Miller                   Name: Nancy Miller         Title: Vice President               Bayerische Landesbank, New York Branch, as Lender               By:        /s/ Edward Cripps                   Name: Edward Cripps         Title: Vice President               By:        /s/ Stuart Schulman                   Name: Stuart Schulman         Title: Senior Vice President               Commerzbank AG, New York and Grand Cayman     Branches, as Lender               By:        /s/ Karla Wirth                   Name: Karla Wirth         Title: AVP               By:        /s/ Yangling J. Si                   Name: Yangling J. Si         Title: AVP               Wachovia Bank, National Association, as Lender               By:        /s/ Beth Rue                   Name: Beth Rue         Title: Assistant Vice President Del Monte Amendment No.1   --------------------------------------------------------------------------------                 1st Farm Credit Services, PCA, as Lender               By:        /s/ Dale A. Richardson                   Name: Dale A. Richardson         Title: VP, Capital Markets Group               People’s Bank, as Lender               By:        /s/ George F. Paik                   Name: George F. Paik         Title: Vice President               Farm Credit West, PCA, as Lender               By:        /s/ Ben Madonna                   Name: Ben Madonna         Title: Asst. Vice President               JPMorgan Chase Bank, N.A., as Lender               By:        /s/ William P. Rindfuss                   Name: William P. Rindfuss         Title: Vice President               HSBC Bank USA, National Association, as Lender               By:        /s/ Robert P. Reynolds                   Name: Robert P. Reynolds         Title: VP & Sr. Relationship Manager Del Monte Amendment No.1   --------------------------------------------------------------------------------                 Farm Credit Services of Minnesota Valley, PCA,     d/b/a FCS Commercial Finance Group, as Lender               By:        /s/ Lisa Caswell                   Name: Lisa Caswell         Title: Commercial Loan Officer               SunTrust Bank, as Lender               By:        /s/ Samuel M. Jannetta                   Name: Samuel M. Jannetta         Title: Vice President               Morgan Stanley Senior Funding, Inc., as Lender               By:        /s/ Lisa Malone                   Name: Lisa Malone         Title: Vice President               Firstrust Bank, as Lender               By:        /s/ Kent D. Nelson                   Name: Kent D. Nelson         Title: Senior Vice President Del Monte Amendment No.1   --------------------------------------------------------------------------------                 RZB Finance LLC, as Lender               By:        /s/ John A. Valiska                   Name: John A. Valiska         Title: First Vice President               By:        /s/ Astrid Wilke                   Name: Astrid Wilke         Title: Vice President               Farm Credit Services of Mid-America, PCA, as Lender               By:        /s/ Ralph M. Bowman                   Name: Ralph M. Bowman         Title: Vice President               Farm Credit Services of Missouri, PCA, as Lender               By:        /s/ Sean Unterreines                   Name: Sean Unterreines         Title: Capital Markets Officer               Sovereign Bank, as Lender               By:        /s/ Elisabet C. Hayes                   Name: Elisabet C. Hayes         Title: Vice President               Bank of Hawaii, as Lender               By:        /s/ James Karnowski                   Name: James Karnowski         Title: Vice President Del Monte Amendment No.1   --------------------------------------------------------------------------------                 Northwest Farm Credit Services, PCA, as Lender               By:        /s/ Casey Kinzer                   Name: Casey Kinzer         Title: Senior Credit Officer               Comerica West Inc., as Lender               By:        /s/ Don R. Carruth                   Name: Don R. Carruth         Title: Corporate Banking Officer               American AgCredit, PCA, as Lender               By:         /s/ Gary Van Schuyver                   Name: Gary Van Schuyver         Title: Vice President               Branch Banking and Trust Company, as Lender               By:        /s/ Roberts A. Bass                   Name: Roberts A. Bass         Title: Senior Vice President               PNC Bank, National Association, as Lender               By:        /s/ Luke McElhinny                   Name: Luke McElhinny         Title: Vice President Del Monte Amendment No.1   --------------------------------------------------------------------------------                 Farm Credit Bank of Texas, as Lender               By:        /s/ Luis Requejo                   Name: Luis Requejo         Title: Vice President               Oak Brook Bank, as Lender               By:        /s/ Henry Wessel                   Name: Henry Wessel         Title: VP               GreenStone Farm Credit Services, ACA/FLCA, as Lender               By:        /s/ Ben Mahlich                   Name: Ben Mahlich         Title: AVP-Lending Officer               Mizuho Corporate Bank, Ltd., as Lender               By:        /s/ Robert Gallagher                   Name: Robert Gallagher         Title: Senior Vice President               AgFirst Farm Credit Bank, as Lender               By:        /s/ Felicia Morant                   Name: Felicia Morant         Title: Vice President Del Monte Amendment No.1   --------------------------------------------------------------------------------                 Protective Life Insurance Company, as Lender               By:        /s/ Lance P. Black                   Name: Lance P. Black         Title: Vice President               Dresdner Bank AG, New York and Grand Cayman     Branches, as Lender               By:        /s/ Brian M. Smith                   Name: Brian M. Smith         Title: Managing Director               By:        /s/ Thomas R. Brady                   Name: Thomas R. Brady         Title: Director               U.S. Bank National Association, as Lender               By:        /s/ Alan Schuler                   Name: Alan Schuler         Title: Senior Vice President               Erste Bank, as Lender               By:        /s/ Paul Judicke                   Name: Paul Judicke         Title: Director, New York Branch               By:        /s/ Brandon A. Meyerson                   Name: Brandon A. Meyerson         Title: Vice President, New York Branch Del Monte Amendment No.1   --------------------------------------------------------------------------------                 Farm Credit Services of America, PCA, as Lender               By:        /s/ Curt Brown                   Name: Curt Brown         Title: Vice President               U.S. AgBank, FCB, as Lender               By:        /s/ Greg Somerhalder                   Name: Greg Somerhalder         Title: Vice President       Guaranty Bank, as Lender               By:        /s/ Michael Ansolabehere                   Name: Michael Ansolabehere         Title: Vice President               Cooperatieve Centrale Raiffeisen-Boerenleenbank     B.A. “Rabobank International” New York Branch, as     Lender               By:        /s/ Jessalyn Peters                   Name: Jessalyn Peters         Title: Managing Director               By:        /s/ Rebecca O. Morrow                   Name: Rebecca O. Morrow         Title: Executive Director Del Monte Amendment No.1   --------------------------------------------------------------------------------                 General Electric Capital Corporation, as Lender               By:        /s/ Dwayne L. Coker                   Name: Dwayne L. Coker         Title: Duly Authorized Signatory Del Monte Amendment No.1   --------------------------------------------------------------------------------   CONSENT           Dated as of January 20, 2006           Each of the undersigned, (a) as Guarantor under (i) in the case of each of the undersigned other than Del Monte Food Company (“Holdings”), the Subsidiary Guaranty dated February 8, 2005 (the “Subsidiary Guaranty”) and (i) in the case of Holdings, the Guaranty made by Holdings under Article X of the Credit Agreement (as defined below) (the “DMFC Guaranty”), in each case, in favor of the Secured Parties referred to in the Credit Agreement referred to in the foregoing Amendment (the “Credit Agreement”) and (b) as Grantor under the Security Agreement dated February 8, 2005 (as amended through the date hereof, the “Security Agreement”) to Bank of America, N.A. as Collateral Agent for such Secured Parties, hereby consents to such Amendment and hereby confirms and agrees that (A) notwithstanding the effectiveness of such Amendment, each of (1) in the case of each of the undersigned other than Holdings, the Subsidiary Guaranty and (2) in the case of Holdings, the DMFC Guaranty is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects, except that, on and after the effectiveness of such Amendment, each reference in the Subsidiary Guaranty, the DMFC Guaranty or the Security Agreement to the “Credit Agreement”, “thereunder”, “thereof” or words of like import shall mean and be a reference to the Credit Agreement, as amended by such Amendment and (B) the Collateral Documents to which each of the undersigned is a party and all of the Collateral described therein do, and shall continue to, secure the payment of all of the Secured Obligations. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement.               DEL MONTE FOODS COMPANY               By:        /s/ Thomas E. Gibbons               Name:   Thomas E. Gibbons     Title:   Senior Vice President and Treasurer               STAR-KIST SAMOA, INC.               By:        /s/ Thomas E. Gibbons               Name:   Thomas E. Gibbons     Title:   Vice President, Chief Financial Officer and         Treasurer Del Monte Amendment No.1   --------------------------------------------------------------------------------                 MARINE TRADING PACIFIC, INC.               By:   /s/ Thomas E. Gibbons               Name:   Thomas E. Gibbons     Title:   Vice President, Chief Financial Officer and         Treasurer               STAR-KIST MAURITIUS, INC.               By:   /s/ Thomas E. Gibbons               Name:   Thomas E. Gibbons     Title:   Vice President, Chief Financial Officer and         Treasurer. Del Monte Amendment No.1  

  Exhibit 10.2 AGREEMENT           This Agreement is entered into by and between SafeNet, Inc. (“SafeNet”) and Carole Argo (“Argo”), the President and Chief Operating Officer of SafeNet.           In consideration of the covenants undertaken and contained herein, the adequacy of which is herein acknowledged, the parties agree as follows:           1. In accordance with Section 8(a) of the Employment Agreement between Argo and SafeNet, dated June 28, 2004 (“Employment Agreement”), this Agreement shall serve as notice of the termination of Argo’s employment under the Employment Agreement, with such termination to become effective on December 31, 2006 (the “Separation Date”). In addition, Argo hereby resigns effective October 17, 2006 from any and all officer positions she holds with SafeNet, including her position as President and Chief Operating Officer of SafeNet and her positions as an officer, employee or Board member of any SafeNet subsidiary. In addition, Argo resigns effective October 17, 2006 from all fiduciary and trustee responsibilities, including but not limited to any employee benefit plans of the Company and its Affiliates, and SafeNet will take all steps necessary to effectuate her resignations.           2. Argo will remain as an employee of SafeNet and will consult with SafeNet on the management transition during the period referred to in Section 1. In consideration for those services, Safenet will pay to Argo her base salary and provide her use of her automobile and family medical and dental, disability and life insurance through the Separation Date. At the Separation Date, SafeNet will pay any unpaid base salary and accrued vacation through the Separation Date. Except as otherwise provided herein or in the Employment Agreement, as of the Separation Date Argo will be eligible to receive the benefits provided to former employees of SafeNet under SafeNet’s employee benefit plans, in accordance with the terms and conditions of each such plan.           3. Both Argo and SafeNet reserve all rights under the Employment Agreement.           4. SafeNet will not consider, at this time, this Agreement as a resignation within the meaning of Section 9(b) of the Employment Agreement or, except as expressly provided herein, for any other purpose relating to the Employment Agreement.           5. The Personnel Committee of the SafeNet Board of Directors will determine by March 29, 2007 (“Decision Date”) whether Argo should be treated as having been terminated for Cause under the Employment Agreement. None of the periods of time set forth in the Employment Agreement within which events must occur or actions must be taken shall begin to run until the Personnel Committee determines whether Argo should be considered to have been terminated for Cause (provided that any required six-month waiting period under Section 409A of the Internal Revenue Code of 1986, as amended, shall begin to run as of the Separation Date), except as expressly   --------------------------------------------------------------------------------   provided herein. SafeNet and Argo agree that no statutes of limitations on any claims Argo or SafeNet may have under the Employment Agreement shall begin to run until the Decision Date or such earlier date as the Personnel Committee determines whether Argo should be considered to have been terminated for Cause. Subject to the foregoing sentences of this Section 5, if the Personnel Committee determines that Argo should be considered to have been terminated for Cause, that determination will have the same effect under the Employment Agreement as if Argo had been terminated for Cause as of the date of this Agreement, except for purposes of payment of salary and benefits in Section 2. If the Personnel Committee fails to make a decision by the Decision Date, Argo will be deemed to have been terminated by SafeNet without Cause (or to have terminated her employment for Good Reason) as of the date of this Agreement, with entitlement to all the rights and the benefits provided for in the Employment Agreement, except for purposes of payment of salary and benefits in Section 2.           6. Any payments or benefits to which Argo may be due under Sections 5 and 9 of the Employment Agreement (other than the payments and benefits provided by Section 2 of this Agreement and existing health care benefits subject to COBRA, for which the Company will pay all costs, excluding Argo’s co-payment (and that of any eligible spouse or dependents), for one year following the Separation Date) shall not become due until ten days after the Personnel Committee determines whether Argo should be considered to have been terminated for Cause, and shall be due at that time only if the Personnel Committee does not determine that Argo should be considered to have been terminated for Cause; provided, however, that the foregoing shall not cause Argo to forfeit or waive any claim for benefits she may have under a plan, policy or arrangement that is an “employee benefit plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended. Argo agrees that she will not exercise any options on SafeNet stock until the Decision Date or such earlier date on which the Personnel Committee reaches its decision under Section 5 of this Agreement, except that with respect to any options for which the Company does not take a compensation charge in connection with its restatement of its 2000 through 2005 and first quarter 2006 financial results she may participate in a Change of Control, as defined in Section 18(b) of the Employment Agreement, or other sale of business transaction in the same manner as other option holders. If such a Change in Control or other sale of business transaction occurs before the Decision Date, the parties agree to negotiate which of the options for which the change of measurement date would result in a higher strike price Argo may exercise with the goal to avoid any unreasonable forfeiture of unexercised options by Argo while maintaining the Company’s interests, including receiving an option price consistent with the conclusions of its restatement process. For purposes of Argo’s stock option agreements and the Company’s Stock Option Plans, Argo will be deemed to have been terminated on the Separation Date. As such, any cancellation clauses will begin to run from the Separation Date. SafeNet agrees that the foregoing restrictions on exercise of Argo’s stock options shall not apply to those options granted on January 1, 2000. SafeNet agrees that Argo may exercise any options for which the Company does not take a compensation charge, once the Company has made its determination related to its restatement of financial results.   --------------------------------------------------------------------------------             7. Argo and SafeNet waive their right to notice of any termination for Cause or Good Reason under Section 8(a) and 8(b) of the Employment Agreement.           8. Argo’s resignation under this Agreement will not affect any advancement of fees or indemnification to which she otherwise would be entitled under applicable state law, under the Articles of Incorporation and Bylaws of SafeNet, under the Employment Agreement, or under any other applicable agreement. SafeNet also agrees that all such rights to indemnification shall apply to any claims relating to or arising from her employment from the date of this Agreement through the Separation Date.           9. Argo and the Special Committee of the SafeNet Board of Directors and the Personnel Committee will attempt to reach agreement on any amount to be paid or repaid to SafeNet by Argo, and any amount to be paid by SafeNet to Argo, in connection with the Employment Agreement and with respect to any actual or potential claims arising out of the process of granting stock options at SafeNet (and the accounting for and disclosure of such stock option grants) or any other claims asserted against Argo in stockholder derivative actions and any actual or potential claims Argo may assert against SafeNet. To the extent that any agreement between the parties under this paragraph contains a release of claims asserted against Argo in pending stockholder derivative actions, the parties agree that such a release shall be subject to approval by the appropriate courts in which stockholder derivative actions are pending.           10. For a six-month period following the Separation Date (the “Post-Employment Period”), Argo will refrain from directly or indirectly soliciting the Company’s current vendors, customers or employees, or prospective vendors, customers or employees whose identity became or becomes known to Argo as a result of her position at SafeNet. During the Post-Employment Period, Argo will not participate in, be employed in any capacity by, serve as a director, consultant, agent or representative for, or have any interest, directly or indirectly (other than a passive ownership interest of up to 5% in any publicly traded company’s stock), in any enterprise whose primary business is encryption based security. As of the Separation Date, the noncompetition obligations set forth in the Employment Agreement are no longer of force and effect and are replaced by the provisions in this Section 10.           11. SafeNet and Argo agree that Argo shall be provided a reasonable opportunity to review and comment on SafeNet’s proposed public statement relating to this Agreement and her separation from SafeNet; provided that SafeNet shall not be obligated to make any changes to such public statement based on any comments received from Argo.           12. Nothing contained in this Agreement shall be deemed as an admission by any party.   --------------------------------------------------------------------------------             13. This Agreement shall not be deemed to constitute a waiver of any rights, claims or defenses of any of the parties to this Agreement, all of which are expressly preserved. Preserved rights and claims include, but are not limited to, SafeNet’s ability to assert termination for Cause and Argo’s ability to assert termination without Cause or for Good Reason or to assert she terminated her employment in accordance with Section 9(b) of the Employment Agreement; provided, however, that Argo agrees that any assertion of termination without Cause or for Good Reason shall be effective as of the date of this Agreement, and that such assertion shall not be made before the Decision Date. This Agreement does not constitute a release of any claims that either party may have against the other.           14. This Agreement can be modified only in writing signed by the parties. The Agreement shall constitute the entire understanding between the parties concerning the subject matter of this Agreement and supersedes and replaces all prior negotiations, proposed agreements, and agreements, written or oral, relating to this subject.           15. Both parties agree to cooperate with the other in taking the actions required under the terms of this Agreement, including without limitation those described in paragraphs 1 and 9 hereof.           16. Both parties have cooperated in the drafting and preparation of this Agreement. Hence, in any construction to be made of this Agreement, the same shall not be construed against any party on the basis that the party was the drafter.           17. This Agreement may be executed in one or more counterparts, each of which shall constitute an original, and all of which shall constitute one instrument.           18. In entering this Agreement, the parties represent that they have relied upon the advice of their attorneys, who are attorneys of their own choice, and that the terms of this Agreement have been completely read and explained to them by their attorneys, and that those terms are fully understood and voluntarily accepted by them.           19. To the fullest extent allowed by law, any controversy or claim arising out of or relating to this Agreement shall be settled by binding and non-appealable arbitration conducted in Baltimore, Maryland, or such other place as the parties hereto agree, by an arbitrator acting in accordance with the Employment Arbitration rules of the American Arbitration Association. To the extent anything in this Agreement conflicts with any arbitration procedures required by applicable law, the arbitration procedures required by applicable law shall govern. The proceedings before the arbitrator shall be maintained in the strictest confidence by the parties and the arbitrator, subject only to legal requirements of disclosure. The arbitrator shall issue a written award that sets forth the essential findings and conclusions on which the award is based. The arbitrator shall have the authority to award any relief authorized by law in connection with the asserted claims or disputes. The arbitration award shall be enforceable before any court of competent jurisdiction, and shall be subject to correction, confirmation or vacatur only on the grounds provided by applicable law, including the Federal Arbitration Act. Nothing in this paragraph shall be construed to apply to or affect pending stockholder derivative actions brought on behalf of the Company.   --------------------------------------------------------------------------------             20. SafeNet and Argo will share equally the arbitrator’s fees and any other expense of conducting the arbitration. Each party will pay its own attorney’s fees and costs, except that the arbitrator may award the prevailing party reimbursement from the opposing party or parties of its reasonable fees (including attorneys’ fees) and expenses she or it may incur in connection with such arbitration. Any final decision of the arbitrator so chosen may be enforced by a court of competent jurisdiction.           Each of the undersigned have read the foregoing Agreement, and accepts and agrees to the provisions it contains and hereby executes it voluntarily with full understanding of its consequences.           SafeNet, Inc.               By:   /s/ Walter Straub     Title:     Personnel Committee Chairman               Dated:                   By:   /s/ Andrew E. Clark               Title:   Special Committee Chairman               Dated:   October 17, 2006               By:   /s/ Carole Argo               Carole Argo               Dated:   10/16/06      

Exhibit 10.1 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ADMINISTRATION AGREEMENT among CIT EQUIPMENT COLLATERAL 2006-VT1 as Issuer, CIT FINANCIAL USA, INC., as Administrator, CIT FUNDING COMPANY, LLC, as Depositor, and THE BANK OF NEW YORK as Indenture Trustee Dated as of February 1, 2006 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- TABLE OF CONTENTS                 Page       --------------------------------------------------------------------------------           SECTION 1.   DUTIES OF THE ADMINISTRATOR 1   SECTION 2.   RECORDS 7   SECTION 3.   COMPENSATION 7   SECTION 4.   ADDITIONAL INFORMATION TO BE FURNISHED TO THE         ISSUER 7   SECTION 5.   INDEPENDENCE OF THE ADMINISTRATOR 8   SECTION 6.   NO JOINT VENTURE 8   SECTION 7.   OTHER ACTIVITIES OF ADMINISTRATOR 8   SECTION 8.   TERM OF AGREEMENT; RESIGNATION AND REMOVAL OF         ADMINISTRATOR 8   SECTION 9.   ACTION UPON TERMINATION, RESIGNATION OR REMOVAL 9   SECTION 10.   NOTICES 9   SECTION 11.   AMENDMENTS 10   SECTION 12.   SUCCESSORS AND ASSIGNS 10   SECTION 13.   GOVERNING LAW 11   SECTION 14.   HEADINGS 11   SECTION 15.   COUNTERPARTS 11   SECTION 16.   SEVERABILITY 11   SECTION 17.   NOT APPLICABLE TO CFUSA IN OTHER CAPACITIES 11   SECTION 18.   LIMITATION OF LIABILITY OF OWNER TRUSTEE AND         INDENTURE TRUSTEE 11   SECTION 19.   THIRD-PARTY BENEFICIARY 12   SECTION 20.   BANKRUPTCY PETITION. 12   SECTION 21.   LIMITED RECOURSE 12   SECTION 22.   SURVIVABILITY 12   EXHIBIT A LIMITED POWER OF ATTORNEY     i --------------------------------------------------------------------------------           This Administration Agreement, dated as of February 1, 2006 (this “Agreement”), is among CIT Equipment Collateral 2006-VT1 (the “Issuer”), CIT Financial USA, Inc. (together with its successors and assigns, “CFUSA” and in its capacity as administrator, the “Administrator”), CIT Funding Company, LLC (together with its successors and assigns, the “Depositor”), and The Bank of New York, not in its individual capacity but solely as Indenture Trustee (together with its successors and assigns, the “Indenture Trustee”). W I T N E S S E T H:           WHEREAS, the Issuer is issuing 4.98953% Class A-1 Receivable-Backed Notes, 5.13% Class A-2 Receivable-Backed Notes, 5.13% Class A-3 Receivable-Backed Notes, 5.16% Class A-4 Receivable-Backed Notes, 5.23% Class B Receivable-Backed Notes, 5.28% Class C Receivable-Backed Notes, and 5.48% Class D Receivable-Backed Notes, (collectively, the “Notes”) pursuant to the Indenture, dated as of the date hereof (the “Indenture”), between the Issuer and the Indenture Trustee (capitalized terms used herein that are not otherwise defined shall have the meanings ascribed thereto in the Indenture or in the Pooling and Servicing Agreement, as defined in the Indenture);           WHEREAS, the Issuer has entered into certain agreements in connection with the issuance of the Notes and of certain beneficial ownership interests of the Issuer, including (i) the Pooling and Servicing Agreement, (ii) the Indenture and (iii) the other Transaction Documents to which the Issuer is a party;           WHEREAS, pursuant to the Transaction Documents, the Issuer and the Owner Trustee are required to perform certain duties in connection with (i) the Notes and the Collateral therefor pledged pursuant to the Indenture and (ii) the beneficial ownership interest in the Issuer evidenced by the Equity Certificate (the registered holder of such interest being referred to herein as the “Owner”);           WHEREAS, the Issuer desires to have the Administrator perform certain of the duties of the Issuer and the Owner Trustee referred to in the preceding clause and to provide such additional services consistent with the terms of this Agreement and the Transaction Documents as the Issuer and the Owner Trustee may from time to time request; and           WHEREAS, the Administrator has the capacity to provide the services required hereby and is willing to perform such services for the Issuer and the Owner Trustee on the terms set forth herein.           NOW, THEREFORE, in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:           Section 1. Duties of the Administrator.                (a) Duties with respect to the Transaction Documents.                     (i) The Administrator agrees to perform all its duties as Administrator and the duties of the Issuer and the Owner Trustee under the Transaction -------------------------------------------------------------------------------- Documents. In addition, the Administrator shall consult with the Owner Trustee regarding the duties of the Issuer or the Owner Trustee under the Transaction Documents. The Administrator shall monitor the performance of the Issuer and shall advise the Owner Trustee when action is necessary to comply with the respective duties of the Issuer and the Owner Trustee under the Transaction Documents. The Administrator shall prepare for execution by the Issuer or shall cause the preparation by other appropriate persons of, all such documents, reports, filings, instruments, certificates and opinions that it shall be the duty of the Issuer or the Owner Trustee to prepare, file or deliver pursuant to the Transaction Documents. In furtherance of the foregoing, the Administrator shall take all appropriate action that the Issuer or the Owner Trustee is required to take pursuant to the Indenture including, without limitation, such of the foregoing as are required with respect to the following matters under the Indenture (all section references in this Section 1(a)(i) are to sections of the Indenture):                          (A) the preparation of Issuer Orders directing the authentication of Notes and the preparation of or obtaining of any other documents and instruments required for execution and authentication of the Notes and delivery of the same to the Indenture Trustee (Section 2.02);                          (B) the duty to cause the Note Register to be kept and to give the Indenture Trustee notice of any appointment of a new Note Registrar and the location, or change in location, of the Note Register (Section 2.04);                          (C) the notification of Noteholders of the final principal payment on their Notes (Section 2.07(b)) or indication on the Monthly Servicer’s Report that the Principal Amount is 0;                          (D) the preparation, obtaining or filing of the instruments, opinions and certificates and other documents required for the release of Collateral (Section 2.12);                          (E) the maintenance of an office or agency in New York, New York, or the appointment of the Indenture Trustee as its agent therefor, for registration of transfer or exchange of Notes, and the delivery of notice to the Indenture Trustee of the location, and of any change in the location, of any such office or agency (Section 3.02);                          (F) the duty to cause newly appointed Paying Agents, if any, to deliver to the Indenture Trustee the instrument specified in the Indenture regarding funds held in trust (Section 3.03);                          (G) the direction to a Paying Agent to pay to the Indenture Trustee all sums held by such Paying Agent (Section 3.03);                          (H) the preparation of and delivery to the Indenture Trustee of an Issuer Request directing the Indenture Trustee to deposit in the Collection Account any money held by the Indenture Trustee or any Paying Agent in trust for the payment of any amount due with respect to any Note and remaining unclaimed after such amount has become due and payable (Section 3.03); 2 --------------------------------------------------------------------------------                          (I) the obtaining and preservation of the Issuer’s qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of the Indenture, the Notes, the Collateral and each other instrument and agreement included in the Collateral (Section 3.04);                          (J) the preparation of all supplements and amendments to the Indenture and all financing statements, continuation statements, instruments of further assurance and other instruments and the taking of such other action as is necessary or advisable to protect the Collateral, other than as prepared by the Servicer (Section 3.05);                          (K) the identification to the Indenture Trustee in an Officer’s Certificate of a Person with whom the Issuer has contracted to perform its duties under the Indenture (Section 3.06(b));                          (L) the notification of the Indenture Trustee and each Rating Agency of a Servicer Default under the Pooling and Servicing Agreement (Sections 3.06(d) and 3.12);                          (M) the notification of the Indenture Trustee of any termination of the Servicer’s rights and powers under the Pooling and Servicing Agreement (Section 3.06(d));                          (N) the notification of the Indenture Trustee and each Rating Agency of the appointment of a Successor Servicer under the Pooling and Servicing Agreement (to the extent such party has not already been notified pursuant to the Pooling and Servicing Agreement) (Section 3.06(d));                          (O) the delivery of certain statements as to compliance with the Indenture (Sections 3.08(a)(F) and 3.08(b)(F));                          (P) the preparation and obtaining of documents and instruments required for the release of the Issuer from its obligations under the Indenture (Section 3.09(b));                          (Q) the notification of the Indenture Trustee and each Rating Agency of an Event of Default under the Indenture (Section 3.12);                          (R) the monitoring of the Issuer’s obligations as to the satisfaction and discharge of the Indenture and the preparation of an Officer’s Certificate and the obtaining of the Opinion of Counsel and the Independent Certificate relating thereto (Section 4.01);                          (S) the compliance with any written directive of the Indenture Trustee with respect to the sale of the Collateral in a commercially reasonable manner if an Event of Default shall have occurred and be continuing (Section 5.04); 3 --------------------------------------------------------------------------------                          (T) the preparation and delivery to Noteholders and the Indenture Trustee of a notice stating the record date, the payment date and the amount to be paid on such record date (Section 5.06(b));                          (U) the preparation and delivery of notice to Noteholders and each Rating Agency of the appointment of a successor Indenture Trustee (Section 6.08);                          (V) the preparation of any written instruments required to confirm more fully the authority of any co-trustee or separate trustee and any written instruments necessary in connection with the resignation or removal of the Indenture Trustee or any co-trustee or separate trustee (Sections 6.08 and 6.10);                          (W) the notification of the Rating Agencies of any merger or consolidation involving the Indenture Trustee (Section 6.09);                          (X) the furnishing of the Indenture Trustee with the names and addresses of Noteholders during any period when the Indenture Trustee is not the Note Registrar (Section 7.01);                          (Y) the filing of reports required by the Commission or under the TIA (Section 7.03);                          (Z) the opening of one or more accounts in the Indenture Trustee’s name, the preparation and delivery of Issuer Orders, Officer’s Certificates and Opinions of Counsel and all other actions necessary with respect to investment and reinvestment of funds in the Trust Accounts (Sections 8.02 and 8.03);                          (AA) the preparation of an Issuer Request and Officer’s Certificate, if necessary, for the release of the Collateral (Section 8.04(b));                          (BB) the preparation of Issuer Orders and the obtaining of Opinions of Counsel with respect to the execution of supplemental indentures and the mailing to the Noteholders of notices with respect to such supplemental indentures (Sections 9.01, 9.02 and 9.03);                          (CC) the preparation, execution and delivery of new Notes conforming to any supplemental indenture (Section 9.06);                          (DD) the duty to notify Noteholders of redemption of the Notes or to cause the Indenture Trustee to provide such notification (Section 10.02);                          (EE) the preparation and delivery of all Officer’s Certificates and Independent Certificates with respect to any requests by the Issuer to the Indenture Trustee to take any action under the Indenture (Section 11.01(a)); 4 --------------------------------------------------------------------------------                          (FF) the preparation and delivery to Noteholders and the Indenture Trustee of any agreements with respect to alternate payment and notice provisions (Section 11.06); and                          (GG) the recording of the Indenture, if applicable (Section 11.14).                     (ii) The Administrator agrees to:                          (A) except as otherwise expressly provided in the Indenture or the Pooling and Servicing Agreement, pay the Indenture Trustee’s fees and reimburse the Indenture Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Indenture Trustee in accordance with any provision of the Transaction Documents (including the reasonable compensation, expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, bad faith, or willful misconduct;                          (B) indemnify the Owner Trustee (including in its individual capacity) and its officers, directors, employees or agents for, and hold them harmless against, any loss, liability or expense incurred without negligence, bad faith, or willful misconduct on their part, arising out of or in connection with the acceptance or administration of the transactions contemplated by the Trust Agreement and this Agreement, including the reasonable costs and expenses of defending themselves against any claim or liability in connection with the exercise or performance of any of their powers or duties under the Trust Agreement (the indemnities provided by this section shall include, without limitation, an indemnity as described above with respect to the Depositor’s obligations in favor of the Owner Trustee under Section 8.02 of the Trust Agreement to the extent any such obligations to the Owner Trustee remain unpaid).                          (C) perform the duties of the Administrator specified in Section 9.01(e) of the Trust Agreement required to be performed in connection with the winding up of the Issuer.                (b) Additional Duties.                     (i) In addition to the duties set forth in Section 1(a)(i), the Administrator shall perform such calculations and shall prepare or shall cause the preparation by other appropriate persons of, and shall execute on behalf of the Issuer or the Owner Trustee, all such documents, reports, filings, instruments, certificates and opinions that the Issuer or the Owner Trustee are required to prepare, file or deliver pursuant to the Transaction Documents and Sections 5.01, 6.01 and 6.02 of the Trust Agreement, and, at the request of the Owner Trustee, shall take all appropriate actions that the Issuer or the Owner Trustee are required to take pursuant to the Transaction Documents. In furtherance thereof, the Owner Trustee shall, on behalf of itself and of the Issuer, execute and deliver to the Administrator and to each successor Administrator appointed pursuant to the terms hereof, one or more powers of attorney substantially in the form of Exhibit A hereto, appointing the Administrator the attorney-in-fact of the Owner Trustee and the Issuer for the purpose of executing on behalf of the Owner Trustee 5 -------------------------------------------------------------------------------- and the Issuer all such documents, reports, filings, instruments, certificates and opinions. Subject to Section 5 hereof, and in accordance with the directions of the Issuer, the Administrator shall administer, perform or supervise the performance of such other activities in connection with the Collateral (including the Transaction Documents) as are not covered by any of the foregoing provisions and as are expressly requested by the Issuer and are reasonably within the capability of the Administrator.                     (ii) Notwithstanding anything in this Agreement or the Transaction Documents to the contrary, the Administrator shall be responsible for promptly notifying the Owner Trustee in the event that any withholding tax is imposed on the Trust’s payments (or allocations of income) to the Owner as contemplated in Section 5.02 of the Trust Agreement. Any such notice shall specify the amount of any withholding tax required to be withheld by the Owner Trustee pursuant to such provision.                     (iii) Notwithstanding anything in this Agreement or the Transaction Documents to the contrary, the Administrator shall be responsible for performance of its duties and the duties of the Trust set forth in Section 5.05 of the Trust Agreement with respect to, among other things, accounting and reports to the Equity Certificateholder; provided, however, that the Owner Trustee shall retain responsibility for the distribution of information forms in its possession as requested by the Equity Certificateholder or the Administrator and which are necessary to enable the Trust to prepare its federal and state income tax returns.                     (iv) The Administrator shall satisfy its obligations with respect to clauses (ii) and (iii) above by retaining, at the expense of the Trust, a firm of independent public accountants (the “Accountants”) acceptable to the Owner Trustee, which shall perform the obligations of the Administrator thereunder.                     (v) The Administrator shall perform the duties of the Administrator specified in Section 10.02 of the Trust Agreement required to be performed in connection with the resignation or removal of the Owner Trustee and any other duties expressly required to be performed by the Administrator under the Trust Agreement.                     (vi) The Administrator shall not direct the Owner Trustee to take or to refrain from taking any action if such action or inaction: (A) would be contrary to any obligation of the Trust or the Owner Trustee under this Agreement or any of the other Transaction Documents, (B) to the actual knowledge of a Responsible Officer of the Owner Trustee, would result in the Trust’s becoming taxable as a corporation for federal or state income tax purposes or (C) would be contrary to the purpose of the Trust.                     (vii) Upon acceptance of appointment by a successor Owner Trustee pursuant to the Trust Agreement, the Administrator shall mail notice thereof to the Equity Certificateholder, the Indenture Trustee, the Noteholders and each Rating Agency.                     (viii) In carrying out the foregoing duties or any of its other obligations under this Agreement, the Administrator may enter into transactions or otherwise deal with any of its Affiliates; provided, however, that the terms of any such transactions or dealings shall be in accordance with any directions received from the Issuer and shall be, in the 6 -------------------------------------------------------------------------------- Administrator’s opinion, no less favorable to the Issuer than would be available from unaffiliated parties.                (c) Non-Ministerial Matters.                     (i) With respect to matters that in the reasonable judgment of the Administrator are non-ministerial, the Administrator shall not take any action unless within a reasonable time before the taking of such action, the Administrator shall have notified the Owner Trustee of the proposed action and the Owner Trustee shall not have withheld consent or provided an alternative direction. For the purpose of the preceding sentence, “non-ministerial matters” shall include, without limitation:                          (A) the amendment of or any supplement to the Indenture;                          (B) the initiation of any claim or lawsuit by the Issuer and the compromise of any action, claim or lawsuit brought by or against the Issuer (other than in connection with the collection of the Contracts);                          (C) the amendment, change or modification of any other Transaction Documents;                          (D) the appointment of successor Note Registrars, successor Paying Agents and successor Indenture Trustees pursuant to the Indenture or the appointment of successor Administrators or a successor Servicer, or the consent to the assignment by the Note Registrar, Paying Agent or Indenture Trustee of its obligations under the Indenture; and                          (E) the removal of the Indenture Trustee.                     (ii) Notwithstanding anything to the contrary in this Agreement, the Administrator shall not be obligated to, and shall not, (A) make any payments to the Noteholders under the Transaction Documents, (B) sell the Collateral pursuant to Section 5.04(d) of the Indenture, (C) take any other action that the Issuer directs the Administrator not to take on its behalf or (D) take any other action which may be construed as having the effect of varying the terms of the investment of the Noteholders or the Equity Certificateholder.           Section 2. Records. The Administrator shall maintain appropriate books of account and records relating to services performed hereunder, which books of account and records shall be accessible for inspection by the Issuer and the Owner Trustee at any reasonable time during normal business hours.           Section 3. Compensation. As compensation for the performance of the Administrator’s obligations under this Agreement and as reimbursement for its expenses related thereto, the Administrator shall be entitled to a monthly fee which shall be solely an obligation of the Servicer as contemplated in Section 5.19 of the Pooling and Servicing Agreement and which shall be in an amount as shall be agreeable to the Depositor and the Administrator. 7 --------------------------------------------------------------------------------           Section 4. Additional Information to be Furnished to the Issuer. The Administrator shall furnish to the Issuer from time to time such additional information regarding the Collateral as the Issuer shall reasonably request.           Section 5. Independence of the Administrator. For all purposes of this Agreement, the Administrator shall be an independent contractor and shall not be subject to the supervision of the Issuer or the Owner Trustee with respect to the manner in which it accomplishes the performance of its obligations hereunder. Unless expressly authorized by the Issuer, the Administrator shall have no authority to act for or represent the Issuer or the Owner Trustee in any way and shall not otherwise be deemed an agent of the Issuer or the Owner Trustee.           Section 6. No Joint Venture. Nothing contained in this Agreement (i) shall constitute the Administrator and either of the Issuer or the Owner Trustee as members of any partnership, joint venture, association, syndicate, unincorporated business or other separate entity, (ii) shall be construed to impose any liability as such on any of them or (iii) shall be deemed to confer on any of them any express, implied or apparent authority to incur any obligation or liability on behalf of the others.           Section 7. Other Activities of Administrator. Nothing herein shall prevent the Administrator or its Affiliates from engaging in any other business or, in its sole discretion, from acting in a similar capacity as an administrator for any other Person or entity even though such person or entity may engage in business activities similar to those of the Issuer, the Owner Trustee or the Indenture Trustee.           Section 8. Term of Agreement; Resignation and Removal of Administrator. This Agreement shall continue in force until the termination of the Trust Agreement, upon which event this Agreement shall automatically terminate.                (a) Subject to Section 8(d) and Section 8(e) hereof, the Administrator may resign its duties hereunder by providing the Issuer with at least sixty (60) days’ prior written notice.                (b) Subject to Section 8(d) and Section 8(e) hereof, the Issuer may remove the Administrator with or without cause by providing the Administrator with at least sixty (60) days’ prior written notice.                (c) Subject to Section 8(d) and Section 8(e) hereof, at the sole option of the Issuer, the Administrator may be removed immediately upon written notice of termination from the Issuer to the Administrator if any of the following events shall occur:                     (i) the Administrator shall default in the performance of any of its duties under this Agreement and, after notice of such default, shall not cure such default within ten (10) days (or, if such default cannot be cured in such time, shall not give within ten (10) days such assurance of cure as shall be reasonably satisfactory to the Issuer); or                     (ii) an Insolvency Event shall occur with respect to the Administrator. 8 --------------------------------------------------------------------------------           The Administrator agrees that if any of the events specified in clause (ii) above shall occur, it shall give written notice thereof to the Issuer and the Indenture Trustee within seven (7) days after the occurrence of such event.                (d) No resignation or removal of the Administrator pursuant to this Section shall be effective until (i) a successor Administrator shall have been appointed by the Issuer and (ii) such successor Administrator shall have agreed in writing to be bound by the terms of this Agreement in the same manner as the Administrator is bound hereunder.                (e) The appointment of any successor Administrator shall be effective only after the satisfaction of the Rating Agency Condition with respect to the proposed appointment.                (f) Subject to Section 8(d) and 8(e) hereof, the Administrator acknowledges that upon the appointment of a Successor Servicer pursuant to the Pooling and Servicing Agreement, the Administrator shall immediately resign.           Section 9. Action upon Termination, Resignation or Removal. Promptly upon the effective date of termination of this Agreement pursuant to Section 8 or the resignation or removal of the Administrator pursuant to Section 8(a), (b) or (c) hereof respectively, the Administrator shall be entitled to be paid all fees and reimbursable expenses accruing to it to the date of such termination, resignation or removal. The Administrator shall forthwith upon such termination pursuant to Section 8 hereof deliver to the Issuer all property and documents of or relating to the Collateral then in the custody of the Administrator. In the event of the resignation or removal of the Administrator pursuant to Section 8(a), (b) or (c) hereof, respectively, the Administrator shall reasonably cooperate with the Issuer and take all reasonable steps requested to assist the Issuer in making an orderly transfer of the duties of the Administrator.           Section 10. Notices. All notices, demands, certificates, requests and communications hereunder (“notices”) shall be in writing and shall be effective (a) upon receipt when sent through the U.S. mails, registered or certified mail, return receipt requested, postage prepaid, with such receipt to be effective the date of delivery indicated on the return receipt, or (b) one Business Day after delivery to an overnight courier (specifying one (1) Business Day’s delivery), or (c) on the date personally delivered to an Authorized Officer of the party to which sent, or (d) on the date transmitted by legible telecopier transmission with a confirmation of receipt, in all cases addressed to the recipient as follows:           (i) If to the Administrator:           CIT Financial USA, Inc. l CIT Drive Livingston, New Jersey 07039     Attn: Treasury – Securitization           Fax No.: (973) 535-5900 Telephone No.: (973) 740-5058 9 --------------------------------------------------------------------------------           (ii) If to the Depositor:           CIT Funding Company, LLC 1 CIT Drive Livingston, New Jersey 07039     Attn: Treasury – Securitization           Fax No.: (973) 535-5900 Telephone No.: (973) 740-5058         (iii) If to the Indenture Trustee:           The Bank of New York 101 Barclay Street, Floor 8W New York. NY 10286     Attn: Corporate Trust Administration, CIT Equipment Collateral 2006-VT1           Fax No.: (212) 815-2493 Telephone No.: (212) 815-6019         (iv) If to the Issuer or the Owner Trustee:           Chase Bank USA, National Association 500 Stanton Christiana Road Floor 3/OPS 4 Newark, DE 19713     Attn: Worldwide Securities Services           Fax No.: (302) 552-6280 Telephone No.: (302) 552-6279 Each party hereto may, by notice given in accordance herewith to each of the other parties hereto, designate any further or different address to which subsequent notices shall be sent.           Section 11. Amendments. This Agreement may be amended from time to time by a written amendment duly executed and delivered by the parties hereto, with the written consent of the Owner Trustee but without the consent of the Noteholders and the Equity Certificateholder; provided that such amendment will not materially and adversely affect the interest of any Noteholder or the Equity Certificateholder. Any modification to this Agreement that would materially and adversely affect the interests of the Noteholders and the Equity Certificateholder may not be effected without satisfying the Rating Agency Condition. Promptly after the execution of any amendment to this Agreement, the Administrator shall furnish written notification of the substance of such amendment, together with a copy thereof, to each Rating Agency.           Section 12. Successors and Assigns. This Agreement may not be assigned by the Administrator unless such assignment is previously consented to in writing by the Issuer, the 10 -------------------------------------------------------------------------------- Indenture Trustee and the Owner Trustee and subject to the satisfaction of the Rating Agency Condition in respect thereof. An assignment with such consent and satisfaction, if accepted by the assignee, shall bind the assignee hereunder in the same manner as the Administrator is bound hereunder. Notwithstanding the foregoing, this Agreement may be assigned by the Administrator without the consent of the Issuer or the Owner Trustee to a corporation or other organization that is a successor (by merger, consolidation or purchase of all or substantially all assets) to the Administrator; provided that such successor organization executes and delivers to the Issuer, the Owner Trustee and the Indenture Trustee an agreement, in form and substance reasonably satisfactory to the Owner Trustee and the Indenture Trustee, in which such corporation or other organization agrees to be bound hereunder by the terms of said assignment in the same manner as the Administrator is bound hereunder. Subject to the foregoing, this Agreement shall bind any successors or assigns of the parties hereto.           Section 13. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.           Section 14. Headings. The section and subsection headings hereof have been inserted for convenience of reference only and shall not be construed to affect the meaning, construction or effect of this Agreement.           Section 15. Counterparts. This Agreement may be executed in several counterparts including by telefax transmission thereof (and by different parties on separate counterparts), each of which shall be an original and all of which shall constitute but one and the same agreement.           Section 16. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.           Section 17. Not Applicable to CFUSA in Other Capacities. Nothing in this Agreement shall affect any obligation CFUSA may have in any other capacity.           Section 18. Limitation of Liability of Owner Trustee and Indenture Trustee.                (a) Notwithstanding anything contained herein to the contrary, this instrument has been countersigned by Chase Bank USA, National Association, not in its individual capacity but solely in its capacity as Owner Trustee of the Issuer and in no event shall Chase Bank USA, National Association, in its individual capacity or any beneficial owner of the Issuer have any liability for the representations, warranties, covenants, agreements or other obligations of the Issuer hereunder, as to all of which recourse shall be had solely to the assets of the Issuer. For all purposes of this Agreement, in the performance of any duties or obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to the benefits of, the 11 -------------------------------------------------------------------------------- terms and provisions of the Trust Agreement which apply to or extend to the benefit of the Owner Trustee.                (b) Notwithstanding anything contained herein to the contrary, this Agreement has been countersigned by The Bank of New York not in its individual capacity but solely as Indenture Trustee and in no event shall The Bank of New York have any liability for the representations, warranties, covenants, agreements or other obligations of the Issuer hereunder or in any of the certificates, notices or agreements delivered pursuant hereto, as to all of which recourse shall be had solely to the assets of the Issuer. For all purposes of this Agreement, in the performance of any duties or obligations of the Indenture Trustee hereunder, The Bank of New York shall be subject to, and entitled to the benefits of, any terms and provisions of the Indenture which apply to or extend to the benefit of the Indenture Trustee.           Section 19. Third-party Beneficiary. The Owner Trustee is a third-party beneficiary to this Agreement and is entitled to the rights and benefits hereunder and may enforce the provisions hereof as if it were a party hereto.           Section 20. Bankruptcy Petition.                (a) The Indenture Trustee and the Administrator, by entering into this Agreement, hereby covenant and agree that they will not at any time institute against the Issuer or the Depositor or join in any institution against the Issuer or the Depositor, any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings, or other proceedings under any United States federal or state bankruptcy or similar law in connection with any obligations under this Agreement or relating to the Notes, the Indenture or any of the other Transaction Documents.                (b) The Indenture Trustee and the Administrator further covenant and agree that the obligations of this Section 20 shall survive termination of this Agreement.           Section 21. Limited Recourse.                (a) Each of the Indenture Trustee and the Administrator, by entering into this Agreement, hereby covenants and agrees that it shall only have recourse against the Issuer or the Depositor to the extent of the funds on hand and assets of the Issuer or the Depositor, respectively and, with respect to the Issuer, any such recourse shall extend only to amounts in excess of amounts necessary to make payments on the Notes.                (b) Each of the Indenture Trustee and the Administrator agree that the obligations of this Section 21 shall survive termination of this Agreement.           Section 22. Survivability. The obligations of the Administrator described in Section 1(a)(ii)(B) hereof shall survive termination of this Agreement. [Signature Page Follows] 12 --------------------------------------------------------------------------------           IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written.           CIT EQUIPMENT COLLATERAL 2006-VT1         By: CHASE BANK USA, NATIONAL       ASSOCIATION, not in its individual capacity but solely as Owner Trustee             By:         --------------------------------------------------------------------------------       Name:       Title:           CIT FUNDING COMPANY, LLC, as Depositor       By:       --------------------------------------------------------------------------------     Name:     Title:         THE BANK OF NEW YORK, not in its individual capacity but solely as Indenture Trustee       By:       --------------------------------------------------------------------------------     Name:     Title:         CIT FINANCIAL USA, INC., as Administrator       By:       --------------------------------------------------------------------------------     Name:     Title: -------------------------------------------------------------------------------- EXHIBIT A LIMITED POWER OF ATTORNEY     State of )   ) ss.: County of )           KNOW ALL PERSONS BY THESE PRESENTS, that Chase Bank USA, National Association, not in its individual capacity but solely as owner trustee (the “Owner Trustee”) of CIT Equipment Collateral 2006-VT1, a Delaware statutory trust (the “Trust”), by and through its duly elected and authorized officer named below, on behalf of the Trust as Issuer under the Administration Agreement, dated as of February 1, 2006 (the “Administration Agreement”), among the Trust, CIT Funding Company, LLC, The Bank of New York, as Indenture Trustee, and CIT Financial USA, Inc., as Administrator, does hereby nominate, constitute and appoint CIT Financial USA, Inc., a Delaware corporation, each of its officers from time to time and each of its employees authorized by it from time to time to act hereunder, jointly and each of them severally, together or acting alone, its true and lawful attorney-in-fact, for the Issuer in its name, place and stead, in the sole discretion of such attorney-in-fact, to perform such calculations and prepare or cause the preparation by other appropriate persons of, and to execute on behalf of the Issuer, all such documents, reports, filings, instruments, certificates and opinions that the Issuer or the Owner Trustee is required to prepare, file or deliver pursuant to the Administration Agreement, and to take any and all other action, as such attorney-in-fact may deem necessary or desirable in accordance with the directions of the Owner Trustee or the Issuer and in connection with its duties as Administrator or successor Administrator under the Administration Agreement. Capitalized terms used herein that are not otherwise defined shall have the meanings ascribed thereto in the Administration Agreement.           The Issuer hereby ratifies and confirms the execution, delivery and performance (whether before or after the date hereof) of the above-mentioned documents, reports, filings, instruments, certificates and opinions, by the attorney-in-fact and all that the attorney-in-fact shall lawfully do or cause to be done by virtue hereof.           The Issuer hereby agrees that no person or other entity dealing with the attorney-in-fact shall be bound to inquire into such attorney-in-fact’s power and authority hereunder and any such person or entity shall be fully protected in relying on such power and authority.           This Limited Power of Attorney may not be assigned without the prior written consent of the Issuer. It is effective immediately and will continue until it is revoked.           This Limited Power of Attorney shall be governed and construed in accordance with the laws of the State of New York without reference to principles of conflicts of law. 2 --------------------------------------------------------------------------------           Executed as of this ____ day of March, 2006.           CIT EQUIPMENT COLLATERAL 2006-VT1         By: CHASE BANK USA, NATIONAL       ASSOCIATION, not in its individual capacity but solely as Owner Trustee           By:       --------------------------------------------------------------------------------     Name:     Title: 3 -------------------------------------------------------------------------------- CERTIFICATE OF ACKNOWLEDGMENT OF NOTARY PUBLIC     State of )   ) ss.: County of )           On [   ], 2006 before me, ____________________________________________________           [insert date]                                                                            [Here insert name and title of notary]           personally appeared ____________________________________________________________________________________________________________           personally known to me, or           proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ties), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which person(s) acted, executed the instrument.           WITNESS my hand and official seal.                 Signature    [SEAL]   --------------------------------------------------------------------------------   4 --------------------------------------------------------------------------------

Exhibit 10(y) AMENDMENT DATED AS OF DECEMBER 18, 2005 TO THE EXECUTIVE RETENTION EMPLOYMENT AGREEMENT (THE "AGREEMENT") DATED AS OF JUNE 17, 2002 BY AND BETWEEN FPL GROUP, INC. (THE "COMPANY") AND LEWIS HAY III (THE "EXECUTIVE") WHEREAS, the Company is considering entering into a Agreement and Plan of Merger among FPL Group, Inc., Constellation Energy Group, Inc. and Merger Sub that is expected to be dated on or about December 19, 2005 (the "Merger Agreement"); and WHEREAS, the Company and the Executive agree that execution and delivery of the Merger Agreement by the Company, the approval by the Company's shareholders of the transactions contemplated by the Merger Agreement (the "Transactions") and/or the consummation of the Transactions should not constitute a Change in Control (as defined in the Agreement) or a Potential Change in Control (as defined in the Agreement) other than in accordance with the terms of this Amendment. NOW THEREFORE, for the good and valuable consideration, the receipt of which is hereby acknowledged by the parties, the Company and the Executive hereby agree as follows: 1.  Amendment to the Agreement.  Section 1 of the Agreement is hereby amended by adding the following to the end thereof: Notwithstanding anything to the contrary contained herein, the execution and delivery of the Agreement and Plan of Merger among FPL Group, Inc., Constellation Energy Group, Inc. and Merger Sub that is expected to be dated on or about December 19, 2005 (the "Merger Agreement") by the Company, the approval by the Company's shareholders of the transactions contemplated by the Merger Agreement (the "Transactions") and/or the consummation of any the Transactions shall not constitute a Change in Control or a Potential Change in Control and the Effective Date of the Agreement shall not occur in connection or as a consequence therewith; provided that the Executive shall be entitled to the benefits and protections of Section 11 if the Effective Date would have occurred but for the application of this sentence of Section 1. 2.  Section 409A.  The Executive and the Company agree to mutually cooperate and negotiate in good faith to make, in a timely fashion, such amendments to the terms of the Agreement as may be necessary, in the reasonable judgment of each of the Company and the Executive, to avoid the imposition of penalties and additional taxes under Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"); it being the intent of the parties that neither the Company nor the Executive shall be subject to penalties or taxes under Section 409A of the Code by virtue of the provisions of this Agreement and that, insofar as is possible without the incurrence of any expenses by the Company not contemplated under the Agreement as in effect on December 15, 2005, the Executive shall be provided with payments and benefits under this Agreement as amended as herein that are substantially economically equivalent to the payments and benefits which would be payable to the Executive absent both this Amendment and the requirements of Section 409A of the Code. 3.  Effective Date.  This Amendment shall be effective as of the date hereof and shall terminate on January 31, 2006 if the Merger Agreement has not been fully executed and delivered by all parties thereto 4.  Miscellaneous.  This Amendment shall be governed by and construed in accordance with the laws of Florida, without reference to principles of conflict of laws. This Amendment may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid addressed as follows:   If to the Executive:       Lewis Hay, III   Address shown on Company records       If to the Company:       FPL Group, Inc.   700 Universe Boulevard   Juno Beach, Florida 33408   Attention: Vice President, Human Resources or such other address as either party shall have furnished to the other in accordance herewith. Notice and communication shall be effective when actually received by the addressee. IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to authorization from the Board of Directors, the Company has caused this Amendment to be executed in its name and on its behalf all as of the day and year first written above.     EXECUTIVE           By LEWIS HAY III     Lewis Hay III               FPL GROUP, INC.           By ROBERT H. ESCOTO     Robert H. Escoto

EXHIBIT 10.1   INDEMNIFICATION AGREEMENT   THIS AGREEMENT (the “Agreement”) is made and entered into effective as of January 3, 2006 between Netopia, Inc., a Delaware corporation (“the Company”) and Raymond J. Smets (“Indemnitee”).   WITNESSETH THAT:   WHEREAS, Indemnitee has been employed as the Senior Vice President, Sales and Marketing of the Company, and in such capacities performs a valuable service for the Company; and   WHEREAS, the Board of Directors of the Company have adopted Bylaws (the “Bylaws”) providing for the indemnification of the officers and directors of the Company to the maximum extent authorized by Section 145 of the Delaware General Corporation Law, as amended (“Law”); and   WHEREAS, the Bylaws and the Law, by their nonexclusive nature, permit contracts between the Company and the officers or directors of the Company with respect to indemnification of such officers or directors; and   WHEREAS, in accordance with the authorization as provided by the Law, the Company may purchase and maintain a policy or policies of directors’ and officers’ liability insurance (“D & O Insurance”), covering certain liabilities which may be incurred by its officers or directors in the performance of their obligations to the Company; and   WHEREAS, as a result of recent developments affecting the terms, scope and availability of D & O Insurance there exists general uncertainty as to the extent of protection afforded Company officers and directors by such D & O Insurance and said uncertainty also exists under statutory and bylaw indemnification provisions; and   WHEREAS, in order to induce Indemnitee to serve as an officer or director of the Company, the Company has determined and agreed to enter into this contract with Indemnitee;   NOW, THEREFORE, in consideration of Indemnitee’s continued service as an officer or director after the date hereof, the parties hereto agree as follows: -------------------------------------------------------------------------------- 1. Indemnity of Indemnitee. The Company hereby agrees to hold harmless and indemnify Indemnitee to the full extent authorized or permitted by the provisions of the Law, as such may be amended from time to time, and Article VII, Section 6 of the Bylaws, as such may be amended. In furtherance of the foregoing indemnification, and without limiting the generality thereof:   (a) Proceedings Other Than Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(a) if, by reason of his Corporate Status (as hereinafter defined), he is, or is threatened to be made, a party to or participant in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right of the Company. Pursuant to this Section 1(a), Indemnitee shall be indemnified against all Expenses (as hereinafter defined), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal Proceeding, had no reasonable cause to believe his conduct was unlawful.   (b) Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(b) if, by reason of his Corporate Status, he is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 1(b), Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company; provided, however, that, if applicable law so provides, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the Court of Chancery of the State of Delaware shall determine that such indemnification may be made.   (c) Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, he shall be indemnified to the maximum extent permitted by law against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.   2. Additional Indemnity. In addition to, and without regard to any limitations on, the indemnification provided for in Section 1, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of his Corporate Status he is, or is threatened to be made, a party -------------------------------------------------------------------------------- to or participant in any Proceeding (including a Proceeding by or in the right of the Company), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee. The only limitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 hereof) to be unlawful under Delaware law.   3. Contribution in the Event of Joint Liability.   (a) Whether or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any threatened, pending or completed action, suit or proceeding in which Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and Company hereby waives and relinquishes any right of contribution it may have against Indemnitee. Company shall not enter into any settlement of any action, suit or proceeding in which Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.   (b) Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), Company shall contribute to the amount of expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which the law may require to be considered. The relative fault of Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary, and the degree to which their conduct is active or passive. -------------------------------------------------------------------------------- (c) Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, directors or employees of the Company other than Indemnitee who may be jointly liable with Indemnitee.   4. Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.   5. Advancement of Expenses. Notwithstanding any other provision of this Agreement, the Company shall advance all reasonable Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Corporate Status within ten days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses. Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free. Notwithstanding the foregoing, the obligation of the Company to advance Expenses pursuant to this Section 5 shall be subject to the condition that, if, when and to the extent that the Company determines that Indemnitee would not be permitted to be indemnified under applicable law, the Company shall be entitled to be reimbursed, within thirty (30) days of such determination, by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts theretofor paid; provided, however, that if Indemnitee has commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, any determination made by the Company that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding and Indemnitee shall not be required to reimburse the Company for any advance of Expenses until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). -------------------------------------------------------------------------------- 6. Procedures and Presumptions for Determination of Entitlement to Indemnification. It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the law and public policy of the State of Delaware. Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:   (a) To obtain indemnification (including, but not limited to, the advancement of Expenses and contribution by the Company) under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.   (b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a) hereof, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following three methods, which shall be at the election of Indemnitee: (1) by a majority vote of the disinterested directors, even though less than a quorum, or (2) by independent legal counsel in a written opinion, or (3) by the stockholders.   (c) If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) hereof, the Independent Counsel shall be selected as provided in this Section 6(c). The Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board of Directors). Indemnitee or the Company, as the case may be, may, within 10 days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 13 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If, within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 6(a) hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of competent jurisdiction for resolution of any objection which shall have been made by the Company or Indemnitee to the other’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 6(b) hereof. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(c), regardless of the manner in which such Independent Counsel was selected or appointed. -------------------------------------------------------------------------------- (d) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 6(a) of this Agreement. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence.   (e) Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise (as defined below), including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this Section 6(e) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence.   (f) The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any action, claim or proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence.   (g) If the person, persons or entity empowered or selected under Section 6 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within thirty (30) days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 30 day period may be extended for a reasonable time, not to exceed an additional fifteen (15) days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this -------------------------------------------------------------------------------- Section 6(g) shall not apply if the determination of entitlement to indemnification is to be made by the stockholders pursuant to Section 6(b) of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination the Board of Directors or the Disinterested Directors, if appropriate, resolve to submit such determination to the stockholders for their consideration at an annual meeting thereof to be held within seventy five (75) days after such receipt and such determination is made thereat, or (B) a special meeting of stockholders is called within fifteen (15) days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty (60) days after having been so called and such determination is made thereat.   (h) Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination. Any Independent Counsel, member of the Board of Directors, or stockholder of the Company shall act reasonably and in good faith in making a determination under the Agreement of the Indemnitee’s entitlement to indemnification. Any costs or expenses (including attorneys’ fees and disbursements) incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.   7. Remedies of Indemnitee.   (a) In the event that (i) a determination is made pursuant to Section 6 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 6(b) of this Agreement within 90 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request therefor, or (v) payment of indemnification is not made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of his entitlement to such indemnification. Indemnitee shall commence such proceeding seeking an adjudication within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 7(a). The Company shall not oppose Indemnitee’s right to seek any such adjudication.   (b) In the event that a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is not entitled to indemnification, any -------------------------------------------------------------------------------- judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination.   (c) If a determination shall have been made pursuant to Section 6(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 7, absent a prohibition of such indemnification under applicable law.   (d) In the event that Indemnitee, pursuant to this Section 7, seeks a judicial adjudication of his rights under, or to recover damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company the Company shall pay on his behalf, in advance, any and all expenses (of the types described in the definition of Expenses in Section 13 of this Agreement) actually and reasonably incurred by him in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery.   (e) The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement.   8. Non-Exclusivity; Survival of Rights; Insurance; Subrogation.   (a) The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the certificate of incorporation of the Company, the Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in the Law, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under the Bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.   (b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, or agents or -------------------------------------------------------------------------------- fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee or agent under such policy or policies.   (c) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.   (d) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.   9. Exception to Right of Indemnification. Notwithstanding any other provision of this Agreement, Indemnitee shall not be entitled to indemnification under this Agreement with respect to any Proceeding brought by Indemnitee, or any claim therein, unless (a) the bringing of such Proceeding or making of such claim shall have been approved by the Board of Directors or (b) such Proceeding is being brought by the Indemnitee to assert his rights under this Agreement.   10. Duration of Agreement. All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an officer or director of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as Indemnitee shall be subject to any Proceeding (or any proceeding commenced under Section 7 hereof) by reason of his Corporate Status, whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives. This Agreement shall continue in effect regardless of whether Indemnitee continues to serve as an officer or director of the Company or any other enterprise at the Company’s request.   11. Security. To the extent requested by the Indemnitee and approved by the Board of Directors, the Company may at any time and from time to time provide security to the Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to the Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee. -------------------------------------------------------------------------------- 12. Enforcement.   (a) The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve as an officer or director of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as an officer or director of the Company.   (b) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.   13. Definitions. For purposes of this Agreement:   (a) “Corporate Status” describes the status of a person who is or was a director, officer, employee or agent or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the express written request of the Company.   (b) “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.   (c) “Enterprise” shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the express written request of the Company as a director, officer, employee, agent or fiduciary.   (d) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, costs of appeals, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, appealing, preparing to appeal, investigating, participating, or being or preparing to be a witness in a Proceeding.   (e) “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing -------------------------------------------------------------------------------- either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.   (f) “Proceeding” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of the fact that Indemnitee is or was a director or officer of the Company, by reason of any action taken by him or of any inaction on his part while acting as an officer or director of the Company, or by reason of the fact that he is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise; in each case whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement; and excluding one initiated by an Indemnitee pursuant to Section 7 of this Agreement to enforce his rights under this Agreement.   14. Severability. If any provision or provisions of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, illegal or otherwise unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.   15. Modification and Waiver. No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.   16. Notice By Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder. The failure to so notify the Company shall not relieve the Company of any obligation which it may have to the Indemnitee under this Agreement or otherwise. -------------------------------------------------------------------------------- 17. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:     (a) If to Indemnitee, to the address set forth below Indemnitee’s signature hereto.     (b) If to the Company, to:   Netopia, Inc. 6001 Shellmound Street, 4th Floor Emeryville, CA 94608 Attention: Chief Executive Officer   or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.   18. Identical Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.   19. Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.   20. Governing Law. The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware without application of the conflict of laws principles thereof. -------------------------------------------------------------------------------- 21. Gender. Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.   IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the day and year first above written.   NETOPIA, INC. By:   /s/ Alan B. Lefkof     Alan B. Lefkof     President and Chief Executive Officer   /s/ Raymond J. Smets Indemnitee:   Raymond J. Smets Address:   965 Cole Place Santa Clara, CA 95054

  [Cooper Cameron Letterhead]   Exhibit 10.23 May 31, 2005 Jane C. Schmitt Vice President, Human Resources 1333 West Loop South, Suite 1700 Houston, Texas 77027 Dear Jane:      The Board of Directors of Cooper Cameron Corporation (the “Company”) has concluded that it is in the Company’s best interest to amend its letter agreement with you, dated November 11, 1999, (the “Agreement”) by eliminating Section 5 in its entirety. The Company, therefore, is offering the payment to you of the sum of two-hundred twenty-two thousand, nine-hundred thirty-seven dollars and zero cents ($222,937.00), payable within two weeks of the execution of this letter, in return for your agreement that the provisions of Section 5 of your Agreement shall be waived and cancelled in their entirety. As further inducement for your agreement to the waiver and cancellation, upon your agreement:   1.   Your Agreement shall be amended so that part (iii) of the definition of “Change of Control” will read in its entirety:         a merger or consolidation involving the Company or its stock or an acquisition by the Company, directly or indirectly or through one or more subsidiaries, of another entity or its stock or assets in exchange for the stock of the Company, unless, immediately following such transaction, 70% or more of the then outstanding Voting Securities of the surviving or resulting corporation or entity will be (or is) then beneficially owned, directly or indirectly, by the individuals and entities who were the beneficial owners of the Company’s outstanding Voting Securities immediately prior to such transaction (treating, for purposes of determining whether the 70% continuity test is met, any ownership of the Voting Securities of the surviving or resulting corporation or entity that results from a stockholder’s ownership of the stock of, or other ownership interest in, the corporation or other entity with which the Company is merged or consolidated as not owned by persons who were beneficial owners of the Company’s outstanding Voting Securities immediately prior to the transaction).   --------------------------------------------------------------------------------   Ms. Jane C. Schmitt May 31, 2005 Page Two   2.   Your Agreement shall be amended further so that a transaction, which would have qualified as a “Change of Control” but for the fact that the consideration therefore is part or all cash, will be a transaction (an “Other Significant Transaction”) triggers your severance benefits in the event of a termination in connection therewith.            If you agree to amend your Agreement, please execute and return this letter to the General Counsel.               Very truly yours,                   /s/ Sheldon R. Erikson                             Sheldon R. Erikson         Chairman, President and CEO     ACCEPTED AND AGREED:       /s/ Jane Schmitt           Jane Schmitt           Date: May 31, 2005       --------------------------------------------------------------------------------   [Cooper Cameron Letterhead] May 31, 2005 Scott Amann Vice President, Investor Relations 1333 West Loop South, Suite 1800 Houston, Texas 77027 Dear Scott:      The Board of Directors of Cooper Cameron Corporation (the “Company”) has concluded that it is in the Company’s best interest to amend its letter agreement with you, dated November 11, 1999, (the “Agreement”) by eliminating Section 5 in its entirety. The Company, therefore, is offering the payment to you of the sum of eighty-six thousand, two-hundred eleven dollars and zero cents ($86,211.00), payable within two weeks of the execution of this letter, in return for your agreement that the provisions of Section 5 of your Agreement shall be waived and cancelled in their entirety. As further inducement for your agreement to the waiver and cancellation, upon your agreement:   1.   Your Agreement shall be amended so that part (iii) of the definition of “Change of Control” will read in its entirety:         a merger or consolidation involving the Company or its stock or an acquisition by the Company, directly or indirectly or through one or more subsidiaries, of another entity or its stock or assets in exchange for the stock of the Company, unless, immediately following such transaction, 70% or more of the then outstanding Voting Securities of the surviving or resulting corporation or entity will be (or is) then beneficially owned, directly or indirectly, by the individuals and entities who were the beneficial owners of the Company’s outstanding Voting Securities immediately prior to such transaction (treating, for purposes of determining whether the 70% continuity test is met, any ownership of the Voting Securities of the surviving or resulting corporation or entity that results from a stockholder’s ownership of the stock of, or other ownership interest in, the corporation or other entity with which the Company is merged or consolidated as not owned by persons who were beneficial owners of the Company’s outstanding Voting Securities immediately prior to the transaction).   --------------------------------------------------------------------------------   Scott Amann May 31, 2005 Page Two   2.   Your Agreement shall be amended further so that a transaction, which would have qualified as a “Change of Control” but for the fact that the consideration therefore is part or all cash, will be a transaction (an “Other Significant Transaction”) triggers your severance benefits in the event of a termination in connection therewith.            If you agree to amend your Agreement, please execute and return this letter to the General Counsel.               Very truly yours,                   /s/ Sheldon R. Erikson                             Sheldon R. Erikson         Chairman, President and CEO           ACCEPTED AND AGREED:           /s/ Scott Amann           Scott Amann           Date: May 31, 2005       --------------------------------------------------------------------------------   [Cooper Cameron Letterhead] May 31, 2005 William C. Lemmer Vice President, General Counsel and Secretary 1333 West Loop South, Suite 1700 Houston, Texas 77027 Dear Bill:      The Board of Directors of Cooper Cameron Corporation (the “Company”) has concluded that it is in the Company’s best interest to amend its letter agreement with you, dated November 11, 1999, (the “Agreement”) by eliminating Section 5 in its entirety. The Company, therefore, is offering the payment to you of the sum of two-hundred seventy-one thousand, five-hundred ninety-two dollars and zero cents ($271,592.00), payable within two weeks of the execution of this letter, in return for your agreement that the provisions of Section 5 of your Agreement shall be waived and cancelled in their entirety. As further inducement for your agreement to the waiver and cancellation, upon your agreement:   1.   Your Agreement shall be amended so that part (iii) of the definition of “Change of Control” will read in its entirety:         a merger or consolidation involving the Company or its stock or an acquisition by the Company, directly or indirectly or through one or more subsidiaries, of another entity or its stock or assets in exchange for the stock of the Company, unless, immediately following such transaction, 70% or more of the then outstanding Voting Securities of the surviving or resulting corporation or entity will be (or is) then beneficially owned, directly or indirectly, by the individuals and entities who were the beneficial owners of the Company’s outstanding Voting Securities immediately prior to such transaction (treating, for purposes of determining whether the 70% continuity test is met, any ownership of the Voting Securities of the surviving or resulting corporation or entity that results from a stockholder’s ownership of the stock of, or other ownership interest in, the corporation or other entity with which the Company is merged or consolidated as not owned by persons who were beneficial owners of the Company’s outstanding Voting Securities immediately prior to the transaction).   --------------------------------------------------------------------------------   William C. Lemmer May 31, 2005 Page Two   2.   Your Agreement shall be amended further so that a transaction, which would have qualified as a “Change of Control” but for the fact that the consideration therefore is part or all cash, will be a transaction (an “Other Significant Transaction”) triggers your severance benefits in the event of a termination in connection therewith.            If you agree to amend your Agreement, please execute and return this letter to the General Counsel.               Very truly yours,                   /s/ Sheldon R. Erikson                             Sheldon R. Erikson         Chairman, President and CEO           ACCEPTED AND AGREED:           /s/ William C. Lemmer           William C. Lemmer           Date: May 31, 2005       --------------------------------------------------------------------------------   [Cooper Cameron Letterhead] May 31, 2005 Robert Rajeski President, Cooper Compression 6500 Bingle Road Houston, Texas 77092 Dear Bob:      The Board of Directors of Cooper Cameron Corporation (the “Company”) has concluded that it is in the Company’s best interest to amend its letter agreement with you, dated November 11, 1999, (the “Agreement”) by eliminating Section 5 in its entirety. The Company, therefore, is offering the payment to you of the sum of eighty-one thousand, eight-hundred forty-two dollars and zero cents ($81,842.00), payable within two weeks of the execution of this letter, in return for your agreement that the provisions of Section 5 of your Agreement shall be waived and cancelled in their entirety. As further inducement for your agreement to the waiver and cancellation, upon your agreement:   1.   Your Agreement shall be amended so that part (iii) of the definition of “Change of Control” will read in its entirety:         a merger or consolidation involving the Company or its stock or an acquisition by the Company, directly or indirectly or through one or more subsidiaries, of another entity or its stock or assets in exchange for the stock of the Company, unless, immediately following such transaction, 70% or more of the then outstanding Voting Securities of the surviving or resulting corporation or entity will be (or is) then beneficially owned, directly or indirectly, by the individuals and entities who were the beneficial owners of the Company’s outstanding Voting Securities immediately prior to such transaction (treating, for purposes of determining whether the 70% continuity test is met, any ownership of the Voting Securities of the surviving or resulting corporation or entity that results from a stockholder’s ownership of the stock of, or other ownership interest in, the corporation or other entity with which the Company is merged or consolidated as not owned by persons who were beneficial owners of the Company’s outstanding Voting Securities immediately prior to the transaction).   --------------------------------------------------------------------------------   Robert Rajeski May 31, 2005 Page Two   2.   Your Agreement shall be amended further so that a transaction, which would have qualified as a “Change of Control” but for the fact that the consideration therefore is part or all cash, will be a transaction (an “Other Significant Transaction”) triggers your severance benefits in the event of a termination in connection therewith.            If you agree to amend your Agreement, please execute and return this letter to the General Counsel.               Very truly yours,                   /s/ Sheldon R. Erikson                             Sheldon R. Erikson         Chairman, President and CEO           ACCEPTED AND AGREED:           /s/ Robert Rajeski           Robert Rajeski           Date: June 1, 2005      

Exhibit 10.18 LOGO [g40664img_1.jpg] INDEMNIFICATION AGREEMENT THIS AGREEMENT, made on this 8th day of December, 2006, by and between Biovest International, Inc. (“Biovest”), a Delaware corporation with a place of business at 324 S. Hyde Park Ave., Suite 350, Tampa FL 33606, and Ronald E. Osman, with an address of 1602 West Kimmel Street, Marion, IL 62959, (“Guarantor”) is as follows: In consideration of Guarantor performing certain services for Biovest, to wit, acting as a Guarantor in connection with a New Market Tax Credit loan transaction from U.S. Bank (the “Loan”) to Biovest’s wholly-owned subsidiary, Autovaxid, Inc. (“Autovaxid”) in an aggregate amount of $1,000,000, Biovest hereby agrees and undertakes to indemnify Guarantor, and to hold Guarantor harmless from and against any and all claims, causes of actions, and liabilities of any kind to the fullest extent permitted by law to the extent that Guarantor is called upon to pledge and/or advance funds, assets, or collateral in connection with the guarantee being executed by Guarantor in connection with this Loan.   Biovest International, Inc. By:   /s/ James A. McNulty   James A. McNulty, CFO & Secretary 324 S. Hyde Park Avenue Suite 350 Tampa, FL 33606 PH: (813) 864-2554 FAX: (813) 258-6912

Exhibit 10bk 1998 EMPLOYEE STOCK PURCHASE PLAN OF C. R. BARD, INC. (AS AMENDED AND RESTATED) Effective as of April 19, 2006, the 1998 Employee Stock Purchase Plan of C. R. Bard, Inc. (the “Plan”) is hereby amended and restated by C. R. Bard, Inc., a New Jersey corporation (the “Corporation”), as set forth herein. The Plan provides Eligible Employees of the Corporation and its Subsidiaries an opportunity to purchase shares of Common Stock of the Corporation on the terms and conditions set forth below. The Plan is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended. SECTION 1. DEFINITIONS 1.01 “Board” shall mean the Board of Directors of the Corporation. 1.02 “Business Day” shall mean any day the New York Stock Exchange is open for business. 1.03 “Code” shall mean the Internal Revenue Code of 1986, as amended. 1.04 “Committee” shall mean the Retirement Committee under the Corporation’s Retirement Plan, or such other committee as may be designated by the Board. 1.05 “Common Stock” shall mean the Corporation’s Common Stock, par value $.25 per share. 1.06 “Compensation” shall mean with respect to a Participant, the portion of the Participant’s “basic pay,” as defined in the Retirement Plan, paid to the Participant during the applicable payroll period. 1.07 “Eligible Employee” means each employee of the Corporation or any domestic Subsidiary, and each employee of a foreign Subsidiary to which the Plan is extended by the Committee, except: (i) an employee whose customary employment is fewer than 20 hours or less per week; or (ii) an employee whose customary employment is for fewer than five months in any calendar year. 1.08 “Fair Market Value” shall mean on a given date, (i) if there should be a public market for the Common Stock on such date, the arithmetic mean of the high and low prices of the Common Stock as reported on such date on the Composite Tape of the principal national securities exchange on which shares of Common Stock are listed or admitted to trading, or, if shares of Common Stock are not listed or admitted on any national securities exchange, the arithmetic mean of the per share closing bid price and per share closing asked price of the Common Stock on such date as quoted on the National Association of Securities Dealers Automated Quotation System (or such market in which such prices are regularly quoted) (the “NASDAQ”), or, if no sale of shares of Common Stock shall have been reported on the Composite Tape of any national securities exchange or quoted on the NASDAQ on such date, then the immediately preceding date on which sales of shares of Common Stock have been so reported or quoted shall be used, and (ii) if there should not be a public market for the Common Stock on such date, the Fair Market Value shall be the value established by the Committee in good faith. 1.09 “Grant Date” shall mean each January 1 and July 1. 1.10 “Option” shall mean an option to purchase shares of Common Stock under the Plan, pursuant to the terms and conditions hereof. 1.11 “Participant” shall mean an Eligible Employee who is participating in the Plan pursuant to Section 4. 1.12 “Purchase Date” shall mean, except as provided in Section 15, each June 30 and December 31 (or the following Business Day if such date is not a Business Day). 1.13 “Purchase Price” shall mean the lesser of 85% of the Fair Market Value of Common Stock on such Grant Date and 85% of the Fair Market Value of a share of Common Stock on such Purchase Date. 1.14 “Plan” shall mean the 1998 Employee Stock Purchase Plan of C. R. Bard, Inc., as amended from time to time. 1.15 “Plan Account” shall mean an account maintained by the Corporation or its designated recordkeeper for each Participant to which the Participant’s payroll deductions are credited, against which funds used to purchase shares of Common Stock are charged and to which shares of Common Stock purchased are credited. 1.16 “Purchase Period” shall mean the time period between the Grant Date of an Option and the Purchase Date for that Option. 1.17 “Retirement Plan” shall mean the Employees’ Retirement Plan of C. R. Bard, Inc., as amended and restated.   1 -------------------------------------------------------------------------------- 1.18 “Subsidiary” shall mean any corporation, other than the Corporation, in an unbroken chain of corporations beginning with the Corporation if, at the time of the granting of the Option, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. SECTION 2. COMMON STOCK SUBJECT TO PLAN. Subject to Section 12, the aggregate number of shares of Common Stock which may be sold under the Plan is 1,250,000. The Corporation may make open-market purchases to provide shares of Common Stock for purchase under the Plan or sell Treasury shares or issue authorized but unissued shares of Common Stock. SECTION 3. PARTICIPATION IN THE PLAN. 3.01 Election to Participate. An Eligible Employee may participate in the Plan by completing and filing with the Corporation or its designated recordkeeper an election form which authorizes payroll deductions from the employee’s Compensation. Such deductions shall commence on the first Grant Date thereafter and shall continue until the Employee terminates participation in the Plan, becomes ineligible to participate in the Plan, or the Plan is terminated. An Eligible Employee may participate in the Plan only through payroll deductions. Other contributions will not be accepted. 3.02 Termination of Participation. (a) A Participant may, at any time and for any reason, voluntarily terminate participation in the Plan by written notification of withdrawal delivered to the appropriate payroll office. Such Participant’s payroll deductions under the Plan shall cease as soon as practicable following delivery of such notice. (b) A Participant’s participation in the Plan shall be terminated upon termination of such Participant’s employment with the Corporation and its Subsidiaries for any reason or when the Participant becomes ineligible to participate in the Plan. If the former Participant remains employed by the Corporation or any of its Subsidiaries after termination of participation in the Plan, any payroll deductions credited to such Participant’s Plan Account shall be used to purchase shares of Common Stock on the next Purchase Date. If the former Participant is no longer employed by the Corporation or any of its Subsidiaries after termination of participation in the Plan, any payroll deductions credited to such Participant’s Plan Account shall be paid to such Participant in cash as soon as practicable following termination of employment. An Eligible Employee whose participation in the Plan is terminated may rejoin the Plan by filing a new election form in accordance with subsection (a). 3.03 Limitations for Certain Eligible Employees. Notwithstanding the foregoing, an Eligible Employee shall not be granted an Option on any Grant Date if such employee, immediately after the Option is granted, owns stock possessing 5% or more of the total combined voting power or value of all classes of stock of the Corporation or any Subsidiary. For purposes of this paragraph, the rules of Code Section 424(d) shall apply in determining the stock ownership of an individual, and stock which an employee may purchase under outstanding options shall be treated as stock owned by the employee. SECTION 4. PAYROLL DEDUCTIONS. 4.01 General. Payroll deductions shall be made from the Compensation paid to each Participant for each payroll period in such whole percentage from 1% to 10% as the Participant shall authorize in such Participant’s election form. The Participant’s payroll deduction limitation shall remain in effect for consecutive purchase periods unless the Participant chooses to revoke or revise the election or becomes ineligible to participate in the Plan. 4.02 Changes in Payroll Deductions. Subject to the minimum and maximum deductions set forth above, a Participant may change the amount of such Participant’s payroll deductions as of the next Grant Date by filing a new election form with the Corporation or its designated recordkeeper no later than ten Business Days in advance of the next Grant Date. The change shall be effective until revoked in writing and filed with the Corporation or its designated recordkeeper no later then ten Business Days in advance of the next Grant Date. SECTION 5. PURCHASE OF SHARES OF COMMON STOCK. 5.01 Option Grant. On each Grant Date, each Participant shall be deemed to have been granted an Option. 5.02 Limits on Purchase. No Eligible Employee may be granted an Option which permits such Eligible Employee to purchase Common Stock under the Plan, and any other stock purchase plan of the Corporation or any Subsidiary that is qualified under Section 423 of the Code, to accrue at a rate which exceeds $25,000 of Fair Market Value of such stock (determined at the time such Option is granted) for each calendar year in which the Option is outstanding at any time.   2 -------------------------------------------------------------------------------- 5.03 Purchase Period. Generally, the Purchase Period for any Option under the Plan shall be six (6) months. Pursuant to Code Section 423, in no event shall a Purchase Period be longer than twenty-seven (27) months. 5.04 Purchase. On each Purchase Date, each Participant shall be deemed, without any further action, to have purchased that number of whole shares of Common Stock determined by dividing the Purchase Price into the balance in the Participant’s Plan Account on the Purchase Date. Any amount remaining in the Participant’s Plan Account shall be carried forward to the next Purchase Date; provided, that in respect of any Purchase Date (other than a date deemed to be a Purchase Date resulting from the termination of a Purchase Period) any Participant may elect (a “Deferral Election”) by written notification delivered to the Corporation for its designated recordkeeper (or in such other manner as the Plan Administrator may determine, which other manner will be communicated to Eligible Employees) not less than 10 days prior to such Purchase Date (which election shall remain in effect until revoked in writing) to delay such purchase to the immediately following January 1, in the case of a Purchase Date on June 30, or July 1, in the case of a Purchase Date on December 31 (the “Delayed Purchase Date”), on which date such Participant shall be deemed, without any further action, to have purchased that number of shares of Common Stock determined by dividing the Purchase Price (determined as of the Purchase Date immediately following the date on which the Deferral Election was made) into the cash balance in the Participant’s Plan Account as of such Purchase Date; provided, further, that each Participant employed by a Subsidiary organized in Germany, the United Kingdom or Italy or any other country designated from time to time by the Plan Administrator (which designation the Plan Administrator shall promptly make known to affected Eligible Employees) shall be deemed to have made such election unless such Participant elects to the contrary by written notification delivered to the Corporation or its designation recordkeeper (or in such other manner as the Plan Administrator may determine, which other manner will be communicated to Eligible Employees) not less than 10 days prior to such Purchase Date (which election shall remain in effect until revoked in writing). 5.05 Participant Statements. As soon as practicable after each Purchase Date, a statement shall be delivered to each Participant which shall include (i) the number of shares of Common Stock purchased on the Purchase Date on behalf of such Participant under the Plan, (ii) the purchase price per share, (iii) the total amount of cash transferred to the Participant’s Plan Account pursuant to payroll deductions and (iv) the amount of cash in the Participant’s Plan Account that will be carried forward. 5.06 Stock Certificates. A stock certificate for whole shares of Common Stock in a Participant’s Plan Account shall be issued upon request of the Participant at any time after such shares have been held in such Participant’s Plan Account for a period of six months. Notwithstanding the preceding sentence, if the Participant’s employment with the Corporation and its Subsidiaries terminates, a stock certificate for whole shares of Common Stock in such Participant’s Plan Account shall be issued as soon as administratively feasible thereafter. Stock certificates under the Plan shall be issued, at the election of the Participant, in such Participant’s name or in such Participant’s name and the name of another person as joint tenants with right of survivorship or as tenants in common. A cash payment shall be made for any fraction of a share in such account, if necessary to close a Participant’s Plan Account. SECTION 6. RIGHTS AS A SHAREHOLDER. As of the Purchase Date or the Delayed Purchase Date, as the case may be, a Participant shall be treated as record owner of such Participant’s shares purchased pursuant to the Plan. SECTION 7. RIGHTS NOT TRANSFERABLE. Rights under the Plan are not transferable by a Participant other than by will or the laws of descent and distribution, and are exercisable during the Participant’s lifetime only by the Participant or by the Participant’s guardian or legal representative. No rights or payroll deductions of a Participant shall be subject to execution, attachment, levy, garnishment or similar process. SECTION 8. SALE OF PURCHASED STOCK. An Eligible Employee must promptly advise the Corporation of any disposition of any shares of Common Stock purchased by the Eligible Employee under the Plan if such disposition shall have occurred within two years after the Grant Date immediately preceding the Purchase Date on which the Eligible Employee purchased such shares. SECTION 9. APPLICATION OF FUNDS. All funds of Participants received or held by the Corporation under the Plan before purchase of the shares of Common Stock shall be held by the Corporation without liability for interest or other increment.   3 -------------------------------------------------------------------------------- SECTION 10. ADJUSTMENTS IN CASE OF CHANGES AFFECTING SHARES. In the event of a subdivision or consolidation of outstanding shares of Common Stock, or the payment of a stock dividend, the number of shares approved for the Plan shall be increased or decreased proportionately, and such other adjustment shall be made as may be deemed equitable by the Plan Administrator. In the event of any other change affecting the Common Stock, such adjustment shall be made as shall be deemed equitable by the Plan Administrator to give proper effect to such event. SECTION 11. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Committee. The Committee shall have authority to make rules and regulations for the administration of the Plan and its interpretations, and decisions with regard to the Plan and such rules and regulations shall be final and conclusive. It is intended that the Plan shall at all times meet the requirements of Code Section 423, if applicable, and the Committee shall, to the extent possible, interpret the provision of the Plan so as to carry out such intent. SECTION 12. AMENDMENTS TO THE PLAN. The Compensation Committee of the Board may amend the Plan at any time provided that no amendment shall be made without the approval of shareholders of the Corporation that would cause the Plan to fail to meet the applicable requirements of Code Section 423. SECTION 13. TERMINATION OF PLAN. The Plan shall terminate upon the earlier of (i) the termination of the Plan by the Board or (b) the date no more shares remain to be purchased under the Plan. If the Board terminates the Plan, the date of termination shall be deemed a Purchase Date. If on such Purchase Date Participants in the aggregate have Options to purchase more shares of Common Stock than are available for purchase under the Plan, each Participant shall be eligible to purchase a reduced number of shares of Common Stock on a pro rata basis, and any excess payroll deductions shall be returned to Participants, as determined by the Committee. SECTION 14. COSTS. All costs and expenses incurred in administering the Plan shall be paid by the Corporation. Any costs or expenses of selling shares of Common Stock acquired pursuant to the Plan shall be borne by the holder thereof. SECTION 15. GOVERNMENTAL REGULATIONS. The Corporation’s obligation to sell and deliver Common Stock pursuant to the Plan is subject to the approval of any governmental authority required in connection with the authorization, issuance or sale of such stock. SECTION 16. APPLICABLE LAW. The Plan shall be interpreted under the laws of the United States of America and, to the extent not inconsistent therewith, by the laws of the State of New Jersey. The Plan is not to be subject to the Employee Retirement Income Security Act of 1974, as amended, but is intended to comply with Code Section 423, if applicable. Any provisions required to be set forth in the Plan by such Code section are hereby included as fully as if set forth in the Plan in full. SECTION 17. EFFECT ON EMPLOYMENT. The provisions of the Plan and the participation of a Participant shall impose no obligation on the Corporation or any Subsidiary to continue the employment of a Participant and shall not lessen or affect the Corporation’s or Subsidiary’s right to terminate the employment of such Participant. SECTION 18. WITHHOLDING. The Corporation reserves the right to withhold from stock or cash distributed to a Participant any amounts which it is required by law to withhold. SECTION 19. SALE OF CORPORATION. In the event of a proposed sale of all or substantially all of the assets of the Corporation or a merger of the Corporation with or into another corporation, the Corporation shall require that each outstanding Option be assumed or an equivalent right to purchase stock of the successor or purchaser corporation be substituted by the successor or purchaser corporation, unless the Plan is terminated.   4 -------------------------------------------------------------------------------- SECTION 20. EFFECTIVE DATE. The Plan originally became effective as of July 1, 1998, and was approved by the shareholders of the Corporation on April 15, 1998. The Plan was previously amended and restated effective as of July 1, 2005. The Plan, as amended and restated herein, is effective as of April 19, 2006, contingent upon approval of the Plan by the shareholders at the Corporation’s 2006 Annual Meeting of Shareholders.   5

Exhibit 10.3 STOCK OPTION GRANT AGREEMENT THIS AGREEMENT (the “Agreement”) is made as of this [    ] day of [            ] 200[    ] between J.CREW GROUP INC. (the “Company”) and [                        ] (the “Participant”). WHEREAS, the Company has adopted and maintains the J. Crew Group, Inc. 2005 Equity Incentive Plan (the “Plan”) to promote the interests of the Company and its shareholders by providing the Company’s key employees and others with an appropriate incentive to encourage them to continue in the employ of the Company and to improve the growth and profitability of the Company; and WHEREAS, the Plan provides for the Grant to Participants in the Plan of [Non-Qualified/ Incentive] Stock Options to purchase shares of Common Stock of the Company; NOW, THEREFORE, in consideration of the promises and the mutual covenants hereinafter set forth, the parties hereto hereby agree as follows:     1. Grant of Options. Pursuant to, and subject to, the terms and conditions set forth herein and in the Plan, the Company hereby Grants to the Participant [a NON-QUALIFIED STOCK OPTION/ an INCENTIVE STOCK OPTION] (the “Option”) with respect to [                ] shares of Common Stock of the Company.     2. Grant Date. The Grant Date of the Option hereby granted is [                ].     3. Incorporation of Plan. All terms, conditions and restrictions of the Plan are incorporated herein and made part hereof as if stated herein. If there is any conflict between the terms and conditions of the Plan and this Agreement, the terms and conditions of this Agreement, as interpreted by the Committee, shall govern. All capitalized terms used herein shall have the meanings given to such terms in the Plan.     4. Exercise Price. The exercise price of each share underlying the Option hereby granted is [                    ].     5. Vesting Date. The Option shall become exercisable as follows: [                ]. Notwithstanding the foregoing, if within the one-year period following a Change in Control the Participant’s employment is terminated by the Company or its affiliate without Cause or by the Participant for Good Reason, all outstanding Options held by such Participant shall become immediately exercisable as of the effective date of such termination of the Participant’s employment.     6. Expiration Date. Subject to the provisions of the Plan, with respect to the Option or any portion thereof which has not become exercisable, the Option shall expire on the date the Participant’s employment is terminated for any reason, and with respect to any Option or any portion thereof which has become exercisable, the Option shall expire on the earlier of (i) 90 days after the Participant’s termination of employment -------------------------------------------------------------------------------- other than for Cause, Retirement, death, or Disability; (ii) one year after termination of the Participant’s employment by reason of death, Retirement or Disability; (iii) the commencement of business on the date the Participant’s employment is, or is deemed to have been, terminated for Cause; or (iv) the [        ] anniversary of the Grant Date.     7. Delays or Omissions. No delay or omission to exercise any right, power, or remedy accruing to any party hereto upon any breach or default of any party under this Agreement, shall impair any such right, power or remedy of such party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party or any provisions or conditions of this Agreement, shall be in writing and shall be effective only to the extent specifically set forth in such writing.     8. Limitation on Transfer. During the lifetime of the Participant, the Option shall be exercisable only by the Participant. The Option shall not be assignable or transferable otherwise than by will or by the laws of descent and distribution. [Notwithstanding the foregoing, the Participant may request authorization from the Committee to assign the Participant’s rights with respect to the Option granted herein to a trust or custodianship, the beneficiaries of which may include only the Participant, the Participant’s spouse or the Participant’s lineal descendants (by blood or adoption), and, if the Committee Grants such authorization, the Participant may assign the Participant’s rights accordingly. In the event of any such assignment, such trust or custodianship shall be subject to all the restrictions, obligations, and responsibilities as apply to the Participant under the Plan and this Stock Option Grant Agreement and shall be entitled to all the rights of the Participant under the Plan.]1 All shares of Common Stock obtained pursuant to the Option granted herein shall not be transferred except as provided in the Plan.     9. Integration. This Agreement and the Plan contain the entire understanding of the parties with respect to its subject matter. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein and the Plan. This Agreement and the Plan supersede all prior agreements and understandings between the parties with respect to the subject matter of this Agreement.     10. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.   -------------------------------------------------------------------------------- 1 This provision will not be used for incentive stock option grants.   2 --------------------------------------------------------------------------------   11. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of NEW YORK, without regard to the provisions governing conflict of laws.     12. Participant Acknowledgment. The Participant hereby acknowledges receipt of a copy of the Plan. The Participant hereby acknowledges that all decisions, determinations and interpretations of the Committee in respect of the Plan, this Agreement and the Option shall be final and conclusive. IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its duly authorized officer and said Participant has hereunto signed this Agreement on the Participant’s own behalf, thereby representing that the Participant has carefully read and understands this Agreement and the Plan as of the day and year first written above.   J.CREW GROUP INC.   By:   [                        ] Title:   [                        ]   [Participant’s Name]   3

Exhibit 10.7   dELiA*s, INC.   REGISTRATION RIGHTS AGREEMENT   THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of the 9th day of December, 2005, by and between dELiA*s, Inc., a Delaware corporation (the “Company”), and each of the persons listed on Schedule A hereto (collectively, the “Investors”).   WHEREAS, pursuant to that certain Common Stock Purchase Agreement of even date herewith by and between the Company and the Investors (the “Purchase Agreement”), the Investors have agreed to acquire shares of common stock, par value $0.001 per share of the Company; and   WHEREAS, as an inducement for the Investor to enter into the Purchase Agreement, the Company and the Investors have agreed to enter into this Agreement.   NOW, THEREFORE, in consideration of the foregoing (incorporated herein by this reference) and the mutual promises and covenants hereinafter set forth, the parties hereto hereby agree as follows:   1. Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings:   “Commission” means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.   “Common Shares” means shares of the Company’s common stock, par value $.001 per share.   “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.   “Holder” means each Investor, and all persons or entities to whom the rights granted under this Agreement are transferred by such Investor or his or her successors or assigns pursuant to Section [16] hereof.   “Indemnified Party” means each party entitled to indemnification under Section 7 hereof.   “Indemnifying Party” means each party required to provide indemnification under Section 7 hereof.   “Other Sellers” means any other holders of equity securities of the Company having registration rights with respect to such equity securities. -------------------------------------------------------------------------------- The terms “register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement.   “Registration Expenses” means all expenses (excluding Selling Expenses) of the Company and the Holder incurred in complying with Sections 2, 3, and 4 hereof, including, without limitation, all registration, qualification, listing and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company and one special counsel for the Holder and Other Sellers, if any, blue sky fees and expenses, and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company).   “Registrable Securities” means (a) the Common Shares purchased by the Investors pursuant to the Purchase Agreement, and (b) any Common Shares of the Company issued or issuable in respect of such Common Shares upon any subdivision, combination or reclassification of such Common Shares or any stock dividend in respect of such Common Shares; provided, however, that such Common Shares shall only be treated as Registrable Securities if and so long as they (i) have not been sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction; (ii) have not been sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act under Section 4(1) thereof so that all transfer restrictions and restrictive legends with respect thereto are removed upon the consummation of such sale, or (iii) are not eligible for sale without restriction pursuant to Rule 144(k) under the Securities Act or any successor rule thereto.   “Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.   “Selling Expenses” means all underwriting discounts, selling commissions and share transfer taxes applicable to the securities registered by the Holder and all fees and disbursements of counsel of the Holder (other than the fees and disbursements of one special counsel for the Holder and all Other Sellers, if any, as described in the definition of “Registration Expenses” above).   2. Demand Registration.   2.1 Subject to the conditions of this Section 2, a Holder or Holders holding in the aggregate at least a majority of the Registrable Shares then collectively held by all such Holders may request, in writing, that the Company effect a registration on Form S-1 (or any successor form) of Registrable Shares owned by such Holder or Holders provided that the aggregate public offering price (before deduction of underwriters’ discounts and commissions) of the shares of Common Stock offered in such registration equals or exceeds $5,000,000. If the Holder or Holders initiating the registration intend to distribute the Registrable Shares by means of an underwriting, he, she or they shall so advise the Company in their request. If such registration is underwritten, the right of other Holders to participate in such registration shall be conditioned on such Holders’ participation in such underwriting. Upon receipt of any such request, the Company shall promptly give written notice of such proposed registration to all Holders. Such other Holders shall have the right, by giving written notice to the Company within 30 days after the Company provides its notice, to elect to have   2 -------------------------------------------------------------------------------- included in such registration all or a part of their Registrable Shares as such Holders may request in such notice of election. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with an underwriter or underwriters that are mutually agreeable to the Company and a majority in interest of the Stockholders. Thereupon, the Company shall, at its own expense and as expeditiously as possible, use its commercially reasonable efforts to effect the registration, on Form S-1 (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable Blue Sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request. Subject to the limitations set forth in Section 2.3 below, equity securities of Other Sellers or of the Company may be included a registration statement effected pursuant to a registration request made by the Holder or Holders in connection with this Section 2.1.   2.2 The Company shall not be obligated to take any action to effect any registration pursuant to this Section 2:   (a) after the Company has effected two (2) such registrations pursuant to this Section 2 and such registrations have been declared or ordered effective;   (b) during the period starting with the date of filing of, and ending on the date ninety (90) days immediately following the effective date of any registration statement pertaining to securities of the Company (other than a registration of securities in a Rule 145 transaction, a registration on a Form S-3 pertaining to a non-underwritten offering, or with respect to registration relating to an employee benefit plan on a Form S-8), provided that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; or   (c) if the Holder(s) proposes to dispose of shares of Registrable Securities that may be registered immediately on Form S-3 pursuant to a request made under Section 3 below.   2.3 If a registration pursuant to this Section 2 is for a registered public offering involving an underwriting, the right of the Holders to participate in the registration pursuant to this Section 2 shall be conditioned upon the Holder’s participation in the underwriting arrangements required by this Section 2 and the inclusion of the Holder’s Registrable Securities in the underwriting, to the extent requested, to the extent provided herein.   (a) The Company shall (together with the Holder(s) and Other Sellers proposing to distribute their securities through such underwriting, if any) enter into and perform its obligations under an underwriting agreement in customary form with the managing underwriter selected or approved for such underwriting by the Company (which managing underwriter shall be reasonably acceptable to the Holders). Notwithstanding any other provision of this Section 2, if the managing underwriter advises the Company in writing that marketing factors require a limitation of the number of shares to be underwritten, then the Company shall so advise the Holder(s) and any such Other Sellers of the number of   3 -------------------------------------------------------------------------------- shares of Registrable Securities that may be included in the registration and underwriting, and such number of shares shall be allocated first to the Holder(s) pro rata based upon their total ownership of shares of Common Shares, and to the extent that after the Holder(s) have included all of the Registrable Securities they wish to include in the registration, any excess shares shall be allocated among the Other Sellers. Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from the registration.   (b) If any Demand Registration is an underwritten offering with respect to any issue of Registrable Securities, Holders holding a majority of the Registrable Securities being registered will select the investment banker or bankers and manager or managers of nationally recognized standing to administer the offering subject to the consent of the Company, such consent not to be unreasonably withheld.   (c) If any Holder of Registrable Securities disapproves of the terms of the underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the managing underwriter. The Registrable Securities and/or other securities so withdrawn shall also be withdrawn from registration.   2.4 If with respect to the last registration permitted to be exercised by the Holders under Section 2.1, the Holders are unable to register all of their Registrable Securities because of the operation of Section 2.3(a) hereof, the Holder shall be entitled to require the Company to effect one additional registration to afford the Holders an opportunity to register all such Registrable Securities. Such additional registration shall again be subject to the provisions of this Section 2; provided, that under no circumstances will the Holders be entitled to more than three (3) registrations in the aggregate pursuant to the provisions of this Section 2.   3. Form S-3 Registration.   3.1 At any time after the Company becomes eligible to file a Registration Statement on Form S-3 (or any successor form relating to secondary offerings, hereinafter, “Form S-3”), holders of a majority of the Registrable Shares will have the right to require the Company to effect a registration on Form S-3 of Registrable Shares provided that the aggregate public offering price (before deduction of underwriters’ discounts and commissions) of the shares of Common Stock offered in such registration equals or exceeds $1,000,000. Upon receipt of any such request, the Company shall promptly give written notice of such proposed registration to all Holders. Such other Holders shall have the right, by giving written notice to the Company within 30 days after the Company provides its notice, to elect to have included in such registration such of their Registrable Shares as such Stockholders may request in such notice of election. Thereupon, the Company shall, as expeditiously as possible, use its best efforts to effect the registration on Form S-3 of all Registrable Shares that the Company has been requested to register. If the registration is for an underwritten offering, the provisions of Section 2.3 shall be applicable; provided, that in such circumstances, all references in such Section 2.3 shall be deemed references to Section 3.   3.2 Notwithstanding the foregoing, the Company shall not be obligated to take any action pursuant to this Section 3   4 -------------------------------------------------------------------------------- (a) after the Company has effected two (2) such registrations pursuant to this Section 3 in any twelve (12) month period and such registrations pursuant to this Section 3, and such registrations have been declared or ordered effective; or   (b) if the Registrable Securities for which the Holder(s) are requesting registration are then eligible for sale under Rule 144 of the Securities Act, and such Registrable Securities reasonably can be disposed within a ninety (90) day period, based on historical trading volume.   4. “Piggyback” Registration.   4.1 If at any time or from time to time, the Company shall determine to register any of its securities for reasons other than (i) a registration relating solely to employee benefit plans, (ii) a registration relating solely to a Commission Rule 145 transaction, or (iii) a registration on Form S-4 or S-8 or any successor form to such forms, the Company will:   (a) give the Holders written notice at least forty five (45) days prior to the filing of any such registration; and   (b) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request made within forty five (45) days after receipt of such written notice from the Company by any Holder.   4.2 If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 4.1 and the provisions of Section 2.3 shall apply, provided however, if the managing underwriter advises the Company in writing that marketing factors require a limitation of the number of shares to be underwritten, then the Company shall so advise the Holders and any Other Sellers of the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated first to the Other Seller(s) which initiated the request for registration, and then among the Holder sand the remaining Other Sellers in proportion, as nearly as practicable, to the respective amounts of shares held by the Holders and such Other Sellers at the time of filing the registration statement.   5. Expenses of Registration. Except as specifically provided herein, all Registration Expenses shall be borne by the Company. All Selling Expenses incurred in connection with any registrations hereunder shall be borne by the Holders and the Other Sellers, if any, of the securities so registered pro rata on the basis of the number of shares so registered.   6. Registration Procedures. In the case of each registration, qualification or compliance effected by the Company pursuant to this Agreement, the Company will keep the Holders advised in writing as to the initiation, qualification, compliance and completion of each registration. At its expense the Company will:   6.1 Prepare and file with the Commission a registration statement with respect to such securities and use commercially reasonable efforts to cause such registration statement to become and remain effective for at least one hundred eighty (180) days or, if earlier, until the   5 -------------------------------------------------------------------------------- distribution described in the registration statement has been completed; provided, however, that in the case of any registration of Registrable Securities on Form S-3 which are intended to be offered on a continuous or delayed basis, such period shall be extended, if necessary, to keep the registration statement effective until all such Registrable Securities are sold, provided that if Rule 415, or any successor rule under the Securities Act, permits an offering on a continuous or delayed basis, and provided further that if applicable rules under the Securities Act governing the obligation to file a post-effective amendment permit, in lieu of filing a post-effective amendment which (i) includes any prospectus required by Section 10(a)(3) of the Securities Act; or (ii) reflects facts or events representing a material or fundamental change in the information set forth in the registration statement, the incorporation by reference of information required to be included in (i) and (ii) above shall be contained in periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act in the registration statement.   6.2 Furnish to the Holders and to the underwriters of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities.   6.3 Prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statements as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement.   6.4 At any time when a prospectus relating to the registration statement is required to be delivered under the Securities Act, notify the Holders of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an 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 not misleading or incomplete in the light of the circumstances then existing, and at the request of any such seller, prepare and furnish to such seller a reasonable number of copies of each supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchaser of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or incomplete in the light of the circumstances then existing.   6.5 Use commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.   6.6 Cause all such Registrable Securities to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed.   6.7 Provide a transfer agent and registrar for all Registrable Securities and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration.   6 -------------------------------------------------------------------------------- 6.8 Make available for inspection by the Holders, any underwriter participating in any disposition pursuant to such registration and any attorney or accountant retained by any the Holder or such underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers and directors to supply all information reasonably requested by such Holder, underwriter, attorney or accountant in connection with such registration statement; provided, however, that such Holders, underwriter, attorney or accountant shall agree to hold in confidence and trust all information so provided.   6.9 Furnish to the Holders:   (a) in the case of an underwritten public offering, a copy of any opinion of counsel for the Company provided to the underwriters participating in such offering, dated the effective date of the registration statement;   (b) in the case of an underwritten public offering, a copy of any “comfort” letters provided to the underwriters participating in such offering and signed by the Company’s independent public accountants who have examined and reported on the Company’s financial statements included in the registration statement, to the extent permitted by the standards of the American Institute of Certified Public Accountants or other relevant authorities; and   (c) a copy of all documents filed with and all correspondence from or to the Commission in connection with any such offering other than non-substantive cover letters and the like.   6.10 Otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months, but not more than eighteen (18) months, beginning with the first (1st) month after the effective date of the Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act.   6.11 In connection with the preparation and filing of each Registration Statement under this Agreement, the Company will give the Holder and its underwriters, if any, and its respective counsel and accountants, the opportunity to review such registration statement, each prospectus included therein or filed with the Commission, and each amendment thereof or supplement thereto, and will give Holder such access to the Company’s books and records and such opportunities to discuss the business of the Company with its officers, its counsel and the independent public accountants who have certified the Company’s financial statements, as reasonably shall be necessary, in the opinion of Holder or such underwriters or their respective counsel, in order to conduct a reasonable and diligent investigation within the meaning of the Securities Act.   7. Indemnification.   7.1 To the extent permitted by law, the Company will indemnify the Holders and each underwriter, if any, and each person who controls any underwriter within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages or liabilities (or   7 -------------------------------------------------------------------------------- actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation by the Company of any rule or regulation promulgated under the Securities Act applicable to the Company in connection with any such registration, qualification or compliance, and the Company will reimburse the Holders, each such underwriter and each person who controls any such underwriter, for all legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, as such expenses are incurred, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company by the Holders or underwriter for use therein; and provided further, however, that the Company shall not be required to indemnify any Person against any liability arising from any untrue or misleading statement or omission contained in any preliminary prospectus if such deficiency is corrected in the final prospectus or for any liability which arises out of the failure of any Person to deliver a prospectus as required by the Securities Act.   7.2 To the extent permitted by law, each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors and officers, each underwriter, if any, of the Company’s securities covered by such a registration statement, each other Holder participating in such registration, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, and each Other Seller participating in such registration, each of its officers and directors and each person controlling such Other Seller within the meaning of Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such Holders, Other Sellers, directors, officers, persons, underwriters and control persons for all legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, as such expenses are incurred, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by such Holder for use therein; provided that in no event shall any indemnity under this Section 7.2 exceed the net proceeds received by such Holder in such registration; and provided further, however, that the Holders shall not be required to indemnify any Person against any liability arising from any untrue or misleading statement or omission contained in any preliminary prospectus if such deficiency is corrected in the final prospectus or for any liability which arises out of the failure of any Person to deliver a prospectus as required by the Securities Act.   8 -------------------------------------------------------------------------------- 7.3 Each Indemnified Party shall give notice to each Indemnifying Party promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party’s expense; provided, however, that an Indemnified Party (together with all other Indemnified Parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the Indemnifying Party, if representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential differing interests between such Indemnified Party and any other party represented by such counsel in such proceeding. The failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 7, unless the failure to give such notice is materially prejudicial to an Indemnifying Party’s ability to defend such action. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Notwithstanding the foregoing, such Indemnified Party shall have the right to employ its own counsel in any such litigation, proceeding or other action if (i) the employment of such counsel has been authorized by the Indemnifying Party, in its sole and absolute discretion, or (ii) the named parties in any such claims (including any impleaded parties) include any such Indemnified Party and the Indemnified Party and the Indemnifying Party shall have been advised in writing (in suitable detail) by counsel to the Indemnified Party either (A) that there may be one or more legal defenses available to such Indemnified Party which are different from or additional to those available to the Indemnifying Party, or (B) that there is a conflict of interest by virtue of the Indemnified Party and the Indemnifying Parties having common counsel, in any of which events, the legal fees and expenses of a single counsel for all Indemnified Parties with respect to each such claim, defense thereof, or counterclaims thereto shall be borne by Indemnifying Party.   7.4 If the indemnification provided for in this Section 7 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any claim, loss, damage, liability or action referred to therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such claim, loss, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and the Indemnified Party on the other in connection with the actions that resulted in such claims, loss, damage, liability or action, as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact related to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.   7.5 The Company and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 7 were based solely upon the number of entities from whom contribution was requested or by any other method of allocation which does not take account of the   9 -------------------------------------------------------------------------------- equitable considerations referred to above in this Section 7. The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages and liabilities referred to above in this Section 7 shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim, subject to the provisions of this Section 7. Notwithstanding the provisions of this Section 7, the Holders shall not be required to contribute any amount or make any other payments under this Agreement which in the aggregate exceed the net proceeds (after selling expenses) received by the Holders. No person guilty of fraudulent misrepresentation (within the meaning of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.   8. Information by Holders. Each Holder shall furnish to the Company such information regarding such Holder, the Registrable Securities held by him, her or it and the distribution proposed by such Holder as the Company may request in writing and as shall be required in connection with any registration, qualification or compliance hereunder.   9. Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Registrable Securities to the public without registration, after such time as a public market exists for the Common Shares of the Company, the Company agrees to use commercially reasonable efforts to:   9.1 Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date that the Company becomes subject to the reporting requirements of the Securities Act or the Exchange Act;   9.2 File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); and   9.3 So long as a Holder owns any Registrable Securities, to furnish to such Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after ninety (90) days after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as such Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing such Holder to sell any such securities without registration.   10. Transfer of Registration Rights. The registration rights granted under this Agreement may be not be transferred by a Holder, except (i) to an affiliate of the Holder (as defined in Rule 405 of the Securities Act), or (ii) to a third party upon prior written consent of the Company, which consent may be withheld in the Company’s sole discretion (and in each case, only in connection with the transfer of the underlying Registrable Securities).   11. Termination of Registration Rights. The registration rights afforded to the Holder under this Agreement shall terminate, if not previously exercised, on the seventh (7th) anniversary of the date hereof.   10 -------------------------------------------------------------------------------- 12. Limitation on Registration Rights. Nothing contained in this Agreement shall create any obligation on the part of the Company to register under the Securities Act any securities that are not Registrable Securities.   13. Miscellaneous.   13.1 Assignment. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties hereto.   13.2 Specific Performance. The parties hereto hereby declare that it is impossible to measure in money the damages which will accrue to a party hereto or to his or its successors or assigns by reason of a failure to perform any of the obligations under this Agreement and agree that the terms of this Agreement shall be specifically enforceable. If any party hereto or his or its successors or assigns institutes any action or proceeding to specifically enforce the provisions hereof, any person against whom such action or proceeding is brought hereby waives the claim or defense therein that such party or such personal representative has an adequate remedy at law, and such person shall not offer in any such action or proceeding the claim or defense that such remedy at law exists.   13.3 Governing Law. This Agreement shall be governed by and construed under the laws of New York without regard to the provisions thereof relating to choice of law or conflicts of law.   13.4 Attorneys’ Fees. If any suit or action is instituted to enforce any provision in this Agreement, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals.   13.5 Counterparts. This Agreement may be executed in any number of counterpart signature pages, each of which shall be deemed to be an original and all of which together shall constitute one and the same original instrument. Delivery of executed signature pages to this Agreement may be by facsimile transmission with confirmation of received transmission or other electronic means that faithfully reproduces the original with the same effect as if a manually signed original were personally delivered.   13.6 Notices. All notices, consents or other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given (i) when delivered in hand or by courier; (ii) five (5) business days after being mailed by first class certified mail, return receipt requested, postage prepaid; or (iii) three (3) business days after being sent by a reputable overnight delivery service, postage or delivery charges prepaid, to the parties at their respective addresses. All notices to be given hereunder shall be sent to the Company at its address specified on the signature page hereto and to the Investors at their respective addresses set forth on Schedule A hereto. Any party may change its address for notice and the address to which copies must be sent by giving notice of the new addresses to any of the other parties in accordance   11 -------------------------------------------------------------------------------- with this Section 13.6, except that any such change of address notice shall not be effective unless and until received.   13.7 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, portions of such provisions, or such provisions in their entirety, to the extent necessary, shall be severed from this Agreement, and the balance of this Agreement shall be enforceable in accordance with its terms.   13.8 Amendment and Waiver. Any provision of this Agreement may be amended with the written consent of the Company and holders of a majority of the Registrable Securities then held by the Holders. Any amendment or waiver effected in accordance with this paragraph shall be binding upon all Holders and the Company.   13.9 Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party to this Agreement, upon any breach or default of the other party, shall impair any such right, power or remedy of such non-breaching party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be made in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, or by law or otherwise afforded to any Holder, shall be cumulative and not alternative.   [Signature Page To Follow]   12 -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first above written.   COMPANY:    dELiA*S, INC.                    By:  /s/ Robert E. Bernard      --------------------------------------------------------------------------------      Name: Robert E. Bernard      Title: Chief Executive Officer Company’s Notice Address:             435 Hudson Street    with a copy (which shall not constitute notice) to: New York, NY 10014    Richard M. Graf Attn: Chief Executive Officer    Katten Muchin Rosenman LLP Fax: (212) 590-6310    1025 Thomas Jefferson St., NW      Washington, DC 20007      Fax: (202) 339-6058               INVESTORS:           /s/ Robert E. Bernard      --------------------------------------------------------------------------------      Robert E. Bernard             /s/ Walter Killough      --------------------------------------------------------------------------------      Walter Killough             /s/ David Desjardins      --------------------------------------------------------------------------------      David Desjardins             /s/ Cathy McNeal      --------------------------------------------------------------------------------      Cathy McNeal             /s/ Andrew Firestone      --------------------------------------------------------------------------------      Andrew Firestone             [Signature Page to Registration Rights Agreement]   13

  Exhibit 10.1 Execution Copy AMENDED AND RESTATED CREDIT AGREEMENT dated as of June 24, 2005, as amended and restated as of May 26, 2006 among COVANTA ENERGY CORPORATION, COVANTA HOLDING CORPORATION, as a Guarantor, CERTAIN SUBSIDIARIES OF COVANTA ENERGY CORPORATION, as Guarantors, VARIOUS LENDERS, GOLDMAN SACHS CREDIT PARTNERS L.P., as Sole Lead Arranger, Sole Book Runner, Sole Syndication Agent, Administrative Agent and Collateral Agent, JPMORGAN CHASE BANK, as Co-Documentation Agent, Revolving Issuing Bank and a Funded LC Issuing Bank, UBS AG, STAMFORD BRANCH, as a Funded LC Issuing Bank, UBS SECURITIES LLC as Co-Documentation Agent and CALYON NEW YORK BRANCH as Co-Documentation Agent   $789,312,500.00 Senior Secured Credit Facilities     --------------------------------------------------------------------------------   TABLE OF CONTENTS               Page   SECTION 1. DEFINITIONS AND INTERPRETATION     2             1.1. Definitions     2   1.2. Accounting Terms     42   1.3. Interpretation, etc.     43             SECTION 2. LOANS AND LETTERS OF CREDIT     43             2.1. Tranche C Term Loans and Delayed Draw Term Loans     43   2.2. Revolving Loans     44   2.3. Swing Line Loans     45   2.4. Issuance of Letters of Credit and Purchase of Participations Therein     48   2.5. Pro Rata Shares; Availability of Funds     58   2.6. Use of Proceeds     59   2.7. Evidence of Debt; Register; Lenders’ Books and Records; Notes     59   2.8. Interest on Loans     60   2.9. Conversion/Continuation     63   2.10. Default Interest     63   2.11. Fees     64   2.12. Scheduled Payments     65   2.13. Voluntary Prepayments/Commitment Reductions     66   2.14. Mandatory Prepayments/Commitment Reductions     68   2.15. Application of Prepayments     71   2.16. General Provisions Regarding Payments     72   2.17. Ratable Sharing     73   2.18. Making or Maintaining Eurodollar Rate Loans     74   2.19. Increased Costs; Capital Adequacy     76   2.20. Taxes; Withholding, etc.     77   2.21. Obligation to Mitigate     80   2.22. Defaulting Lenders     80   2.23. Removal or Replacement of a Lender     81             SECTION 3. CONDITIONS PRECEDENT     82             3.1. Closing Date     82   3.2. Conditions to Each Credit Extension     88   3.3. Effective Date     89             SECTION 4. REPRESENTATIONS AND WARRANTIES     91             4.1. Organization; Requisite Power and Authority; Qualification     91   4.2. Capital Stock and Ownership     91   4.3. Due Authorization     91   4.4. No Conflict     91   4.5. Governmental Consents     92   i --------------------------------------------------------------------------------                 Page   4.6. Binding Obligation     92   4.7. Historical Financial Statements     92   4.8. Projections     92   4.9. No Material Adverse Change     93   4.10. No Restricted Junior Payments     93   4.11. Adverse Proceedings, etc.     93   4.12. Payment of Taxes     93   4.13. Properties     93   4.14. Environmental Matters     94   4.15. No Defaults     94   4.16. Material Contracts     94   4.17. Governmental Regulation     95   4.18. Margin Stock     95   4.19. Employee Matters     95   4.20. Employee Benefit Plans     95   4.21. Certain Fees     96   4.22. Solvency     96   4.23. Related Agreements     96   4.24. Disclosure     96   4.25. Patriot Act     97   4.26. Financing Statements     97             SECTION 5. AFFIRMATIVE COVENANTS     97             5.1. Financial Statements and Other Reports     98   5.2. Existence     101   5.3. Payment of Taxes and Claims     101   5.4. Maintenance of Properties     101   5.5. Insurance     102   5.6. Inspections     102   5.7. Lenders Meetings     102   5.8. Compliance with Laws     103   5.9. Environmental     103   5.10. Subsidiaries     105   5.11. Additional Material Real Estate Assets     106   5.12. Interest Rate Protection     106   5.13. Further Assurances     106   5.14. Miscellaneous Business Covenants     107   5.15. Cash Management Systems     107   5.16. Insurance Regulatory Account     108   5.17. Plan of Reorganization Account     108             SECTION 6. NEGATIVE COVENANTS     108             6.1. Indebtedness     108   6.2. Liens     115   6.3. [Intentionally left blank]     117   ii --------------------------------------------------------------------------------                 Page   6.4. No Further Negative Pledges     118   6.5. Restricted Junior Payments     118   6.6. Restrictions on Subsidiary Distributions     120   6.7. Investments     121   6.8. Financial Covenants     123   6.9. Fundamental Changes; Disposition of Assets; Acquisitions     130   6.10. Disposal of Subsidiary Interests     131   6.11. Prohibition on Sales and Lease-Backs     132   6.12. Transactions with Shareholders and Affiliates     132   6.13. Conduct of Business     132   6.14. Amendments or Waivers of Certain Related Agreements     132   6.15. Amendments or Waivers with respect to MSW Notes, MSW Refinancing Notes, ARC Notes, ARC Refinancing Notes, New MSW Notes and New ARC Notes     133   6.16. Amendments or Waivers of the Second Lien Credit Agreement and Second Lien Notes Indenture     133   6.17. Fiscal Year     133             SECTION 7. GUARANTY     134             7.1. Guaranty of the Obligations     134   7.2. Contribution by Guarantors     134   7.3. Payment by Guarantors     134   7.4. Liability of Guarantors Absolute     135   7.5. Waivers by Guarantors     137   7.6. Guarantors’ Rights of Subrogation, Contribution, etc.     137   7.7. Subordination of Other Obligations     138   7.8. Continuing Guaranty     138   7.9. Authority of Guarantors or Company     138   7.10. Financial Condition of Company     138   7.11. Bankruptcy, etc.     139   7.12. Discharge of Guaranty Upon Sale of Guarantor     139             SECTION 8. EVENTS OF DEFAULT     140             8.1. Events of Default     140             SECTION 9. AGENTS     143             9.1. Appointment of Agents     143   9.2. Powers and Duties     144   9.3. General Immunity     144   9.4. Agents Entitled to Act as Lender     146   9.5. Lenders’ Representations, Warranties and Acknowledgment     146   9.6. Right to Indemnity     146   9.7. Successor Administrative Agent and Swing Line Lender     147   9.8. Collateral Documents and Guaranty     147   iii --------------------------------------------------------------------------------                 Page   SECTION 10. MISCELLANEOUS     148             10.1. Notices     148   10.2. Expenses     149   10.3. Indemnity     150   10.4. Set-Off     150   10.5. Amendments and Waivers     151   10.6. Successors and Assigns; Participations     153   10.7. Independence of Covenants     157   10.8. Survival of Representations, Warranties and Agreements     157   10.9. No Waiver; Remedies Cumulative     157   10.10. Marshalling; Payments Set Aside     158   10.11. Severability     158   10.12. Obligations Several; Independent Nature of Lenders’ Rights     158   10.13. Headings     158   10.14. APPLICABLE LAW     158   10.15. CONSENT TO JURISDICTION     158   10.16. WAIVER OF JURY TRIAL     159   10.17. Confidentiality     160   10.18. Usury Savings Clause     160   10.19. Counterparts     161   10.20. Effectiveness     161   10.21. Patriot Act     161   10.22. Electronic Execution of Assignments     161   10.23. Amendment and Restatement     161   10.24. Reaffirmation and Grant of Security Interests     162   iv --------------------------------------------------------------------------------                 APPENDICES:     A-1     Tranche C Term Loan Commitments       A-2     Delayed Draw Term Loan Commitments       B     Notice Addresses               SCHEDULES:     1.1(a)     Certain Adjustments to Financial Covenant Definitions       1.1(b)     Closing Date Excluded Subsidiaries       1.1(c)     Existing Letters of Credit       1.1(d)     Closing Date Foreign Subsidiaries       1.1(e)     Detroit Letters of Credit       1.1(f)     Transition Costs       2.4(f)     Allocation of New Credit Linked Deposits       3.1(d)     Certain Closing Date Indebtedness Events       3.1(h)     Closing Date Mortgaged Properties       4.1     Jurisdictions of Organization       4.2     Capital Stock and Ownership       4.13     Real Estate Assets       4.17     Material Contracts       5.15     Cash Management Systems       6.1     Certain Indebtedness       6.2     Certain Liens       6.7     Certain Investments       6.9-A     Certain Permitted Asset Sales       6.9-B     Foreign Subsidiary Restructuring       6.12     Certain Affiliate Transactions               EXHIBITS:     A-1     Funding Notice       A-2     Conversion/Continuation Notice       A-3     Issuance Notice       B-1     Term Loan Note       B-2     Revolving Loan Note       B-3     Swing Line Note       C     Compliance Certificate       D-1     Opinion of Skadden, Arps, Slate, Meagher & Flom LLP       D-2     Opinion of LeBoeuf, Lamb, Greene & MacRae LLP       D-3     Opinion of Mr. Timothy Simpson       E     Assignment Agreement       F     Certificate Re Non-bank Status       G-1     Closing Date Certificate       G-2     Effective Date Certificate       G-3     Solvency Certificate       H     Counterpart Agreement       I-1     Pledge and Security Agreement       I-2     Holding Pledge Agreement       J     Mortgage       K     Intercreditor Agreement v --------------------------------------------------------------------------------   AMENDED AND RESTATED CREDIT AGREEMENT           This AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT, dated as of June 24, 2005, as amended and restated as of May 26, 2006 is entered into by and among COVANTA ENERGY CORPORATION, a Delaware corporation (“Company”), COVANTA HOLDING CORPORATION (formerly known as Danielson Holding Corporation), a Delaware corporation (“Holding”), CERTAIN SUBSIDIARIES OF COMPANY, as Guarantors, the Lenders party hereto from time to time, GOLDMAN SACHS CREDIT PARTNERS L.P. (“GSCP”) as Sole Lead Arranger, Sole Book Runner and Sole Syndication Agent (in such respective capacities, the “Lead Arranger”, “Book Runner”, and “Syndication Agent) as Administrative Agent (together with its permitted successors in such capacity, “Administrative Agent”) and as Collateral Agent (together with its permitted successor in such capacity, “Collateral Agent”), JPMORGAN CHASE BANK (“JPMC”), UBS SECURITIES LLC (“UBSS”) and CALYON NEW YORK BRANCH (“Calyon” together with JPMC and UBSS as Co-Documentation Agents in such capacities, “Co-Documentation Agents”) and JPMC, as a Revolving Issuing Bank and a Funded LC Issuing Bank, and UBS AG, STAMFORD BRANCH (“UBS”) as a Funded LC Issuing Bank. RECITALS:      WHEREAS, capitalized terms used in these Recitals shall have the respective meanings set forth for such terms in Section 1.1 hereof;      WHEREAS, Company, Holding, GSCP, as Joint Lead Arranger, Joint Book Runner, Administrative Agent and Collateral Agent, certain Subsidiaries of Company as Guarantors, the agents and lenders party thereto from time to time and certain other Persons are parties to that certain Credit and Guaranty Agreement, dated as of June 24, 2005 (the “Existing Credit Agreement”);      WHEREAS, Company desires that certain of the existing lenders and other parties hereto agree to amend and restate the Existing Credit Agreement in its entirety to: (i) establish new Tranche C Term Loans and Delayed Draw Term Loans to be made hereunder; (ii) refinance the existing Term Loans made under and as defined in the Existing Credit Agreement (the “Existing Term Loans”) with the Tranche C Term Loans made hereunder; (iii) establish New Credit Linked Deposits to be funded hereunder; (iv) refinance the existing Credit Linked Deposits funded under the Existing Credit Agreement (the “Existing Credit Linked Deposits”) with the New Credit Linked Deposits funded hereunder; (v) permit the prepayment of certain Second Lien Loans outstanding under the Second Lien Credit Agreement and any premium related thereto with the proceeds of the Delayed Draw Term Loans and (vi) make certain other changes as more fully set forth herein, which amendment and restatement shall become effective upon the Effective Date as defined herein;      WHEREAS, the Requisite Lenders have, on or prior to the Effective Date, authorized the Administrative Agent to execute this Agreement on behalf of all Continuing Lenders;      WHEREAS, it is the intent of the parties hereto that this Agreement not constitute a novation of the obligations and liabilities of the parties under the Existing Credit Agreement and   --------------------------------------------------------------------------------   that this Agreement amend and restate in its entirety the Existing Credit Agreement and re-evidence the Obligations outstanding on the Effective Date as contemplated hereby; and      WHEREAS, it is the intent of Credit Parties to confirm that all Obligations of the Credit Parties under the other Credit Documents, as amended hereby, shall continue in full force and effect and that, from and after the Effective Date, all references to the “Credit Agreement” contained therein shall be deemed to refer to this Agreement.      NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows: SECTION 1. DEFINITIONS AND INTERPRETATION      1.1. Definitions. The following terms used herein, including in the preamble, recitals, exhibits and schedules hereto, shall have the following meanings:           “Acquired Business” means Covanta ARC Holdings Inc., together with its Subsidiaries.           “Acquisition” means the acquisition by Holding of the Acquired Business pursuant to the Stock Purchase Agreement.           “Acquisition Holding Contribution” as defined in Section 2.14(c).           “Act” as defined in Section 4.25.           “Adjusted Company Operating Cash Flow” means, for any Fiscal Quarter and without duplication, (a) Company Cash Flow for such Fiscal Quarter, minus, to the extent that each is reflected in such Company Cash Flow, (b), the sum of (i) cash proceeds from Asset Sales, capital contributions or issuances of Capital Stock (or any other payments from Holding) or the incurrence of Indebtedness or any proceeds otherwise attributable to extraordinary gains or other non-recurring items, plus (ii) Net Insurance/Condemnation Proceeds, plus (iii) returns of invested capital upon liquidation, sale or other similar extraordinary return of an Investment, minus (c) any Cash or Cash Equivalents that are subject to a Lien (other than a Lien created under the Collateral Documents or the collateral documents relating to the Second Lien Notes Indenture or the Second Lien Credit Agreement), plus (d) payments (or intercompany loans) made by Company to or on behalf of its Subsidiaries for Investments incurred in connection with intercompany loans permitted under Sections 6.1(d), (e) (other than subsections (i)(A), (i)(B) and (i)(D) thereof) and (t) or Investments incurred pursuant to Section 6.7(g), Section 6.7(j)(ii) (but in the case of Section 6.7(j)(ii), other than to the extent made with the proceeds of an Acquisition Holding Contribution) and Section 6.7(n)(ii), plus (e) (but only to the extent that since the Closing Date the aggregate of all amounts added to pursuant to this clause (e) does not exceed by more than $75,000,000 the aggregate of all amounts deducted pursuant to clause (f) of this definition) to the extent permitted hereunder any out of pocket expenses, costs and other similar payments made by Company or its Subsidiaries to third parties in connection with the construction of any Expansion owned by a Subsidiary of Company, minus (f) any cash received 2 --------------------------------------------------------------------------------   in connection with the construction of any Expansion owned by a Subsidiary of Company, plus (g) payments made by Company or any of its Subsidiaries for MSW Put-Related Costs, plus (h) any payment of Company Cash Interest Expense, plus (i) any payment of principal of Company Total Debt.           “Adjusted Eurodollar Rate” means, for any Interest Rate Determination Date with respect to an Interest Period for a Eurodollar Rate Loan or New Credit Linked Deposit, the rate per annum obtained by dividing (and rounding upward to the next whole multiple of 1/16 of 1%) (i) (a) the rate per annum (rounded to the nearest 1/100 of 1%) equal to the offered rate which appears on the page of the Telerate Screen which displays an average British Bankers Association Interest Settlement Rate (such page currently being page number 3740 or 3750, as applicable) for deposits (for delivery on the first day of such period) with a term equivalent to such period in Dollars, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (b) in the event the rate referenced in the preceding clause (a) does not appear on such page or service or if such page or service shall cease to be available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the rate determined by Administrative Agent to be the offered rate on such other page or other service which displays an average British Bankers Association Interest Settlement Rate for deposits (for delivery on the first day of such period) with a term equivalent to such period in Dollars, determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, or (c) in the event the rates referenced in the preceding clauses (a) and (b) are not available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the offered quotation rate to first class banks in the London interbank market by Credit Suisse for deposits (for delivery on the first day of the relevant period) in Dollars of amounts in same day funds comparable to the principal amount of the applicable Loan or New Credit Linked Deposit, for which the Adjusted Eurodollar Rate is then being determined with maturities comparable to such period as of approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, by (ii) an amount equal to (a) one minus (b) the Applicable Reserve Requirement.           “Administrative Agent” as defined in the preamble hereto.           “Adverse Proceeding” means any action, suit, proceeding (whether administrative, judicial or otherwise), governmental investigation or arbitration at law or in equity, or before or by any Governmental Authority, domestic or foreign (including any Environmental Claims), whether pending or, to the knowledge of Company or any of its Subsidiaries, threatened against or affecting Company or any of its Subsidiaries or any property of Company or any of its Subsidiaries.           “Affected Entities” means the collective reference to Covanta Warren Energy Resource Corp. L.P., Covanta Warren Holdings I, Inc., Covanta Warren Holdings II, Inc. (collectively the “Covanta Warren Entities”) and Magellan Cogeneration Inc. in each case only for so long as such Person continues to be the subject of a proceeding under applicable bankruptcy or insolvency law.           “Affected Lender” as defined in Section 2.18(b).           “Affected Loans” as defined in Section 2.18(b). 3 --------------------------------------------------------------------------------             “Affiliate” means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power (i) to vote 5% or more of the Securities having ordinary voting power for the election of directors of such Person or (ii) to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise.           “Agent” means each of Syndication Agent, Administrative Agent and Collateral Agent.           “Aggregate Amounts Due” as defined in Section 2.17.           “Aggregate Payments” as defined in Section 7.2.           “Agreement” means (i) in respect of the period prior to the Effective Date, the Existing Credit Agreement and (ii) in respect of any period on and after the Effective Date, this Amended and Restated Credit and Guaranty Agreement, dated as of May 26, 2006, as it may be amended, supplemented or otherwise modified from time to time.           “Applicable Margin’’ means           (i) with respect to Revolving Loans that are Eurodollar Rate Loans, a percentage per annum, determined by reference to Company Leverage Ratio in effect from time to time as set forth below:             Company   Applicable Margin for Revolving   Leverage   Loans     Ratio   (Eurodollar Loans) ³ 4.25:1.00     3.00 %           < 4.25:1.00         ³ 3.50:1.00     2.75 %           < 3.50:1.00     2.50 % (ii) with respect to Swing Line Loans and Revolving Loans that are Base Rate Loans, an amount equal to the Applicable Margin for Eurodollar Rate Loans as set forth in clause (i) minus 1.00% per annum; (iii) with respect to the Term Loans that are Eurodollar Rate Loans, Funded Letters of Credit and New Credit Linked Deposits, 2.25% per annum and (iv) with respect to Term Loans that are Base Rate Loans, 1.25% per annum. No change in the Applicable Margin shall be effective until three Business Days after the date on which Administrative Agent shall have 4 --------------------------------------------------------------------------------   received the applicable financial statements and a Compliance Certificate pursuant to Section 5.1(d) calculating the Company Leverage Ratio. At any time Company has not submitted to Administrative Agent the applicable information as and when required under Section 5.1(d), the Applicable Margin shall be determined as if the Company Leverage Ratio were in excess of 4.25:1.00 until such time as each failure is cured. Within one Business Day of receipt of the applicable information under Section 5.1(d), Administrative Agent shall give each Lender telefacsimile or telephonic notice (confirmed in writing) of the Applicable Margin in effect from such date.           “Applicable Reserve Requirement” means, at any time, for any Eurodollar Rate Loan or a New Credit Linked Deposit, the maximum rate, expressed as a decimal, at which reserves (including, without limitation, any basic marginal, special, supplemental, emergency or other reserves) are required to be maintained with respect thereto against “Eurocurrency liabilities” (as such term is defined in Regulation D) under regulations issued from time to time by the Board of Governors of the Federal Reserve System or other applicable banking regulator. Without limiting the effect of the foregoing, the Applicable Reserve Requirement shall reflect any other reserves required to be maintained by such member banks with respect to (i) any category of liabilities which includes deposits by reference to which the applicable Adjusted Eurodollar Rate is to be determined, or (ii) any category of extensions of credit or other assets which include Eurodollar Rate Loans. A Eurodollar Rate Loan or a New Credit Linked Deposit shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credit for proration, exceptions or offsets that may be available from time to time to the applicable Lender. The rate of interest on Eurodollar Rate Loans or a New Credit Linked Deposit shall be adjusted automatically on and as of the effective date of any change in the Applicable Reserve Requirement.           “ARC Indenture” means that certain Indenture, dated as of May 1, 2003, between American Ref-Fuel Company LLC and Wachovia Bank, National Association as supplemented by the First Supplemental Indenture, dated as of May 1, 2003 between American Ref-Fuel Company LLC and Wachovia Bank, National Association.           “ARC LLC” means American Ref-Fuel Company LLC, a Delaware limited liability company.           “ARC Notes” means the “Notes” as defined in the ARC Indenture.           “ARC Refinancing Indenture” means a trust indenture in form and substance reasonably satisfactory to Administrative Agent pursuant to which any ARC Refinancing Notes may be issued in accordance with the terms of this Agreement, as such indenture may be further amended, restated, supplemented, modified, extended, renewed or replaced from time to time in accordance with Section 6.15 of this Agreement.           “ARC Refinancing Notes” as defined in Section 6.1(n).           “Asset Sale” means a sale, lease or sub-lease (as lessor or sublessor), sale and leaseback, assignment, conveyance, transfer or other disposition to, or any exchange of property with, any Person (other than Company or any Guarantor Subsidiary), in one transaction or a 5 --------------------------------------------------------------------------------   series of transactions, of all or any part of Company’s or any of its Subsidiaries’ businesses, assets or properties of any kind, whether real, personal, or mixed and whether tangible or intangible (other than Cash), whether now owned or hereafter acquired, including, without limitation, the Capital Stock of any of Company’s Subsidiaries, other than (i) inventory (or other assets) sold or leased in the ordinary course of business, (excluding any such sales by operations or divisions discontinued), and (ii) Excluded Asset Sales.           “Assignment Agreement” means an Assignment and Assumption Agreement substantially in the form of Exhibit E, with such amendments or modifications as may be approved by Administrative Agent and Company.           “Assignment Effective Date” as defined in Section 10.6(b).           “Authorized Officer” means, as applied to any Person, any individual holding the position of chief executive officer, general counsel, chief financial officer, chief accounting officer or treasurer.           “Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and hereafter in effect, or any successor statute.           “Base Rate” means, for any day, a rate per annum equal to the greater of (i) the Prime Rate in effect on such day and (ii) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the effective day of such change in the Prime Rate or the Federal Funds Effective Rate, respectively.           “Base Rate Loan” means a Loan bearing interest at a rate determined by reference to the Base Rate.           “Beneficiary” means each Agent, Issuing Bank, Lender and Lender Counterparty.           “Business Day” means (i) any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or is a day on which banking institutions located in such state are authorized or required by law or other governmental action to close and (ii) with respect to all notices, determinations, fundings and payments in connection with the Adjusted Eurodollar Rate or any Eurodollar Rate Loans or New Credit Linked Deposit, the term “Business Day” shall mean any day which is a Business Day described in clause (i) and which is also a day for trading by and between banks in Dollar deposits in the London interbank market.           “Calyon” as defined in the preamble hereto.           “Capital Lease” means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person. 6 --------------------------------------------------------------------------------             “Capital Stock” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), including, without limitation, partnership interests and membership interests, and any and all warrants, rights or options to purchase or other arrangements or rights to acquire any of the foregoing from the issuer thereof.           “Cash” means money, currency or a credit balance in any demand or Deposit Account.           “Cash Equivalents” means, as at any date of determination, (i) marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States Government or (b) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one year after such date; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iii) commercial paper maturing no more than one year from the date of creation thereof and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (iv) certificates of deposit or bankers’ acceptances maturing within one year after such date and issued or accepted by any Lender or by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia that (a) is at least “adequately capitalized” (as defined in the regulations of its primary Federal banking regulator) and (b) has Tier 1 capital (as defined in such regulations) of not less than $100,000,000; (v) shares of any money market mutual fund that (a) has at least 95% of its assets invested continuously in the types of investments referred to in clauses (i) and (ii) above, and (b) has net assets of not less than $500,000,000; (vi) any repurchase agreement having a term of 30 days or less entered into with any commercial banking institution satisfying the criteria set forth in clause (iv) which is secured by a fully perfected security interest in any obligation of the type described in clause (i), above, (vii) securities and investments held by Foreign Subsidiaries pursuant to the requirements of Project documents to which they are a party, (viii) other investment-grade instruments and securities held by Foreign Subsidiaries, (ix) auction rate securities or auction rate preferred stock having a rate reset frequency of less than ninety (90) days and having, at the time of the acquisition thereof, a rating of at least A from S&P or from Moody’s and (x) such other securities and investments held by Excluded Subsidiaries and Foreign Subsidiaries as Company and Administrative Agent may agree.           “Cash Flow Coverage Ratio” means the ratio as of the last day of any Fiscal Quarter of (i) the sum of (A) Adjusted Company Operating Cash Flow (as calculated pursuant to the proviso below) plus (B) transition costs of the type and maximum aggregate amount set out on Schedule 1.1(f) incurred in connection with integration of the Acquired Business in such four Fiscal Quarter period to (ii) Company Cash Interest Expense, in each case for the four Fiscal Quarters of Company ending on such date taken as a single accounting period; provided that Adjusted Company Operating Cash Flow for such four Fiscal Quarter period shall be calculated by adding (1) Adjusted Company Operating Cash Flow for the Fiscal Quarter ending on such date to the sum of (2) Adjusted Company Operating Cash Flow for each of the three Fiscal Quarters immediately prior to the Fiscal Quarter measured in (1) above, as set forth in the 7 --------------------------------------------------------------------------------   Compliance Certificate for each such Fiscal Quarter; provided further that with respect to any calculation period ending prior to the first anniversary of the Closing Date, the foregoing shall be subject to adjustment as set forth in Schedule 1.1(a).           “Certificate re Non-Bank Status” means a certificate substantially in the form of Exhibit F.           “Change of Control” means, at any time, (i) Holding shall cease to beneficially own and control, directly or indirectly on a fully diluted basis, all of the economic and voting interests in the Capital Stock of Company; (ii) the majority of the seats (other than vacant seats) on the board of directors (or similar governing body) of Company cease to be occupied by Persons who either (a) were members of the board of directors of Company on the Closing Date or (b) were nominated for election by the board of directors of Company, a majority of whom were directors on the Closing Date or whose election or nomination for election was previously approved by a majority of such directors; (iii) any Person or “group” (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than SZ Investments, LLC, Third Avenue Trust, LLC, D.E. Shaw Laminar Portfolios, LLC and EGI-FUND (05-07) Investors, L.L.C. or any of their Affiliates (a) shall have acquired beneficial ownership of 40% on a fully diluted basis of the voting and/or economic interest in the Capital Stock of Holding or (b) shall have obtained the power to control the board of directors (or similar governing body) of Holding; or (iv) any “change of control” or similar event under (a) the MSW Notes, the MSW Refinancing Notes, the ARC Notes, the ARC Refinancing Notes, the New MSW Notes or the New ARC Notes that would require Company to tender for or otherwise give rise to an accelerated repayment of any such notes (except in the case of the MSW Notes to the extent directly resulting from the Acquisition) or (b) the Second Lien Credit Agreement or Second Lien Notes Indenture.           “Class” means (i) with respect to Lenders, each of the following classes of Lenders: (a) Lenders having Tranche C Term Loan Exposure, (b) Lenders having Revolving Exposure (including Swing Line Lender), (c) Lenders having Funded Letters of Credit Exposure and (d) Lenders having Delayed Draw Term Loan Exposure and (ii) with respect to Loans, each of the following classes of Loans: (a) Tranche C Term Loans, (b) Revolving Loans (including Swing Line Loans) and (c) Delayed Draw Term Loans.           “Closing Date” means June 24, 2005, the date on which the Existing Term Loans and the Existing Credit Linked Deposits were made.           “Closing Date Certificate” means a Closing Date Certificate substantially in the form of Exhibit G-1.           “Closing Date Mortgaged Property” as defined in Section 3.1(h).           “Collateral” means, collectively, all of the real, personal and mixed property (including Capital Stock) in which Liens are purported to be granted pursuant to the Collateral Documents as security for the Obligations.           “Collateral Agent” as defined in the preamble hereto. 8 --------------------------------------------------------------------------------             “Collateral Documents” means the Pledge and Security Agreement, the Holding Pledge Agreement, the Control Agreements, the Mortgages, the Intercreditor Agreement, and all other instruments, documents and agreements delivered by any Credit Party pursuant to this Agreement or any of the other Credit Documents in order to grant to Collateral Agent, for the benefit of Lenders, a Lien on any real, personal or mixed property of that Credit Party as security for the Obligations.           “Commitment” means any Revolving Commitment, Tranche C Term Loan Commitment, Delayed Draw Term Loan Commitment or Funded Letter of Credit Commitment.           “Commodities Agreement” means any long-term or forward purchase contract or option contract to buy, sell or exchange commodities or similar agreement or arrangement to which Company or any of its Subsidiaries is a party unless, under the terms of such ordinary course, non-speculative purchase contract, option contract agreement or arrangement Company expects to make or take delivery of all of the commodities which are the subject thereof.           “Company” as defined in the preamble hereto.           “Company Cash Balance” means, for the end of any Fiscal Quarter and without duplication, an amount determined for Company and its Subsidiaries in accordance with GAAP equal to (a) cash and cash equivalents reflected on the consolidated balance sheet of Company and its Subsidiaries, plus (b) Marketable Securities reflected on the consolidated balance sheet of Company and its Subsidiaries, minus (c) cash and cash equivalents of Foreign Subsidiaries of Company, minus (d) Marketable Securities of Foreign Subsidiaries of Company, minus (e) cash and cash equivalents of Domestic Subsidiaries of Company constituting part of the Acquired Business, minus (f) Marketable Securities of Domestic Subsidiaries of Company constituting part of the Acquired Business, minus (g) cash and cash equivalents of all Other Domestic Subsidiaries, minus (h) Marketable Securities of all Other Domestic Subsidiaries. For the purposes of this definition, “cash and cash equivalents” in each of the above references shall be determined in accordance with GAAP and as set forth on the balance sheet of Company for the relevant period.           “Company Cash Flow” means, for any Fiscal Quarter, (a) the Company Cash Balance for the end of such Fiscal Quarter minus (b) the Company Cash Balance for the end of the immediately preceding Fiscal Quarter.           “Company Cash Interest Expense” means, for any period, the sum of (i) total interest expense that was required to be paid in Cash by Company with respect to Company Total Debt during such period whether or not paid in such period, including all commissions, discounts and other fees and charges owed with respect to net costs under Interest Rate Agreements and (ii) other fees and charges owed with respect to letters of credit; provided that Company Cash Interest Expense shall not include Transaction Costs or Related Transaction Costs.           “Company Leverage Ratio” means, as of any date of determination, the ratio of (a) the aggregate amount of Company Total Debt at such date (other than intercompany Indebtedness that would be eliminated in consolidation) to (b) the Adjusted Company Operating 9 --------------------------------------------------------------------------------   Cash Flow (as calculated pursuant to the proviso below), plus transition costs of the type and maximum aggregate amount set out on Schedule 1.1(f) incurred in connection with integration of the Acquired Business for the four Fiscal Quarter period of Company ending on such date, taken as a single accounting period (or if such date of determination is not the last day of a Fiscal Quarter, for the four Fiscal Quarter period ending as of the last day of the most recently concluded Fiscal Quarter); provided that Adjusted Company Operating Cash Flow for such four Fiscal Quarter period shall be calculated by adding (i) Adjusted Company Operating Cash Flow for the Fiscal Quarter ending on such date to the sum of (ii) Adjusted Company Operating Cash Flow for each of the three Fiscal Quarters immediately prior to the Fiscal Quarter measured in (i) above, as set forth in the Compliance Certificate for each such Fiscal Quarter; provided further that with respect to any calculation period ending prior to the first anniversary of the Closing Date, the foregoing shall be subject to adjustment as set forth in Schedule 1.1(a).           “Company Total Debt” means, as of any date of determination, the aggregate stated balance sheet amount (but excluding unamortized premiums) of all Indebtedness of Company of the type identified in clauses (i) through (iv) of the definition of Indebtedness (other than Indebtedness owed by Company to its Subsidiaries) determined in accordance with GAAP. For the avoidance of doubt, Company Total Debt shall not include, without limitation, Performance Guarantees, Limited Recourse Debt, the MSW Notes, the ARC Notes, the New MSW Notes, the New ARC Notes, the ARC Refinancing Notes, the MSW Refinancing Notes and undrawn Letters of Credit.           “Compliance Certificate” means a Compliance Certificate substantially in the form of Exhibit C.           “Consolidated Adjusted EBITDA” means, for any period, an amount determined for Company and its Subsidiaries on a consolidated basis equal to (i) the sum, without duplication, of the amounts for such period of (a) Consolidated Net Income, (b) Consolidated Interest Expense, (c) provisions for taxes, (d) total depreciation expense, (e) total amortization expense, (f) changes in unbilled service receivables, (g) minority interests, (h) non-Cash compensation expense from the issuance of restricted stock and stock options, (i) all legal, accounting and other expenses incurred in connection with the Transactions or the Related Transactions to the extent deducted in determining Consolidated Net Income for such period and (j) other non-Cash items reducing Consolidated Net Income (excluding any such non-Cash item to the extent that it represents an accrual or reserve for potential Cash items in any future period or amortization of a prepaid Cash item that was paid in a prior period), minus (ii) other non-Cash items increasing Consolidated Net Income for such period (excluding any such non-Cash item to the extent it represents the reversal of an accrual or reserve for potential Cash item in any prior period); provided that with respect to any calculation period ending prior to the first anniversary of the Closing Date, the foregoing shall be subject to adjustment as set forth in Schedule 1.1(a).           “Consolidated Capital Expenditures” means, for any period, the aggregate of all expenditures of Company and its Subsidiaries during such period determined on a consolidated basis that, in accordance with GAAP, are or should be included in “additions to plant, property and equipment” or similar items reflected in the consolidated statement of cash flows of Company and its Subsidiaries. The following expenditures shall not constitute 10 --------------------------------------------------------------------------------   Consolidated Capital Expenditures: (i) expenditures that are to be reimbursed by the client (to the extent actually subsequently reimbursed) of a Project under the principal lease, service or operating agreement relating to such Project pursuant to a Contractual Obligation on the part of such client to reimburse such expenditures, (ii) expenditures incurred for the development, construction or acquisition of Projects after the Closing Date and expenditures on Projects existing on the Closing Date for the purpose of increasing waste through-put or power output, in each case, to the extent financed with the proceeds of Limited Recourse Debt expressly permitted pursuant to Section 6.1(p) or Investments expressly permitted pursuant to Section 6.7(j), (iii) expenditures made with Net Asset Sale Proceeds permitted to be retained by Company and its Subsidiaries for investment in long-term productive assets under Section 2.14(a) and (iv) expenditures that are made or committed to be made within three hundred sixty days of receipt of such proceeds from (or reimbursed through) Net Insurance/Condemnation Proceeds.           “Consolidated Interest Expense” means, for any period, total interest expense (including that portion attributable to Capital Leases in accordance with GAAP and capitalized interest) of Company and its Subsidiaries on a consolidated basis with respect to all outstanding Indebtedness of Company and its Subsidiaries, including all commissions, discounts and other fees and charges owed with respect to letters of credit and net costs under Interest Rate Agreements, but excluding (to the extent otherwise included), however, (x) any amounts referred to in Section 2.11(f) of this Agreement or Section 2.11 of the Second Lien Credit Agreement payable on or before the Closing Date, (y) interest that is capitalized in connection with construction financing and (z) all Transaction Costs or Related Transaction Costs.           “Consolidated Net Income” means, for any period, (i) the net income (or loss) of Company and its Subsidiaries on a consolidated basis for such period taken as a single accounting period determined in conformity with GAAP, minus, to the extent otherwise included and without duplication, (ii) (a) the income (or loss) of any Person (other than the Acquired Business) accrued prior to the date it becomes a Subsidiary of Company or is merged into or consolidated with Company or any of its Subsidiaries or that Person’s assets are acquired by Company or any of its Subsidiaries, (b) (or plus) any after-tax gains (or losses) attributable to Asset Sales or returned surplus assets of any Pension Plan, and (c) (to the extent not included in clauses (a) and (b) above) any net extraordinary gains or (plus) net extraordinary losses.           “Continuing Lenders” means the Continuing Term Lenders and the Continuing Funded Letter of Credit Participants.           “Continuing Term Lender” means an Existing Term Loan lender under the Existing Credit Agreement that has delivered a Lender Consent Letter.           “Continuing Funded Letter of Credit Participant” means a Funded Letter of Credit Participant under the Existing Credit Agreement that has delivered a Lender Consent Letter.           “Contractual Obligation” means, as applied to any Person, any provision of any Security issued by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, 11 --------------------------------------------------------------------------------   agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject.           “Contributing Guarantors” as defined in Section 7.2.           “Control Agreements” means each control agreement to be executed and delivered by Collateral Agent, a securities intermediary or depositary bank and Company or a Guarantor Subsidiary pursuant to the terms of the Pledge and Security Agreement with such modifications as Collateral Agent may reasonably approve.           “Conversion/Continuation Date” means the effective date of a continuation or conversion, as the case may be, as set forth in the applicable Conversion/Continuation Notice.           “Conversion/Continuation Notice” means a Conversion/Continuation Notice substantially in the form of Exhibit A-2.           “Corporate Services Reimbursement Agreement” means the corporate services and expense reimbursement agreement entered into by Holding and Company on March 10, 2004, as such agreement may be amended, restated, supplemented or otherwise modified from time to time to the extent permitted thereunder and under Section 6.14.           “Counterpart Agreement” means a Counterpart Agreement substantially in the form of Exhibit H delivered by a Subsidiary of Company pursuant to Section 5.10.           “Covanta Warren Debt” as defined in the definition of Restricted Junior Payments.           “Covanta Warren Entities” as defined in the definition of Affected Entities.           “Credit Date” means the date of a Credit Extension.           “Credit Document” means any of this Agreement, the Notes, if any, the Collateral Documents, any letter of credit applications or reimbursement agreements or other documents or certificates requested by an Issuing Bank executed by Company in favor of an Issuing Bank relating to Letters of Credit, and all other certificates, instruments or agreements executed and delivered by a Credit Party for the benefit of any Agent, any Issuing Bank or any Lender in connection herewith.           “Credit Extension” means and includes the making (but not the conversion or continuation) of a Loan, the funding of an Existing Credit Linked Deposit on the Closing Date, the funding of a New Credit Linked Deposit on the Effective Date and the issuance, amendment, extension or renewal of a Letter of Credit.           “Credit Linked Deposit Account” means one or more operating and/or investment accounts established by Administrative Agent that shall be used for the purposes set forth in Section 2.4. 12 --------------------------------------------------------------------------------             “Credit Party” means Company and each Guarantor and any other Subsidiary of Company which is a party to a Credit Document.           “Credit Suisse” means Credit Suisse, Cayman Islands branch.           “Currency Agreement” means any foreign exchange contract, currency swap agreement, futures contract, option contract, synthetic cap or other similar agreement or arrangement, each of which is for the purpose of hedging the foreign currency risk associated with Company’s and its Subsidiaries’ operations and not for speculative purposes.           “Default” means a condition or event that, after notice or lapse of time or both, would constitute an Event of Default.           “Default Excess” means, with respect to any Defaulting Lender, the excess, if any, of such Defaulting Lender’s Pro Rata Share of the aggregate outstanding principal amount of Loans of all Lenders (calculated as if all Defaulting Lenders (other than such Defaulting Lender) had funded all of their respective Defaulted Loans) over the aggregate outstanding principal amount of all Loans of such Defaulting Lender.           “Default Period” means, with respect to any Defaulting Lender, the period commencing on the date of the applicable Funding Default and ending on the earliest of the following dates: (i) the date on which all Commitments are cancelled or terminated and/or the Obligations are declared or become immediately due and payable, (ii) the date on which (a) the Default Excess with respect to such Defaulting Lender shall have been reduced to zero (whether by the funding by such Defaulting Lender of any Defaulted Loans of such Defaulting Lender or by the non-pro rata application of any voluntary or mandatory prepayments of the Loans in accordance with the terms of Section 2.13 or Section 2.14 or by a combination thereof) and (b) such Defaulting Lender shall have delivered to Company and Administrative Agent a written reaffirmation of its intention to honor its obligations hereunder with respect to its Commitments, and (iii) the date on which Company, Administrative Agent and Requisite Lenders waive all Funding Defaults of such Defaulting Lender in writing.           “Defaulted Loan” as defined in Section 2.22.           “Defaulting Lender” as defined in Section 2.22.           “Delayed Draw Term Loan” means a Delayed Draw Term Loan made by a Lender to Company pursuant to Section 2.1(b).           “Delayed Draw Term Loan Commitment” means the commitment of a Lender to make or otherwise fund a Delayed Draw Term Loan and “Delayed Draw Term Loan Commitments” means such commitments of all Lenders in the aggregate. The amount of each Lender’s Delayed Draw Term Loan Commitment, if any, as of the Effective Date is set forth on Appendix A-2 or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Delayed Draw Term Loan Commitments as of the Effective Date is $140,000,000. 13 --------------------------------------------------------------------------------             “Delayed Draw Term Loan Commitment Period” means the time period commencing on the Effective Date through and including the Delayed Draw Term Loan Commitment Termination Date.           “Delayed Draw Term Loan Commitment Termination Date” means the earliest to occur of (i) the date the Delayed Draw Term Loan Commitments are permanently reduced to zero pursuant to Section 2.13, (ii) the date of the termination of the Commitments pursuant to Section 8.1, and (iii) July 15, 2006.           “Delayed Draw Term Loan Credit Date” means any date of funding of Delayed Draw Term Loans after the Effective Date.           “Delayed Draw Term Loan Exposure” means, with respect to any Lender, as of any date of determination, (i) at any time prior to the Delayed Draw Term Loan Commitment Termination Date, the aggregate outstanding principal amount of such Lender’s Delayed Draw Term Loans plus the unfunded portion of such Lender’s Delayed Draw Term Loan Commitment and (ii) at any time on or after the Delayed Draw Term Loan Commitment Termination Date, the aggregate outstanding principal amount of such Lender’s Delayed Draw Term Loans.           “Deposit Account” means a demand, time, savings, passbook or like account with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a negotiable certificate of deposit.           “Detroit Letters of Credit” means any Funded Letter of Credit as described on Schedule 1.1(e) in an aggregate amount no greater than the amount set forth thereon, requested by Company to be issued hereunder and having an expiration date no later than the date which is three years and thirty-five days from the date of issuance.           “Development Subsidiary” means, solely for the purpose of excluding such Subsidiary from Company’s obligation to comply with Section 5.10 with respect to such Subsidiary, a Subsidiary established by Company or any of its Subsidiaries for the sole purpose of bidding on a prospective Project; provided that (i) any equity Investment in such Subsidiary by Company or another Subsidiary of Company in aggregate when taken together with all other equity Investments in Development Subsidiaries shall not exceed $1,000,000 at any one time outstanding; (ii) such Subsidiary shall have no assets other than Cash pursuant to clause (i) of this definition and intercompany Indebtedness permitted hereunder and the agreements to which it is party and which are entered into in the ordinary course of business and are necessary for it to develop or bid on prospective Projects and (iii) such Subsidiary’s sole business shall be limited to those actions necessary to develop or bid on prospective Projects. At such time, if any, as such Subsidiary shall incur any Indebtedness (other than intercompany Indebtedness permitted hereunder), grant any Liens or make any Investment or Restricted Junior Payment or carry on any activity after then that expressly permitted by sub-clause (iii) above, such Subsidiary shall cease to become a Development Subsidiary.           “Dollars” and the sign “$” mean the lawful money of the United States of America. 14 --------------------------------------------------------------------------------             “Domestic Subsidiary” means any Subsidiary of Company organized under the laws of the United States of America, any State thereof or the District of Columbia.           “Effective Date” means May 26, 2006, the date on which the conditions to effectiveness set forth in Section 3.3 are satisfied and the Tranche C Term Loans are made.           “Effective Date Certificate” means an Effective Date Certificate substantially in the form of Exhibit G-2.           “Eligible Assignee” means (i) any Lender, any Affiliate of any Lender and any Related Fund (any two or more Related Funds being treated as a single Eligible Assignee for all purposes hereof), and (ii) any commercial bank, insurance company, investment or mutual fund or other entity that is an “accredited investor” (as defined in Regulation D under the Securities Act) and which extends credit or buys loans as one of its businesses; provided, that in the case of any assignee of any Revolving Commitment, such Person extends credit on a revolving basis as one of its businesses and provided, further, no Affiliate of Company or Holding shall be an Eligible Assignee.           “Employee Benefit Plan” means any “employee benefit plan” as defined in Section 3(3) of ERISA which is or was sponsored, maintained or contributed to by, or required to be contributed by, Company, any of its Subsidiaries or any of their respective ERISA Affiliates.           “Environmental Claim” means any investigation, notice of violation, claim, action, suit, proceeding, demand, abatement order or other order or directive, by any Governmental Authority or any other Person, arising (i) pursuant to or in connection with any actual or alleged violation of any Environmental Law; (ii) in connection with any Release or threatened Release of Hazardous Material; or (iii) in connection with any actual or alleged damage, injury, threat or harm to health, safety, natural resources or the environment.           “Environmental Laws” means any and all current or future foreign or domestic, federal or state (or any subdivision of either of them), statutes, ordinances, orders, rules, regulations, judgments, Governmental Authorizations, or any other requirements of Governmental Authorities relating to (i) environmental matters, including those relating to any Release or threatened Release of Hazardous Materials; (ii) the generation, use, storage, transportation, treatment, processing, removal, remediation or disposal of Hazardous Materials; or (iii) occupational safety and health, industrial hygiene, land use or the protection of human, plant or animal health or welfare, in any manner applicable to Company or any of its Subsidiaries or any Facility.           “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor thereto.           “ERISA Affiliate” means, as applied to any Person, (i) any corporation which is a member of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which that Person is a member; (ii) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Internal Revenue Code of which that Person is a member; and (iii) any member of an affiliated service group within the meaning of Section 15 --------------------------------------------------------------------------------   414(m) or (o) of the Internal Revenue Code of which that Person, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member. Any former ERISA Affiliate of Company or any of its Subsidiaries shall continue to be considered an ERISA Affiliate of Company or any such Subsidiary within the meaning of this definition with respect to the period such entity was an ERISA Affiliate of Company or such Subsidiary and with respect to liabilities arising after such period for which Company or such Subsidiary could be liable under the Internal Revenue Code or ERISA.           “ERISA Event” means (i) a “reportable event” within the meaning of Section 4043 of ERISA and the regulations issued thereunder with respect to any Pension Plan (excluding those for which the provision for 30-day notice to the PBGC has been waived by regulation); (ii) the failure to meet the minimum funding standard of Section 412 of the Internal Revenue Code with respect to any Pension Plan (whether or not waived in accordance with Section 412(d) of the Internal Revenue Code) or the failure to make by its due date a required installment under Section 412(m) of the Internal Revenue Code with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal by Company, any of its Subsidiaries or any of their respective ERISA Affiliates from any Pension Plan with two or more contributing sponsors or the termination of any such Pension Plan resulting in liability to Company, any of its Subsidiaries or any of their respective Affiliates pursuant to Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any event or condition which might constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (vi) the imposition of liability on Company, any of its Subsidiaries or any of their respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section 4212(c) of ERISA; (vii) the withdrawal of Company, any of its Subsidiaries or any of their respective ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential material liability therefore, or the receipt by Company, any of its Subsidiaries or any of their respective ERISA Affiliates of notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the occurrence of an act or omission which could give rise to the imposition on Company, any of its Subsidiaries or any of their respective ERISA Affiliates of fines, penalties, taxes or related charges under Chapter 43 of the Internal Revenue Code or under Section 409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the assertion of a material claim (other than routine claims for benefits) against any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof, or against Company, any of its Subsidiaries or any of their respective ERISA Affiliates in connection with any Employee Benefit Plan; (x) receipt from the Internal Revenue Service of notice of the failure of any Pension Plan (or any other Employee Benefit Plan intended to be qualified under Section 401(a) of the Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or the failure of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section 501(a) of the Internal Revenue Code; or (xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan. 16 --------------------------------------------------------------------------------             “Eurodollar Rate Loan” means a Loan bearing interest at a rate determined by reference to the Adjusted Eurodollar Rate.           “Event of Default” means each of the conditions or events set forth in Section 8.1.           “Excess Cash Flow” means, for any Fiscal Year of Company, an amount equal to: (a) Adjusted Company Operating Cash Flow for such Fiscal Year, (calculated by adding Adjusted Company Operating Cash Flow for four Fiscal Quarters of such Fiscal Year, as set forth in the Compliance Certificate for each such Fiscal Quarter); less (b) (to the extent otherwise reflected in (a) above) the sum (determined without duplication) of: (i) payments in respect of Company Cash Interest Expense made by Company during the Fiscal Year; (ii) any payment (other than voluntary prepayments, prepayments made pursuant to Section 2.14(e), the repayment of Existing Term Loans on the Effective Date and the repayment of the Second Lien Term Loans on the Delayed Draw Term Loan Credit Date) of principal of Company Total Debt; and (iii) (A) Investments constituting intercompany loans permitted under Sections 6.1(d), (e) (other than subsections (i)(A), (i)(B) and (i)(D) thereof) and (t), and (B) Investments incurred pursuant to Section 6.7(g), Section 6.7(j) (but only to the extent added back pursuant to the definition of Adjusted Company Operating Cash Flow) and Section 6.7(n)(ii).           “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute.           “Excluded Asset Sales” means the collective reference to (i) any sale or discount, in each case without recourse, of notes or accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof or to resolve disputes that occur in the ordinary course of business, (ii) any exchange of specific items of equipment between Company and any of its Subsidiaries or among any Subsidiaries of Company, so long as the purpose of each such exchange is to acquire replacement items of equipment which are the functional equivalent of the item of equipment so exchanged, (iii) disposals of obsolete, worn out or surplus property in the ordinary course of business, (iv) the sale, lease, license, transfer or other disposition of equipment, materials and other tangible assets by Company or any Subsidiary of Company to any Subsidiary of Company; provided, however, that the aggregate fair market value of all such equipment, materials and other tangible assets sold, leased, licensed, transferred or otherwise disposed of pursuant to this clause (iv) does not 17 --------------------------------------------------------------------------------   exceed $5,000,000 in any Fiscal Year or $10,000,000 in the aggregate since the Closing Date, (v) sales of other assets for aggregate consideration of less than $500,000 with respect to any transaction or series of related transactions and less than $2,000,000 in the aggregate and (vi) any license (other than an exclusive license) of intellectual property owned by Company or its Subsidiaries in the ordinary course of business at fair market value, if any.           “Excluded Subsidiary” means each (i) Domestic Subsidiary of Company or of any Subsidiary of Company for which becoming a Credit Party would constitute a violation of (a) a Contractual Obligation existing on the Closing Date or thereafter, a bona fide Contractual Obligation (the prohibition contained in which was not entered into in contemplation of this provision), in favor of a Person (other than Company or any of its Subsidiaries or Affiliates) for which the required consents have not been obtained or (b) applicable law affecting such Subsidiary, provided, that any such Subsidiary of Company or of another Subsidiary shall cease to be covered under this clause at such time as such Subsidiary’s becoming a Credit Party would no longer constitute a violation of such Contractual Obligation or applicable law, whether as a result of obtaining the required consents or otherwise and (ii) each Domestic Subsidiary of Company identified on Schedule 1.1(b)-1. The Excluded Subsidiaries, as of the Closing Date, by virtue of clause (i), above, are listed on Schedule 1.1(b)-2.           “Existing Credit Agreement” as defined in the recitals.           “Existing Credit Linked Deposit” as defined in the recitals.           “Existing First Lien Lenders” means each financial institution that is a “Lender” as defined in the Existing Credit Agreement.           “Existing Indebtedness” means the Indebtedness under (i) that certain Credit Agreement dated as of March 10, 2004 among Covanta Energy Corporation, Bank of America, N.A., as Administrative Agent, Deutsche Bank Securities, Inc., as Documentation Agent, Bank of America, N.A. and Deutsche Bank Securities, Inc., as Co-Lead Arrangers, (ii) that certain Credit Agreement dated as of March 10, 2004 among Covanta Power International Holdings, Inc. and Deutsche Bank AG, New York Branch, as Administrative Agent, (iii) that certain Credit Agreement dated as of March 10, 2004 among Covanta Power International Holdings, Inc. and Bank of America, N.A., as Administrative Agent, Deutsche Bank Securities, Inc., as Documentation Agent, Bank of America, N.A. and Deutsche Bank Securities, Inc., as Co-Lead Arrangers, (iv) that certain Credit Agreement dated as of March 10, 2004 among Covanta Energy Corporation and Bank One, N.A., as Administrative Agent, (v) that certain Indenture, dated as of March 10, 2004, among Covanta Energy Corporation and the guarantors named therein and U.S. Bank Trust National Association as Trustee in respect of the 8.25% Senior Secured Notes due 2011, (vi) the Indenture, dated as of March 10, 2004, between Covanta Energy Corporation and U.S. Bank Trust National Association as Trustee in respect of the 7.5% Subordinated Unsecured Notes due 2012 and (vii) the Amended and Restated Credit Agreement dated as of May 1, 2003 among American Ref-Fuel Company LLC and Citicorp North America, Inc, as Administrative Agent and (viii) the Reimbursement Agreements relating to the ARC Equity Contribution Agreement Letters of Credit with Hypobank. 18 --------------------------------------------------------------------------------             “Existing Funded Letters of Credit” means those letters of credit, listed on Schedule 1.1(c), outstanding on the Effective Date (i) that are “Funded Letters of Credit” under the Existing Credit Agreement , (ii) under that certain Credit Agreement dated as of March 10, 2004 among Covanta Energy Corporation, JPMorgan Chase Bank, N.A., as successor by merger to Bank One, N.A., as Administrative Agent, and (ii) under that certain Credit Agreement dated as of March 10, 2004 among Covanta Energy Corporation, Bank of America, N.A., as Administrative Agent, Deutsche Bank Securities, Inc., as Documentation Agent, Bank of America, N.A. and Deutsche Bank Securities, Inc., as Co-Lead Arrangers.           “Existing Term Loans” as defined in the recitals.           “Expansion” means, with respect to any Project related to Company’s and its Subsidiaries waste disposal business in the United States of America in existence as of the date hereof, additions or improvements to the existing facilities of such Projects.           “Facility” means any real property (including all buildings, fixtures or other improvements located thereon) now, hereafter or heretofore owned, leased, operated or used by Company or any of its Subsidiaries or any of their respective predecessors or Affiliates of Company, any of its Subsidiaries, or any such predecessors.           “Fair Share Contribution Amount” as defined in Section 7.2.           “Fair Share” as defined in Section 7.2.           “Federal Funds Effective Rate” means for any day, the rate per annum (expressed, as a decimal, rounded upwards, if necessary, to the next higher 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided, (i) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average of the quotations received by Administrative Agent from three federal funds broker of recognized standing selected by Administrative Agent.           “Financial Plan” as defined in Section 5.1(i).           “First Priority” means, with respect to any Lien purported to be created in any Collateral pursuant to any Collateral Document, that such Lien is the only Lien to which such Collateral is subject, other than any Permitted Lien.           “Fiscal Quarter” means a fiscal quarter of any Fiscal Year.           “Fiscal Year” means the fiscal year of Company and its Subsidiaries ending on December 31 of each calendar year. 19 --------------------------------------------------------------------------------             “Flood Hazard Property” means any Real Estate Asset subject to a Mortgage in favor of Collateral Agent, for the benefit of the Lenders, and located in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards.           “Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary. The Foreign Subsidiaries of Company, as of the Closing Date, are listed on Schedule 1.1(d).           “Funded LC Issuing Bank” means initially each of JPMC and UBS and thereafter with respect to any Funded Letter of Credit, any Lender (including any Person who is a Lender as of the Closing Date but subsequently, after agreeing to become a Funded LC Issuing Bank, ceases to be a Lender) which, at the request of Company, and with the consent of Administrative Agent (not to be unreasonably withheld), agrees in such Lender’s sole discretion to become a Funded LC Issuing Bank for the purposes of issuing such Funded Letter of Credit, together with its permitted successors and assigns in such capacity.           “Funded LC Participation Interests” means the right of any Funded Letter of Credit Participant to receive any payments contemplated by this Agreement in respect of such Funded Letter of Credit Participant’s Pro Rata Share of the New Credit Linked Deposits in accordance with this Agreement.           “Funded Letter of Credit” as defined in Section 2.4(b).           “Funded Letter of Credit Commitment” means the commitment of a Lender to make or otherwise fund a New Credit Linked Deposit and “Funded Letter of Credit Commitments” means such commitments of all Lenders in the aggregate. The amount of each Lender’s Funded Letter of Credit Commitment, if any, is set forth on Appendix A-2 or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Funded Letter of Credit Commitments as of the Effective Date is $320,000,000.00.           “Funded Letter of Credit Commitment Period” means the period from the Closing Date to but excluding the Funded Letter of Credit Termination Date.           “Funded Letter of Credit Exposure” means with respect to any Lender, at any time, the sum of (a) the amount of any Unpaid Drawings in respect of which payments from such Lender’s New Credit Linked Deposit have been made (or were required to be made) to a Funded LC Issuing Bank pursuant to Section 2.4(f) at such time and (b) such Lender’s Pro Rata Share of the Funded Letters of Credit Outstanding at such time (excluding the portion thereof consisting of Unpaid Drawings in respect of which payments from such Lender’s New Credit Linked Deposit have been made (or were required to be made) to a Funded LC Issuing Bank pursuant to Section 2.4(f)); provided that at any time when the Funded Letters of Credit Outstanding is zero, the Funded Letter of Credit Exposure of any Lender shall be equal to such Lender’s Funded Letter of Credit Commitment.           “Funded Letter of Credit Fee” as defined in Section 2.11(b)(i). 20 --------------------------------------------------------------------------------             “Funded Letter of Credit Participant” means each Lender having a Funded Letter of Credit Commitment (including, for the avoidance of doubt, each Continuing Funded Letter of Credit Participant).           “Funded Letter of Credit Participation” as defined in Section 2.4(h).           “Funded Letter of Credit Termination Date” means the earliest to occur of (i) the seventh anniversary of the Closing Date; (ii) the date on which the New Credit Linked Deposits have been reduced to zero pursuant to Section 2.13(b)(iii); and (iii) the date of the termination of the Funded Letter of Credit Commitments pursuant to Section 8.1.           “Funded Letters of Credit Outstanding” means at any time, the sum of, without duplication, (a) the aggregate Stated Amount of all outstanding Funded Letters of Credit and (b) the aggregate amount of all Unpaid Drawings in respect of all Funded Letters of Credit.           “Funding Default” as defined in Section 2.22.           “Funding Guarantors” as defined in Section 7.2.           “Funding Notice” means a notice substantially in the form of Exhibit A-1.           “GAAP” means, subject to the limitations on the application thereof set forth in Section 1.2, United States generally accepted accounting principles in effect as of the date of determination thereof.           “Governmental Acts” means any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Governmental Authority.           “Governmental Authority” means any federal, state, municipal, national or other government, governmental department, commission, board, bureau, court, agency or instrumentality, political subdivision or any entity or officer thereof exercising executive, legislative, judicial, regulatory or administrative functions of any government or any court, in each case whether associated with a state of the United States, the United States, or a foreign entity or government.           “Governmental Authorization” means any permit, license, authorization, plan, directive, consent order or consent decree of or from any Governmental Authority.           “Grantor” as defined in the Pledge and Security Agreement.           “GSCP” as defined in the preamble hereto.           “Guaranteed Obligations” as defined in Section 7.1.           “Guarantor” means Holding and each Domestic Subsidiary of Company (other than Excluded Subsidiaries).           “Guarantor Subsidiary” means each Guarantor other than Holding. 21 --------------------------------------------------------------------------------             “Guaranty” means the guaranty of each Guarantor set forth in Section 7.           “Hazardous Materials” means any chemical, material or substance, exposure to which is prohibited, limited or regulated by any Governmental Authority or which may or could pose a hazard to the health and safety of the owners, occupants or any Persons in the vicinity of any Facility or to the indoor or outdoor environment.           “Hedge Agreement” means (i) an Interest Rate Agreement or a Currency Agreement entered into with a Lender Counterparty in order to satisfy the requirements of this Agreement or otherwise in the ordinary course of Company’s or any of its Subsidiaries’ businesses or (ii) a forward agreement or arrangement designed to hedge against fluctuation in electricity rates pertaining to electricity produced by a Project, so long as the contractual arrangements relating to such Project contemplate that Company or its Subsidiaries shall deliver such electricity to third parties.           “Highest Lawful Rate” means the maximum lawful interest rate, if any, that at any time or from time to time may be contracted for, charged, or received under the laws applicable to any Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws now allow.           “Historical Financial Statements” means (x) for the purposes of Section 1.2 hereof, the audited financial statements of Holding and Company as at December 31, 2004, consisting of balance sheets and the related consolidated statements of income, stockholders’ equity and cash flows for such Fiscal Years then ended, together with such changes to accounting principles and policies as Holding and Company may make during their 2005 Fiscal Year in connection with the consolidating of the Acquired Business, which changes are concurred with by their independent public accountant and (y) for all other purposes as of the Closing Date, (i) the audited financial statements of Holding and Company for the immediately preceding three Fiscal Years, and the audited financial statements of the Acquired Business for the fiscal year ending December 31, 2004 consisting of balance sheet and the related consolidated statements of income, stockholders’ equity and cash flows for such Fiscal Years, and (ii) the unaudited financial statements of Holding, Company and the Acquired Business as at the most recently ended Fiscal Quarter (if any) ending after the date of the most recent financial statements referenced in clause (i) hereof, consisting of a balance sheet and the related consolidated statements of income, stockholders’ equity and cash flows for the three-, six-or nine-month period, as applicable, ending on such date, and, in the case of clauses (i) and (ii), (with respect to the financial statements of Holding and Company) certified by the chief financial officer or chief accounting officer of Company that they fairly present, in all material respects, the financial condition of Holding and Company and the Acquired Business at the dates indicated and the results of their operations and their cash flows for the periods ended. as indicated, subject to changes resulting from audit and year-end adjustments.           “Holding” as defined in the preamble hereto. 22 --------------------------------------------------------------------------------             “Holding Pledge Agreement” means the Pledge Agreement executed by Holding in favor of the Collateral Agent on the Closing Date substantially in the form of Exhibit I-2, as it may be amended, supplemented or otherwise modified from time to time.           “Holding Tax Sharing Agreement” means the tax sharing agreement among Holding, Company and CPIH dated as of March 10, 2004, as amended by Amendment No. 1 thereto dated as of the Closing Date, as such agreement may be amended, restated, supplemented or otherwise modified from time to time to the extent permitted thereunder and under Section 6.14.           “Increased-Cost Lenders” as defined in Section 2.23.           “Indebtedness”, as applied to any Person, means, without duplication, (i) all indebtedness for borrowed money; (ii) that portion of obligations with respect to Capital Leases that is properly classified as a liability on a balance sheet in conformity with GAAP; (iii) notes payable and drafts accepted representing extensions of credit whether or not representing obligations for borrowed money; (iv) any obligation owed for all or any part of the deferred purchase price of property or services (excluding trade payables incurred in the ordinary course of business, having a term of less than 12 months and payable in accordance with customary trade practices), which purchase price is due more than six months from the date of incurrence of the obligation in respect thereof; (v) all Indebtedness secured by any Lien on any property or asset owned or held by that Person regardless of whether the Indebtedness secured thereby shall have been assumed by that Person or is nonrecourse to the credit of that Person; (vi) the face amount of any letter of credit issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings; (vii) the direct or indirect guaranty, endorsement (otherwise than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of another; (viii) any obligation of such Person the primary purpose or intent of which is to provide assurance to an obligee that the obligation of the obligor thereof will be paid or discharged, or any agreement relating thereto will be complied with, or the holders thereof will be protected (in whole or in part) against loss in respect thereof; (ix) any liability of such Person for an obligation of another through any agreement (contingent or otherwise) (a) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise) or (b) to maintain the solvency or any balance sheet item, level of income or financial condition of another if, in the case of any agreement described under subclauses (a) or (b) of this clause (ix), the primary purpose or intent thereof is as described in clause (viii) above; and (x) all obligations of such Person in respect of any exchange traded or over the counter derivative transaction, including, without limitation, any Interest Rate Agreement and Currency Agreement (and Hedge Agreements that protect against fluctuations in electricity rates), whether entered into for hedging or speculative purposes; provided, in no event shall obligations under any Interest Rate Agreement and any Currency Agreement be deemed “Indebtedness” for any purpose under Section 6.8.           “Indemnified Liabilities” means, collectively, any and all liabilities, obligations, losses, damages (including natural resource damages), penalties, claims (including Environmental Claims), reasonable out-of-pocket costs (including the costs of any investigation, 23 --------------------------------------------------------------------------------   study, sampling, testing, abatement, cleanup, removal, remediation or other response action necessary to remove, remediate, clean up or abate any Release or threatened Release of Hazardous Materials), and reasonable out-of-pocket expenses of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any fees or expenses incurred by Indemnitees in enforcing this indemnity), whether direct, indirect or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations and Environmental Laws), on common law or equitable cause or on contract or otherwise, that may be imposed on or incurred by any such Indemnitee, in any manner relating to or arising out of (i) this Agreement or the other Credit Documents or the transactions contemplated hereby or thereby (including the Lenders’ agreement to make the Credit Extensions or the use or intended use of the proceeds thereof, or any enforcement of any of the Credit Documents (including any sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty)); (ii) the statements contained in the commitment letter delivered by any Lender to Holding with respect to the transactions contemplated by the Existing Credit Agreement and the engagement letter between GSCP and Holding with respect to the transactions contemplated by this Agreement; or (iii) any Environmental Claim or any Release or threatened Release of Hazardous Materials arising from any past or present activity, operation, land ownership, or practice of Company or any of its Subsidiaries, except to the extent, in any such case, that any liability, obligation, loss, damage, penalty, claim, costs, expense or disbursement results from the gross negligence, willful misconduct or bad faith of such Indemnified Person.           “Indemnitee” as defined in Section 10.3.           “Installment” as defined in Section 2.12.           “Installment Date” as defined in Section 2.12.           “Insurance Deposit Amount” as defined in Section 3.1(o).           “Insurance Premium Financers” means Persons who are non-Affiliates of Company that advance insurance premiums for Company and its Subsidiaries pursuant to Insurance Premium Financing Arrangements.           “Insurance Premium Financing Arrangements” means, collectively, such agreements with Insurance Premium Financers pursuant to which such Insurance Premium Financers advance insurance premiums for Company and its Subsidiaries. Such Insurance Premium Financing Arrangements (i) shall provide for the benefit of such Insurance Premium Financers a security interest in no property of Company or any of its Subsidiaries other than gross unearned premiums for the insurance policies and related rights, (ii) shall not purport to prohibit any portion of the Liens created in favor of Collateral Agent (for the benefit of Secured Parties) pursuant to the Collateral Documents, and (iii) shall not contain any provision or contemplate any transaction prohibited by this Agreement and shall otherwise be in form and substance reasonably satisfactory to Administrative Agent. 24 --------------------------------------------------------------------------------             “Insurance Regulatory Account” as defined in Section 3.1(o).           “Insurance Subsidiaries” means Danielson Indemnity Company and its Subsidiaries.           “Intercompany Master Note” means a promissory note evidencing Indebtedness of Company and each of its Subsidiaries which (a) to the extent the Indebtedness evidenced thereby is owed to any Credit Party, is pledged pursuant to the Collateral Documents, and (b) to the extent the Indebtedness evidenced thereby is owed by a Subsidiary of Company, is senior Indebtedness of such Subsidiary (except to the extent that requiring such Indebtedness to be senior would breach a Contractual Obligation binding on such Subsidiary), except that any such Indebtedness owed by any Credit Party to any Subsidiary which is not a Credit Party shall be unsecured and subordinated in right of payment to the payment in full of the Obligations pursuant to the terms of such note.           “Intercreditor Agreement” means the Intercreditor Agreement dated as of the Closing Date, as amended as of the date hereof, substantially in the form of Exhibit K, as it may be amended, supplemented or otherwise modified from time to time.           “Interest Payment Date” means with respect to (i) any Base Rate Loan, each March 31, June 30, September 30 and December 31 of each year, commencing on the first such date to occur after the Closing Date and the final maturity date of such Loan; and (ii) any Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan; provided, in the case of each Interest Period of longer than three months “Interest Payment Date” shall also include each date that is three months, or an integral multiple thereof, after the commencement of such Interest Period.           “Interest Period” means, (i) in connection with a Eurodollar Rate Loan, an interest period of one-, two-, three- or six-months, as selected by Company in the applicable Funding Notice or Conversion/Continuation Notice, (a) initially, commencing on the Credit Date or Conversion/Continuation Date thereof, as the case may be; and (b) thereafter, commencing on the day on which the immediately preceding Interest Period expires and (ii) in connection with a New Credit Linked Deposit, each period, the first commencing on or following the Closing Date in accordance with Section 2.4(j)(ii) and thereafter commencing on the day on which the immediately preceding Interest Period expires and ending on the numerically corresponding day in the calendar month that is three months thereafter; provided that a single Interest Period shall at all times apply to all New Credit Linked Deposits; provided, in each case (1) if an Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day unless no further Business Day occurs in such month, in which case such Interest Period shall expire on the immediately preceding Business Day; (2) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clauses (3) and (4) of this definition, end on the last Business Day of a calendar month; (3) no Interest Period with respect to any portion of Term Loan shall extend beyond the Term Loan Maturity Date, and (4) no Interest Period with respect to any portion of the Revolving Loans shall extend beyond the Revolving Commitment Termination Date. 25 --------------------------------------------------------------------------------             “Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedging agreement or other similar agreement or arrangement, each of which is for the purpose of hedging the interest rate exposure associated with Company’s and its Subsidiaries’ operations and not for speculative purposes.           “Interest Rate Determination Date” means, with respect to any Interest Period, the date that is two Business Days prior to the first day of such Interest Period.           “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended to the Closing Date and from time to time thereafter, and any successor statute.           “Investment” means (i) any direct or indirect purchase or other acquisition by Company or any of its Subsidiaries of, or of a beneficial interest in, any of the Securities of any other Person (other than a Guarantor Subsidiary); (ii) any direct or indirect redemption, retirement, purchase or other acquisition for value, by any Subsidiary of Company from any Person (other than Company or any Guarantor Subsidiary), of any Capital Stock of such Person; (iii) any direct or indirect loan, advance (other than advances to employees for moving, relocation, business, entertainment and travel expenses, drawing accounts and similar expenditures in the ordinary course of business) or capital contribution by Company or any of its Subsidiaries to any other Person (other than Company or any Guarantor Subsidiary), including all Indebtedness and accounts receivable from that other Person but only to the extent that the same are not current assets or did not arise from sales to that other Person in the ordinary course of business and (iv) Commodities Agreements not constituting Hedge Agreements. The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect to such Investment.           “Issuance Notice” means an Issuance Notice substantially in the form of Exhibit A-3.           “Issuing Bank” means each of a Funded LC Issuing Bank and a Revolving Issuing Bank.           “Joint Venture” means a joint venture, partnership or other similar arrangement, whether in partnership or other legal form.           “JPMC” as defined in the preamble hereto.           “Lead Arranger” as defined in the preamble hereto.           “Lender” means each financial institution listed on the signature pages hereto as a Lender, each Continuing Lender and any other Person that becomes a party hereto pursuant to an Assignment Agreement.           “Lender Consent Letters” means the lender consent letters authorizing the Administrative Agent to execute this Agreement on behalf of the Continuing Lenders. 26 --------------------------------------------------------------------------------             “Lender Counterparty” means Lead Arranger, each Lender or any Affiliate of a Lender counterparty to a Hedge Agreement (including any Person who is a Lender (and any Affiliate thereof) as of the Closing Date but subsequently, whether before or after entering into a Hedge Agreement, ceases to be a Lender) including, without limitation, each such Affiliate that enters into a joinder agreement with Collateral Agent.           “Letter of Credit” means a Revolving Letter of Credit or a Funded Letter of Credit.           “Lien” means any lien, mortgage, pledge, collateral assignment, security interest, charge or encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, and any lease in the nature thereof) and any option, trust or other preferential arrangement having the practical effect of any of the foregoing.           “Limited Recourse Debt” means, with respect to any Subsidiary of Company, Indebtedness of such Subsidiary with respect to which the recourse of the holder or obligee of such Indebtedness is limited to (i) assets associated with the Project (which in any event shall not include assets held by any Guarantor Subsidiary other than a Guarantor Subsidiary, if any, whose sole business is the ownership and/or operation of such Project and substantially all of whose assets are associated with such Project) in respect of which such Indebtedness was incurred and/or (ii) such Subsidiary or the equity interests in such Subsidiary, but in the case of clause (ii) only if such Subsidiary’s sole business is the ownership and/or operation of such Project and substantially all of such Subsidiary’s assets are associated with such Project. For purposes of this Agreement, Indebtedness of a Subsidiary of Company shall not fail to be Limited Recourse Debt solely by virtue of the fact that the holders of such Limited Recourse Debt have recourse to Company or another Subsidiary of Company pursuant to a contingent obligation supporting such Limited Recourse Debt or a Performance Guaranty, so long as such contingent obligation or Performance Guaranty is unsecured and permitted under Section 6.1.           “Loan” means a Tranche C Term Loan, a Revolving Loan, a Swing Line Loan and a Delayed Draw Term Loan.           “Margin Stock” as defined in Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time.           “Marketable Securities” means auction rate securities or auction rate preferred stock having a rate reset frequency of less than ninety (90) days and having, at the time of the acquisition thereof, a rating of at least A from S&P or from Moody’s.           “Material Adverse Effect” means a material adverse effect on (i) the business, operations, assets, liabilities or financial condition of Holding and its Subsidiaries taken as a whole; (ii) the ability of the Credit Parties as a whole to perform their respective Obligations; (iii) the rights, remedies and benefits available to, or conferred upon, the Secured Parties under any Credit Document.           “Material Contract” means any contract or other arrangement to which Company or any of its Subsidiaries is a party (other than the Credit Documents, the Second Lien Credit Agreement and Second Lien Notes Indenture, the MSW Indenture, the MSW Refinancing 27 --------------------------------------------------------------------------------   Indenture, the New MSW Indenture, the ARC Indenture, the ARC Refinancing Indenture, the New ARC Indenture and the principal agreements and instruments entered into in connection with any refinancing thereof) for which breach, nonperformance, cancellation or failure to renew could reasonably be expected to have a Material Adverse Effect.           “Material Real Estate Asset’’ means any fee-owned Real Estate Asset having a fair market value in excess of $2,000,000 as of the date of the acquisition thereof .           “Material Subsidiary” means, with respect to any Person, any Subsidiary of such Person now existing or hereafter acquired or formed by such Person which, on a consolidated basis for such Subsidiary and all of its Subsidiaries, (i) for the most recent fiscal year of such Person accounted for more than 2% of the consolidated revenues of such Person and its Subsidiaries, or (ii) as at the end of such fiscal year, was the owner of more than 2% of the consolidated assets of such Person and its Subsidiaries.           “Modifications” as defined in Section 3.3(c)(i).           “Moody’s” means Moody’s Investor Services, Inc.           “Mortgage” means a Mortgage, substantially in the form of Exhibit J, as amended by the Modifications, as it may be further amended, supplemented or otherwise modified from time to time.           “MSW I” means MSW Energy Holdings LLC, a Delaware corporation, and MSW Energy Finance Co., Inc.           “MSW II” means MSW Energy Holdings II LLC, a Delaware corporation, and MSW Energy Finance Co. II, Inc.           “MSW I Indenture” means that certain Indenture in respect of the Series A and Series B 81/2% Senior Secured Notes due 2010, dated as of June 25, 2003, among MSW Energy Holdings LLC, MSW Energy Finance Co., Inc., the guarantors named therein and Wells Fargo Bank Minnesota, National Association, as trustee, as such indenture may be further amended, restated, supplemented, refinanced, replaced or modified from time to time in accordance with Section 6.15.           “MSW II Indenture” means that certain Indenture in respect of the Series A and Series B 73/8% Senior Secured Notes due 2010, dated as of November 24, 2003, among MSW Energy Holdings II LLC, MSW Energy Finance Co. II, Inc., the guarantors named therein and Wells Fargo Bank Minnesota, National Association, as trustee, as such indenture may be further amended, restated, supplemented, refinanced, replaced or modified from time to time in accordance with Section 6.15.           “MSW I Notes” means the Series A and Series B 81/2% Senior Secured Notes due 2010 of MSW I.           “MSW II Notes” means the Series A and Series B 73/8% Senior Secured Notes due 2010 of MSW II. 28 --------------------------------------------------------------------------------             “MSW Indentures” means the MSW I Indenture and the MSW II Indenture.           “MSW Notes” means the MSW I Notes and the MSW II Notes.           “MSW Put-Related Costs” means any principal, premium, accrued interest, fees, costs and expenses (in each case to the date of redemption in respect of the notes redeemed) owed by MSW I and/or MSW II to holders of the MSW Notes in connection with any valid exercise of the mandatory redemption right arising from the Acquisition.           “MSW Refinancing Indenture” means a trust indenture in form and substance reasonably satisfactory to Administrative Agent pursuant to which any MSW Refinancing Notes may be issued in accordance with the terms of this Agreement, as such indenture may be further amended, restated, supplemented, modified, extended, renewed or replaced from time to time in accordance with Section 6.15 of this Agreement.           “MSW Refinancing Notes” as defined in Section 6.1(n).           “Multiemployer Plan” means any Employee Benefit Plan which is a “multiemployer plan” as defined in Section 3(37) of ERISA.           “NAIC” means The National Association of Insurance Commissioners, and any successor thereto.           “Net Asset Sale Proceeds” means, with respect to any Asset Sale, an amount equal to: (i) Cash payments (including any Cash received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) received by Company or any of its Subsidiaries from such Asset Sale, minus (ii) any bona fide direct costs incurred in connection with such Asset Sale (or if such costs have not then been incurred or invoiced, Company’s good faith estimate thereof), including (a) income or gains taxes payable by the seller as a result of any gain recognized in connection with such Asset Sale, (b) payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the Loans and, to the extent permitted under the Intercreditor Agreement, the Second Lien Term Loans and the Second Lien Notes) that is secured by a Lien on the stock or assets in question and that is required to be repaid under the terms thereof as a result of such Asset Sale, (c) other taxes actually payable (to the extent actually subsequently so paid) upon or in connection with the closing of such Asset Sale (including any transfer taxes or taxes on gross receipts), (d) any taxes payable or reasonably estimated to be payable in connection with any transactions effected (or deemed effected) to make prepayments (e.g., taxes payable upon repatriation of funds from Subsidiaries), (e) actual, reasonable and documented out-of-pocket fees and expenses (including legal fees, fees to advisors and severance costs that are due (pursuant to a Contractual Obligation, or pursuant to a written employment policy applicable to terminated employees generally, of Company or any of its Subsidiaries in effect prior to such Asset Sale or pursuant to applicable law) and payable to employees of Company and its Subsidiaries that are terminated as a result thereof) paid to Persons other than Company and its Subsidiaries and their respective Affiliates in connection with such Asset Sale (including fees necessary to obtain any required consents of such Persons to such Asset Sale), (f) a reasonable reserve for any indemnification payments (fixed or contingent) attributable to seller’s 29 --------------------------------------------------------------------------------   indemnities and representations and warranties to purchaser in respect of such Asset Sale undertaken by Company or any of its Subsidiaries in connection with such Asset Sale and (g) amounts required to be paid to holders of “Allowed Class 6 Claims” (as such term is defined in the Plan of Reorganization) and other entitled claimants with respect to the “CPIH Participation Interest” (as such term is defined in the Plan of Reorganization) in an aggregate amount not to exceed $4,000,000; provided, however, that Net Asset Sale Proceeds shall be reduced in an amount equal to the amount of proceeds Subsidiaries of Company are legally bound or required, pursuant to (i) agreements in effect on the Closing Date, or which were entered into after the Closing Date with respect to the financing or acquisition of a Project, and/or (ii) the ARC Indenture, ARC Refinancing Indenture, New ARC Indenture, the MSW Indentures, MSW Refinancing Indentures or the New MSW Indentures to use for prepayment thereunder (including any premium, penalty and interest due in connection with such prepayment).           “Net Insurance/Condemnation Proceeds” means an amount equal to: (i) any Cash payments or proceeds received by Company or any of its Subsidiaries (a) under any casualty insurance policy in respect of a covered loss thereunder (other than payments for business interruption) occurring after the Closing Date or (b) as a result of the taking of any assets of Company or any of its Subsidiaries by any Person pursuant to the power of eminent domain, condemnation or otherwise, or pursuant to a sale of any such assets to a purchaser with such power under threat of such a taking, minus (ii) (a) any actual and reasonable costs incurred by Company or any of its Subsidiaries in connection with the adjustment or settlement of any claims of Company or such Subsidiary in respect thereof, and (b) any bona fide direct costs incurred in connection with any adjustment or settlement or any such sale as referred to in clause (i)(b) of this definition, including income taxes payable as a result of any gain recognized in connection therewith and any actual, reasonable and documented out-of-pocket fees and expenses (including legal fees, fees to advisors and severance costs that are due (pursuant to a Contractual Obligation, or pursuant to a written employment policy applicable to terminated employees generally, of Company or any of its Subsidiaries in effect prior to such event or pursuant to applicable law) and payable to employees of Company and its Subsidiaries that are terminated as a result thereof) paid to Persons other than Company and its Subsidiaries and their respective Affiliates in connection with such event; provided, that if any costs, fees or expenses that may be deducted under this clause (ii) have not been incurred or invoiced at the time of any determination of Net Insurance/Condemnation Proceeds, Company may deduct its good faith estimate thereof to the extent actually subsequently so paid; provided, however, that Net Insurance/Condemnation Proceeds shall be reduced in an amount equal to the amount of proceeds Subsidiaries of Company are legally bound or required, pursuant to (i) agreements in effect on the Closing Date, or which were entered into after the Closing Date with respect to the financing or acquisition of a Project, and (ii) the ARC Indenture, ARC Refinancing Indenture, New ARC Indenture, MSW Indentures, MSW Refinancing Indentures or New MSW Indentures to use for prepayment thereunder (including any premium, penalty and interest due in connection with such prepayment).           “New ARC Indenture” means a trust indenture in form and substance reasonably satisfactory to Administrative Agent pursuant to which any New ARC Notes may be issued in accordance with the terms of this Agreement, as such indenture may be further 30 --------------------------------------------------------------------------------   amended, restated, supplemented, modified, extended, renewed or replaced from time to time in accordance with Section 6.15 of this Agreement.           “New ARC Notes” means the notes issued by ARC LLC in accordance with Section 6.1(n)(iii).           “New Credit Linked Deposit” means with respect to each Lender, the cash deposit, if any, made by such Lender pursuant to Section 2.4(j), as the same may be (a) reduced from time to time pursuant to Sections 2.4(f) and (h) or 2.13(b)(iii) or (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.6.           “New MSW I Indenture” means a trust indenture in form and substance reasonably satisfactory to Administrative Agent pursuant to which any New MSW I Notes may be issued in accordance with the terms of this Agreement, as such indenture may be further amended, restated, supplemented, modified, extended, renewed or replaced from time to time in accordance with Section 6.15 of this Agreement.           “New MSW I Notes” means the notes issued by MSW I in accordance with Section 6.1(n)(ii).           “New MSW II Indenture” means a trust indenture in form and substance reasonably satisfactory to Administrative Agent pursuant to which any New MSW II Notes may be issued in accordance with the terms of this Agreement, as such indenture may be further amended, restated, supplemented, modified, extended, renewed or replaced from time to time in accordance with Section 6.15 of this Agreement.           “New MSW II Notes” means the notes issued by MSW II in accordance with Section 6.1(n)(ii).           “New MSW Indentures” means the New MSW I Indenture and the New MSW II Indenture.           “New MSW Notes” means the New MSW I Notes and the New MSW II Notes.           “New Term Loans” as defined in Section 2.4(f).           “Non-US Lender” means (a) each Lender (or Administrative Agent) and each Issuing Bank that is a foreign person as defined in Treasury Regulations section 1.1441-1(c)(2) or (b) each Lender (or Administrative Agent) and each Issuing Bank that is a wholly-owned domestic entity that is disregarded for United States federal tax purposes under Treasury Regulations section 301.7701-2(c)(2) as an entity separate from its owner and whose single owner is a foreign person within the meaning of Treasury Regulations section 1.1441-1(c)(2).           “Nonpublic Information” means information which has not been disseminated in a manner making it available to investors generally, within the meaning of Regulation D.           “Note” means a Term Loan Note, a Revolving Loan Note or a Swing Line Note. 31 --------------------------------------------------------------------------------             “Notice” means a Funding Notice, an Issuance Notice, or a Conversion/Continuation Notice.           “Obligations” means all obligations of every nature of each Credit Party from time to time owed to the Agents (including former Agents), the Lenders or any of them, the Issuing Banks and Lender Counterparties, under any Credit Document or Hedge Agreement (including, without limitation, with respect to a Hedge Agreement, obligations owed thereunder to any person who was a Lender or an Affiliate of a Lender at the time such Hedge Agreement was entered into), whether for principal, interest (including interest which, but for the filing of a petition in bankruptcy with respect to such Credit Party, would have accrued on any Obligation, whether or not a claim is allowed against such Credit Party for such interest in the related bankruptcy proceeding), reimbursement of amounts drawn under Letters of Credit, payments for early termination of Hedge Agreements, fees, expenses, indemnification or otherwise.           “Obligee Guarantor” as defined in Section 7.7.           “Organizational Documents” means (i) with respect to any corporation, its certificate or articles of incorporation or organization, as amended, and its by-laws, as amended, (ii) with respect to any limited partnership, its certificate of limited partnership, as amended, and its partnership agreement, as amended, (iii) with respect to any general partnership, its partnership agreement, as amended, and (iv) with respect to any limited liability company, its articles of organization, as amended, and its operating agreement, as amended. In the event any term or condition of this Agreement or any other Credit Document requires any Organizational Document to be certified by a secretary of state or similar governmental official, the reference to any such “Organizational Document” shall only be to a document of a type customarily certified by such governmental official.           “Other Domestic Subsidiaries” means Domestic Subsidiaries of Company other than Subsidiaries constituting part of the Acquired Business.           “PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.           “Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code or Section 302 of ERISA.           “Performance Guaranty” means any performance guaranty agreement entered into by Company or any of its Subsidiaries under which Company or any such Subsidiary (i) guarantees the performance of a Subsidiary of Company under a principal lease, service, construction or operating agreement relating to a Project or (ii) is otherwise obligated to provide support in connection with Projects.           “Permitted Acquisition” means any acquisition by Company or any of its Subsidiaries, whether by purchase, merger or otherwise, of all or substantially all of the assets of, all of the Capital Stock of, or a business line or unit or a division of, any Person; provided,           (i) immediately prior to, and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would result therefrom; 32 --------------------------------------------------------------------------------             (ii) all transactions in connection therewith shall be consummated, in all material respects, in accordance with all applicable laws and in conformity with all applicable Governmental Authorizations;           (iii) to the extent a Guarantor Subsidiary is acquired, Company shall have taken, or caused to be taken, as of the date such Person becomes a Guarantor Subsidiary of Company, each of the actions set forth in Sections 5.10 and/or 5.11, as applicable, unless, following a request by Company, such actions are not required by Administrative Agent;           (iv) Company and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 6.8 on a pro forma basis after giving effect to such acquisition as of the last day of the Fiscal Quarter most recently ended;           (v) Company shall have delivered to Administrative Agent (A) at least 10 Business Days prior to such proposed acquisition, a Compliance Certificate evidencing compliance with Section 6.8 as required under clause (iv) above, together with all relevant financial information with respect to such acquired assets, including, without limitation, the aggregate consideration for such acquisition and any other information required to demonstrate compliance with Section 6.8; and           (vi) any Person or assets or division as acquired in accordance herewith shall be in the same business or lines of business in which Company and/or its Subsidiaries are engaged as of the Closing Date or in which Company and/or its Subsidiaries are expressly permitted hereunder to engage in.           “Permitted Liens” means each of the Liens permitted pursuant to Section 6.2.           “Person” means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, limited liability partnerships, joint stock companies, Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and Governmental Authorities.           “Phase I Environmental Assessment” means, with respect to any Facility, a report that (i) conforms to the ASTM Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process, E 1527-00, or, if reasonably requested by Administrative Agent, the USEPA’s standards for all appropriate inquiry, (ii) was conducted no more than six months prior to the date such report is required to be delivered hereunder, by one or more environmental consulting firms reasonably satisfactory to Administrative Agent, and (iii) shall expressly specify, or shall be accompanied by a letter stating, in form and substance reasonably satisfactory to Administrative Agent, that the report may be relied on by Administrative Agent and the Lenders or Administrative Agent shall have received a letter so stating in form and substance reasonably satisfactory to Administrative Agent.           “Plan of Reorganization” as defined in Section 6.2(t).           “Plan of Reorganization Account” as defined in Section 3.1(p). 33 --------------------------------------------------------------------------------             “Plan of Reorganization Initial Deposit Amount” as defined in Section 3.1(p).           “Platform” as defined in Section 5.1(m).           “Pledge and Security Agreement” means the Pledge and Security Agreement executed by Company and each Guarantor Subsidiary on the Closing Date substantially in the form of Exhibit I-1, as it has been and may be amended, supplemented or otherwise modified from time to time.           “Prime Rate” means the rate of interest quoted in The Wall Street Journal Money Rates Section as the Prime Rate (currently defined as the base rate on corporate loans posted by at least 75% of the nation’s thirty (30) largest banks), as in effect from time to time. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. Administrative Agent or any other Lender may make commercial loans or other loans at rates of interest at, above or below the Prime Rate.           “Principal Office” means, for each of Administrative Agent, Swing Line Lender and the Issuing Banks, such Person’s “Principal Office” as set forth on Appendix B, or such other office or office of a third party or sub-agent, as appropriate, as such Person may from time to time designate in writing to Company, Administrative Agent and each Lender.           “Project” means any waste-to-energy facility, waste disposal or collection facility and facilities related or ancillary thereto, electrical generation plant, cogeneration plant, water treatment facility or other facility for the generation of electricity or engaged in another line of business in which Company and its Subsidiaries are permitted to be engaged hereunder for which a Subsidiary or Subsidiaries of Company was, is or will be (as the case may be) an owner, operator, manager or builder, provided, however, that a Project shall cease to be a Project of Company and its Subsidiaries at such time that Company or any of its Subsidiaries ceases to have any existing or future rights or obligations (whether direct or indirect, contingent or matured) associated therewith.           “Projections” as defined in Section 4.8.           “Pro Rata Share” means (i) with respect to all payments, computations and other matters relating to the Tranche C Term Loan of any Lender, the percentage obtained by dividing (a) the Tranche C Term Loan Exposure of that Lender by (b) the aggregate Tranche C Term Loan Exposure of all Lenders; (ii) with respect to all payments, computations and other matters relating to the Revolving Commitment or Revolving Loans of any Lender or any Revolving Letters of Credit issued or participations purchased therein by any Lender or any participations in any Swing Line Loans purchased by any Lender, the percentage obtained by dividing (a) the Revolving Exposure of that Lender by (b) the aggregate Revolving Exposure of all Lenders; (iii) with respect to all payments, computations and other matters relating to Funded Letters of Credit or New Credit Linked Deposit or Funded Letter of Credit Participations of any Lender, the percentage obtained by dividing (a) the Funded Letter of Credit Exposure of that Lender by (b) the aggregate Funded Letter of Credit Exposure of all Lenders; and (iv) with respect to all payments, computations and other matters relating to the Delayed Draw Term Loan of any Lender, the percentage obtained by dividing (a) the Delayed Draw Term Loan Exposure of that 34 --------------------------------------------------------------------------------   Lender by (b) the aggregate Delayed Draw Term Loan Exposure of all Lenders. For all other purposes with respect to each Lender, “Pro Rata Share” means the percentage obtained by dividing (A) an amount equal to the sum of the Tranche C Term Loan Exposure, the Revolving Exposure, the Funded Letter of Credit Exposure and the Delayed Draw Term Loan Exposure of that Lender, by (B) an amount equal to the sum of the aggregate Tranche C Term Loan Exposure, the aggregate Revolving Exposure, the aggregate Funded Letter of Credit Exposure, and the aggregate Delayed Draw Term Loan Exposure of all Lenders.           “Put Loans” means any proceeds under the Revolving Loan used to pay MSW Put-Related Costs in an aggregate amount not to exceed $25,000,000.           “Put-Related Equity Offering” means the offering of preferred stock (such securities having no mandatory redemption, repurchase, repayment or similar requirements prior to the date which occurs six (6) months after the Termination Date and upon which all dividends or distributions shall be payable in additional shares of such securities) of Holding to all or any of its shareholders within 120 days of the Closing Date.           “Put-Related Equity Offering Agreement” means the subscription agreement, by and among Holding and certain of its shareholders relating to the Put-Related Equity Offering, as it may be amended, supplemented, restated or otherwise modified from time to time in accordance with the provisions of Section 6.14 hereof.           “Real Estate Asset” means, at any time of determination, any interest (fee, leasehold or otherwise) then owned by Company or any Guarantor Subsidiary in any real property.           “Refinancing” means the refinancings of approximately $310,000,000 of the Existing Indebtedness of Company and its Subsidiaries.           “Refunded Swing Line Loans” as defined in Section 2.3(b)(iv).           “Register” as defined in Section 2.7(b).           “Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.           “Reimbursement Date” as defined in Section 2.4(e).           “Related Agreements” means, collectively, (i) the Stock Purchase Agreement; (ii) the MSW Indentures, the MSW Refinancing Indentures, the ARC Indenture, the ARC Refinancing Indenture, the New MSW Indentures and the New ARC Indenture; (iii) the Second Lien Credit Agreement and Second Lien Notes Indenture and all collateral documents related thereto; (iv) the Rights Offering Agreement; (v) the Corporate Services Reimbursement Agreement; (vi) Holding Tax Sharing Agreement; and (vii) the Put-Related Equity Offering Agreement and the documents evidencing the terms of the preferred stock related thereto. 35 --------------------------------------------------------------------------------             “Related Fund” means, with respect to any Lender that is an investment fund, any other investment fund that invests in commercial loans and that is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.           “Related Transaction Costs” means the fees, costs and expenses payable by Company or its Subsidiaries in connection with the Related Transactions within 180 days of the Closing Date.           “Related Transactions” means each of (i) the issuance of the Second Lien Notes within 120 days of the Closing Date and the use of the proceeds thereof to prepay the Second Lien Term Loans, (ii) the issuance of New MSW Notes, (iii) any refinancings of the MSW Notes in connection with the valid exercise by holders of the MSW Notes of mandatory redemption rights caused by the Acquisition (and any refinancing of any bridge loans incurred, or remarketing of securities undertaken, in connection therewith), (iv) issuance of New ARC Notes and (v) the Put-Related Equity Offering.           “Release” means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material into the environment (including the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Material), including the movement of any Hazardous Material through the air, soil, surface water or groundwater.           “Replacement Lender” as defined in Section 2.23.           “Requisite Class Lenders” means, at any time of determination, (i) for the Class of Lenders having Tranche C Term Loan Exposure, Lenders holding more than 50% of the aggregate Tranche C Term Loan Exposure of all Lenders; (ii) for the Class of Lenders having Revolving Exposure, Lenders holding more than 50% of the aggregate Revolving Exposure of all Lenders, (iii) for the Class of Lenders having Funded Letter of Credit Exposure, Lenders holding more than 50% of the aggregate Funded Letter of Credit Exposure of all Lenders; and (iv) for the Class of Lenders having Delayed Draw Term Loan Exposure, Lenders holding more than 50% of the aggregate Delayed Draw Term Loan Exposure of all Lenders.           “Requisite Lenders” means one or more Lenders having or holding Tranche C Term Loan Exposure, Revolving Exposure, Funded Letter of Credit Exposure and Delayed Draw Term Loan Exposure and representing more than 50% of the sum of (i) the aggregate Tranche C Term Loan Exposure of all Lenders, (ii) the aggregate Revolving Exposure of all Lenders, (iii) the aggregate Funded Letter of Credit Exposure of all Lenders, and (iv) aggregate Delayed Draw Term Loan Exposure of all Lenders.           “Restricted Junior Payment” means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of Company now or hereafter outstanding, except a dividend payable solely in shares of stock to the holders of that class; (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock of Company now or hereafter outstanding; (iii) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of stock of Company now or 36 --------------------------------------------------------------------------------   hereafter outstanding; (iv) management or similar fees payable to Holding or any of its Affiliates (other than Company or Guarantor Subsidiary); (v) any payment or prepayment of principal of, premium, if any, or interest on, redemption, purchase, retirement, defeasance (including in-substance or legal defeasance), sinking fund or similar payment with respect to the MSW Notes, the MSW Refinancing Notes, the New MSW Notes, any Indebtedness outstanding under the Second Lien Credit Agreement, Second Lien Notes Indenture, ARC Notes, ARC Refinancing Notes and the New ARC Notes and (vi) any payment or prepayment of principal of, premium, if any, or redemption, purchase, retirement, defeasance, sinking fund or similar payment with respect to any Indebtedness for borrowed money of any Covanta Warren Entity (the “Covanta Warren Debt”).           “Revolving Commitment” means the commitment of a Lender to make or otherwise fund any Revolving Loan and to acquire participations in Revolving Letters of Credit and Swing Line Loans hereunder and “Revolving Commitments” means such commitments of all Lenders in the aggregate. The amount of each Lender’s Revolving Commitment, if any, is set forth on Appendix A-2 or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Revolving Commitments as of the Effective Date is $100,000,000.           “Revolving Commitment Period” means the period from the Closing Date to but excluding the Revolving Commitment Termination Date.           “Revolving Commitment Termination Date” means the earliest to occur of (i) the sixth anniversary of the Closing Date, (ii) the date the Revolving Commitments are permanently reduced to zero pursuant to Section 2.13(b) or 2.14, and (iii) the date of the termination of the Revolving Commitments pursuant to Section 8.1.           “Revolving Exposure” means, with respect to any Lender as of any date of determination, (i) prior to the termination of the Revolving Commitments, that Lender’s Revolving Commitment; and (ii) after the termination of the Revolving Commitments, the sum of (a) the aggregate outstanding principal amount of the Revolving Loans of that Lender, (b) in the case of any Issuing Bank, the aggregate Revolving Letter of Credit Usage in respect of all Revolving Letters of Credit issued by that Lender (net of any participations by Lenders in such Revolving Letters of Credit), (c) the aggregate amount of all participations by that Lender in any outstanding Revolving Letters of Credit or any unreimbursed drawing under any Revolving Letter of Credit, (d) in the case of Swing Line Lender, the aggregate outstanding principal amount of all Swing Line Loans (net of any participations therein by other Lenders), and (e) the aggregate amount of all participations therein by that Lender in any outstanding Swing Line Loans.           “Revolving Issuing Bank” means with respect to any Revolving Letter of Credit, any Lender (including any Person who is a Lender as of the Closing Date but subsequently, after agreeing to become a Revolving Issuing Bank, ceases to be a Lender) which, at the request of Company, and with the consent of Administrative Agent (not to be unreasonably withheld), agrees in such Lender’s sole discretion to become a Revolving Issuing Bank for the purposes of issuing such Revolving Letter of Credit, together with its permitted successors and assigns in such capacity. As of the Effective Date, JPMC shall be a Revolving Issuing Bank. 37 --------------------------------------------------------------------------------             “Revolving Lender” means a Lender having a Revolving Commitment.           “Revolving Letter of Credit” means a commercial or standby letter of credit issued or to be issued by an Issuing Bank pursuant to Section 2.4(a) of this Agreement.           “Revolving Letter of Credit Participant” as defined in Section 2.4(g).           “Revolving Letter of Credit Sublimit” means the lesser of (i) $90,000,000 and (ii) the aggregate unused amount of the Revolving Commitments then in effect.           “Revolving Letter of Credit Usage” means, as at any date of determination, the sum of (i) the aggregate Stated Amount of all outstanding Revolving Letters of Credit, and (ii) the aggregate amount of all drawings under Revolving Letters of Credit honored by an Issuing Bank and not theretofore reimbursed by or on behalf of Company.           “Revolving Loan” means a Loan made by a Lender to Company pursuant to Section 2.2(a) and/or 2.22.           “Revolving Loan Note” means a promissory note in the form of Exhibit B-2, as it may be amended, supplemented or otherwise modified from time to time.           “Rights Offering” means the offering of common stock of Holding to its shareholders on the Closing Date.           “Rights Offering Agreement” means the subscription agreement, dated as of the Closing Date, by and among Holding and certain of its shareholders relating to the Rights Offering, as it may be amended, supplemented, restated or otherwise modified from time to time in accordance with the provisions of Section 6.14 hereof.           “S&P” means Standard & Poor’s Ratings Group, a division of The McGraw Hill Corporation.           “Second Lien Credit Agreement” means the Second Lien Credit and Guaranty Agreement dated as of the Closing Date, as amended as of the date hereof, among Company, Holding, GSCP as a joint lead arranger, a joint bookrunner and co-syndication agent, Credit Suisse, as a joint lead arranger, a joint bookrunner, co-syndication agent, administrative agent, paying agent and collateral agent and the other agents and lenders party thereto, as it may be amended, modified, renewed, refunded, replaced or refinanced from time to time in accordance with Section 6.16.           “Second Lien Notes” means the Second Lien Notes to be issued under the Second Lien Notes Indenture as they may be amended, modified, renewed, refunded, replaced or refinanced from time to time in accordance with Section 6.16 to the extent the proceeds of such Second Lien Notes are used solely to promptly prepay the Second Lien Term Loans in accordance with the provisions of the Second Lien Credit Agreement. 38 --------------------------------------------------------------------------------             “Second Lien Notes Indenture” means the Indenture in respect of the Second Lien Notes, between Company and the trustee thereunder as it may be amended, modified, renewed, refunded, replaced or refinanced from time to time in accordance with Section 6.16.           “Second Lien Term Loans” means the Second Lien Term Loans in an aggregate principal amount of $400,000,000 as of the Effective Date under the Second Lien Credit Agreement.           “Secured Parties” has the meaning assigned to that term in the Pledge and Security Agreement.           “Securities” means any stock, shares, partnership interests, voting trust certificates, certificates of interest or participation in any profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other evidences of Indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the foregoing.           “Series” as defined in Section 2.4(f).           “Securities Act” means the Securities Act of 1933, as amended from time to time, and any successor statute.           “Solvency Certificate” means a Solvency Certificate of the chief financial officer of Holding substantially in the form of Exhibit G-3.           “Solvent” means, with respect to any Credit Party, that as of the date of determination, both (i) (a) the sum of such Credit Party’s debt (including contingent liabilities) does not exceed the present fair saleable value of such Credit Party’s and its Subsidiaries, present assets; (b) such Credit Party’s capital is not unreasonably small in relation to its business as contemplated on the Effective Date and reflected in the Projections or with respect to any transaction contemplated or undertaken after the Effective Date; and (c) such Person has not incurred and does not intend to incur, or believe that it will incur, debts beyond its ability to pay such debts as they become due (whether at maturity or otherwise); and (ii) such Person is “solvent” within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability (irrespective of whether such contingent liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5).           “Stated Amount” of any Letter of Credit shall mean the maximum amount from time to time available to be drawn thereunder, determined without regard to whether any conditions to drawing could then be met.           “Stock Purchase Agreement” means that certain Stock Purchase Agreement, dated as of February 1, 2005, among the Acquired Business, the sellers party thereto and 39 --------------------------------------------------------------------------------   Holding, as it may be amended, supplemented, restated or otherwise modified from time to time in accordance with the provisions of Section 6.14 hereof.           “Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture or other business entity of which more than 50% of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof; provided, in determining the percentage of ownership interests of any Person controlled by another Person, no ownership interest in the nature of a “qualifying share” of the former Person shall be deemed to be outstanding; and provided further, that in no event shall any Affected Entity constitute a Subsidiary of Company or any of its Subsidiaries for so long as such Person remains an Affected Entity, except that with respect to the Covanta Warren Entities at any time after any payment is made pursuant to Section 6.5(h) such Person shall be a Subsidiary.           “Swing Line Lender” means GSCP in its capacity as Swing Line Lender hereunder, together with its permitted successors and assigns in such capacity.           “Swing Line Loan” means a Loan made by the Swing Line Lender to Company pursuant to Section 2.3.           “Swing Line Note” means a promissory note in the form of Exhibit B-3, as it may be amended, supplemented or otherwise modified from time to time.           “Swing Line Sublimit” means the lesser of (i) $10,000,000, and (ii) the aggregate unused amount of Revolving Commitments then in effect.           “Syndication Agent” as defined in the preamble hereto.           “Tax” means any present or future tax, levy, impost, duty, assessment, charge, fee, deduction or withholding of any nature and whatever called, by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or assessed; provided, “Tax on the overall net income” of a Person shall be construed as a reference to a tax imposed by the jurisdiction in which that Person is organized or in which that Person’s applicable principal office (and/or, in the case of a Lender, its lending office) is located or in which that Person (and/or, in the case of a Lender, its lending office) is deemed to be doing business on all or part of the net income, profits or gains (whether worldwide, or only insofar as such income, profits or gains are considered to arise in or to relate to a particular jurisdiction, or otherwise) of that Person (and/or, in the case of a Lender, its applicable lending office).           “Term Loan” means a Tranche C Term Loan, a Delayed Draw Term Loan or a New Term Loan and “Term Loans” means such loans of all Lenders in the aggregate. 40 --------------------------------------------------------------------------------             “Term Loan Commitment” means a Tranche C Term Loan Commitment or a Delayed Draw Term Loan Commitment and “Term Loan Commitments” means such commitments of all Lenders in the aggregate.           “Term Loan Maturity Date” means the earlier of (i) the seventh anniversary of the Closing Date, and (ii) the date that all the Term Loans shall become due and payable in full hereunder, whether by acceleration or otherwise.           “Term Loan Note” means a promissory note in the form of Exhibit B-1, as it may be amended, supplemented or otherwise modified from time to time.           “Termination Date” means the first date on which (i) each Commitment has expired or been terminated, (ii) the principal amount of all Loans and all other Obligations then due and payable have been paid in full, (iii) all Letters of Credit have been cancelled or have expired or have been cash collateralized or otherwise secured to the satisfaction of the Issuing Bank thereof and (iv) the Funded LC Issuing Banks have repurchased all outstanding Funded LC Participation Interests with the remaining New Credit Linked Deposits and deposited such purchase price with the Administrative Agent to be repaid to the Funded Letter of Credit Participants according to their Pro Rata Shares of the New Credit Linked Deposits.           “Terminated Lender” as defined in Section 2.23.           “Tranche C Term Loan” means a Tranche C Term Loan made by a Lender to Company on the Effective Date pursuant to Section 2.1(a) and a New Term Loan subsequently deemed made pursuant to Section 2.4(f).           “Tranche C Term Loan Commitment” means the commitment of a Lender to make or otherwise fund a Tranche C Term Loan and “Tranche C Term Loan Commitments” means such commitments of all Lenders in the aggregate. The amount of each Lender’s Tranche C Term Loan Commitment, if any, is set forth on Appendix A-1 or in the applicable Assignment Agreement, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate amount of the Tranche C Term Loan Commitments as of the Effective Date is $229,312,500.00.           “Tranche C Term Loan Exposure” means, with respect to any Lender, as of any date of determination, the outstanding principal amount of the Tranche C Term Loans of such Lender; provided, at any time prior to the making of the Tranche C Term Loans, the Tranche C Term Loan Exposure of any Lender shall be equal to such Lender’s Tranche C Term Loan Commitment.           “Title Policy” as defined in Section 3.1(h)(iv).           “Total Credit Linked Deposit” means, at any time, the sum of all New Credit Linked Deposits at such time, as the same may be reduced from time to time pursuant to Section 2.4(f) or 2.13(b)(iii).           “Total Funded Letter of Credit Commitment” means the sum of the Funded Letter of Credit Commitments of all the Lenders. 41 --------------------------------------------------------------------------------             “Total Utilization of Revolving Commitments” means, as at any date of determination, the sum of (i) the aggregate principal amount of all outstanding Revolving Loans (other than Revolving Loans made for the purpose of repaying any Refunded Swing Line Loans or reimbursing an Issuing Bank for any amount drawn under any Revolving Letter of Credit, but not yet so applied), (ii) the aggregate principal amount of all outstanding Swing Line Loans, and (iii) the Revolving Letter of Credit Usage.           “Transaction Costs” means the fees, costs and expenses payable by Company in connection with the Transactions within 180 days of the Closing Date.           “Transactions” means the Acquisition, the Refinancing, the entering into the Existing Credit Agreement, this Agreement, the Second Lien Credit Agreement (including the amendment thereto entered into on the Effective Date) and the Rights Offering.           “Treasury Regulations” means the final and temporary (but not proposed) income tax regulations promulgated under the Internal Revenue Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).           “Type of Loan” means (i) with respect to either Term Loans or Revolving Loans, a Base Rate Loan or a Eurodollar Rate Loan, and (ii) with respect to Swing Line Loans, a Base Rate Loan.           “UBS” as defined in the preamble hereto.           “UBSS” as defined in the preamble hereto.           “UCC” means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.           “Unadjusted Eurodollar Rate Component” means that component of the interest costs to Company in respect of a Eurodollar Rate Loan that is based upon the rate obtained pursuant to clause (i) of the definition of Adjusted Eurodollar Rate.           “Unpaid Drawing” as defined in Section 2.4(e).      1.2. Accounting Terms. Except as otherwise expressly provided herein, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. Financial statements and other information required to be delivered by Company to Lenders pursuant to Sections 5.1(b) and 5.1(c) shall be prepared in accordance with GAAP (subject, in the case of Section 5.1(b), to final year-end adjustments and the absence of footnotes) as in effect at the time of such preparation (and delivered together with the reconciliation statements provided for in Section 5.1(e), if applicable). Subject to the foregoing, calculations in connection with the definitions, covenants and other provisions used in Section 6.8 hereof shall utilize accounting principles and policies in conformity with those used to prepare the Historical Financial Statements. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Credit Document, and Company or Administrative Agent shall so request, Administrative Agent and Company shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in 42 --------------------------------------------------------------------------------   GAAP (subject to the approval of Requisite Lenders), provided that, until so amended, such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and Company shall provide to Administrative Agent and Lenders reconciliation statements provided for in Section 5.1(e).      1.3. Interpretation, etc. Any of the terms defined herein may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. References herein to any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule or an Exhibit, as the case may be, hereof unless otherwise specifically provided. The use herein of the word “include” or “including”, when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not no limiting language (such as “without limitation” or “but not limited to” or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that fall within the broadest possible scope of such general statement, term or matter. The use herein of the word “issue” or “issuance” with respect to any Letter of Credit shall be deemed to include any amendment, extension or renewal thereof. This Agreement restates and replaces, in its entirety, the Existing Credit Agreement; any reference in any of the other Credit Documents to the Existing Credit Agreement (however defined) shall mean this Agreement. SECTION 2. LOANS AND LETTERS OF CREDIT      2.1. Tranche C Term Loans and Delayed Draw Term Loans.           (a) Subject to the terms and conditions hereof, (i) each Continuing Term Lender severally agrees that the Existing Term Loans made by such Continuing Term Lender under the Existing Credit Agreement shall remain outstanding on and after the Effective Date as “Tranche C Term Loans” made pursuant to this Agreement in the same pro rata amount of such Continuing Term Lender’s Pro Rata Share of the Existing Term Loans and such Existing Term Loans shall on and after the Effective Date have all of the rights and benefits of Tranche C Term Loans as set forth in this Agreement and the other Credit Documents and (ii) each Lender (other than a Continuing Term Lender holding only Existing Term Loans) severally agrees to lend to Company on the Effective Date, a Tranche C Term Loan in an amount equal to such Lender’s Tranche C Term Loan Commitment (or, in the case of any such Lender holding Existing Term Loans, an additional Tranche C Term Loan in an amount equal to the excess of (A) such Lender’s Tranche C Term Loan Commitment over (B) the principal amount of its Existing Term Loans).           (b) Subject to the terms and conditions hereof, during the Delayed Draw Term Loan Commitment Period, each Lender holding a Delayed Draw Term Loan Commitment severally agrees to make Delayed Draw Term Loans, in accordance with Section 2.1 and subject to the requirements of Section 2.6, to Company in the aggregate amount up to but not exceeding such Lender’s Delayed Draw Term Loan Commitment. Company may make only one borrowing under the Tranche C Term Loan Commitment which shall be made (or deemed made) on the Effective Date and Company may make only one 43 --------------------------------------------------------------------------------   borrowing under the Delayed Draw Term Loan Commitment. Any amount borrowed under this Section 2.1 and subsequently repaid or prepaid may not be reborrowed. Subject to Sections 2.13(a) and 2.14, all amounts owed hereunder with respect to the Term Loans shall be paid in full no later than the Term Loan Maturity Date. Each Lender’s Tranche C Term Loan Commitment shall terminate immediately and without further action on the Effective Date after giving effect to the funding (or deemed funding) of such Lender’s Tranche C Term Loan Commitment on such date. Each Lender’s Delayed Draw Term Loan Commitment shall terminate immediately and without further action on the Delayed Draw Term Loan Commitment Termination Date.           (c) Borrowing Mechanics for Term Loans.           (i) Company shall deliver to Administrative Agent a fully executed Funding Notice no later than one day prior to the Effective Date or the Delayed Draw Term Loan Credit Date, as applicable. Promptly upon receipt by Administrative Agent of such Certificate, Administrative Agent shall notify each Lender of the proposed borrowing.           (ii) Each Lender shall make its Tranche C Term Loan and/or its Delayed Draw Term Loan available to Administrative Agent not later than 12:00 p.m. (New York City time) on the Effective Date or the Delayed Draw Term Loan Credit Date, as applicable, by wire transfer of same day funds in Dollars, at the Principal Office designated by Administrative Agent. Upon satisfaction or waiver of the conditions precedent specified herein, Administrative Agent shall make the proceeds of the Tranche C Term Loans available to Company on the Effective Date and the proceeds of the Delayed Draw Term Loans available to Company on the Delayed Draw Term Loan Credit Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Loans received by Administrative Agent from Lenders to be credited to the account of Company at the Principal Office designated by Administrative Agent or to such other account as may be designated in writing to Administrative Agent by Company.      2.2. Revolving Loans.           (a) Revolving Commitments. During the Revolving Commitment Period, subject to the terms and conditions hereof, each Lender severally agrees to make Revolving Loans to Company in an aggregate amount up to but not exceeding such Lender’s Revolving Commitment; provided, that after giving effect to the making of any Revolving Loans in no event shall the Total Utilization of Revolving Commitments exceed the Revolving Commitments then in effect. Amounts borrowed pursuant to this Section 2.2(a) may be repaid and reborrowed during the Revolving Commitment Period. Each Lender’s Revolving Commitment shall expire on the Revolving Commitment Termination Date and all Revolving Loans and all other amounts owed hereunder with respect to the Revolving Loans and the Revolving Commitments shall be paid in full no later than such date.           (b) Borrowing Mechanics for Revolving Loans.           (i) Except pursuant to Section 2.4(d), Revolving Loans that are Base Rate Loans shall be made in an aggregate minimum amount of $500,000 and integral multiples of 44 --------------------------------------------------------------------------------   $250,000 in excess of that amount, and Revolving Loans that are Eurodollar Rate Loans shall be in an aggregate minimum amount of $500,000 and integral multiples of $250,000 in excess of that amount.           (ii) Whenever Company desires that Lenders make Revolving Loans, Company shall deliver to Administrative Agent a fully executed and delivered Funding Notice no later than 10:00 a.m. (New York City time) at least three Business Days in advance of the proposed Credit Date in the case of a Eurodollar Rate Loan, and at least one Business Day in advance of the proposed Credit Date in the case of a Revolving Loan that is a Base Rate Loan. Except as otherwise provided herein, a Funding Notice for a Revolving Loan that is a Eurodollar Rate Loan shall be irrevocable on and after the related Interest Rate Determination Date, and Company shall be bound to make a borrowing in accordance therewith.           (iii) Notice of receipt of each Funding Notice in respect of Revolving Loans, together with the amount of each Lender’s Pro Rata Share thereof, if any, together with the applicable interest rate, shall be provided by Administrative Agent to each applicable Lender by telefacsimile or electronic transmission means with reasonable promptness, but (provided Administrative Agent shall have received such notice by 10:00 a.m. (New York City time)) not later than 2:00 p.m. (New York City time) on the same day as Administrative Agent’s receipt of such Notice from Company.           (iv) Each Lender shall make the amount of its Revolving Loan available to Administrative Agent not later than 12:00 p.m. (New York City time) on the applicable Credit Date by wire transfer of same day funds in Dollars, at the Principal Office designated by Administrative Agent. Except as provided herein, upon satisfaction or waiver of the conditions precedent specified herein, Administrative Agent shall make the proceeds of such Revolving Loans available to Company on the applicable Credit Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Revolving Loans received by Administrative Agent from Lenders to be credited to the account of Company as may be designated in writing to Administrative Agent by Company.      2.3. Swing Line Loans.           (a) Swing Line Loans Commitments. During the Revolving Commitment Period, subject to the terms and conditions hereof, Swing Line Lender hereby agrees to make Swing Line Loans to Company in the aggregate amount up to but not exceeding the Swing Line Sublimit; provided, that after giving effect to the making of any Swing Line Loan, in no event shall the Total Utilization of Revolving Commitments exceed the Revolving Commitments then in effect. Amounts borrowed pursuant to this Section 2.3 may be repaid and reborrowed during the Revolving Commitment Period. Swing Line Lender’s Revolving Commitment shall expire on the Revolving Commitment Termination Date and all Swing Line Loans and all other amounts owed hereunder with respect to the Swing Line Loans and the Revolving Commitments shall be paid in full no later than such date. 45 --------------------------------------------------------------------------------             (b) Borrowing Mechanics for Swing Line Loans.           (i) Swing Line Loans shall be made in an aggregate minimum amount of $500,000 and integral multiples of $250,000 in excess of that amount.           (ii) Whenever Company desires that Swing Line Lender make a Swing Line Loan, Company shall deliver to Administrative Agent a Funding Notice no later than 12:00 p.m. (New York City time) on the proposed Credit Date.           (iii) Swing Line Lender shall make the amount of its Swing Line Loan available to Administrative Agent not later than 2:00 p.m. (New York City time) on the applicable Credit Date by wire transfer of same day funds in Dollars, at Administrative Agent’s Principal Office. Except as provided herein, upon satisfaction or waiver of the conditions precedent specified herein, Administrative Agent shall make the proceeds of such Swing Line Loans available to Company on the applicable Credit Date by causing an amount of same day funds in Dollars equal to the proceeds of all such Swing Line Loans received by Administrative Agent from Swing Line Lender to be credited to the account of Company as may be designated in writing to Administrative Agent by Company.           (iv) With respect to any Swing Line Loans which have not been voluntarily prepaid by Company pursuant to Section 2.13, Swing Line Lender may at any time in its sole and absolute discretion, deliver to Administrative Agent (with a copy to Company), no later than 11:00 a.m. (New York City time) at least one Business Day in advance of the proposed Credit Date, a notice (which shall be deemed to be a Funding Notice given by Company) requesting that each Lender holding a Revolving Commitment make Revolving Loans that are Base Rate Loans to Company on such Credit Date in an amount equal to the amount of such Swing Line Loans (the “Refunded Swing Line Loans”) outstanding on the date such notice is given which Swing Line Lender requests Lenders to prepay. Anything contained in this Agreement to the contrary notwithstanding, (1) the proceeds of such Revolving Loans made by the Lenders other than Swing Line Lender shall be immediately delivered by Administrative Agent to Swing Line Lender (and not to Company) and applied to repay a corresponding portion of the Refunded Swing Line Loans and (2) on the day such Revolving Loans are made, Swing Line Lender’s Pro Rata Share of the Refunded Swing Line Loans shall be deemed to be paid with the proceeds of a Revolving Loan made by Swing Line Lender to Company, and such portion of the Swing Line Loans deemed to be so paid shall no longer be outstanding as Swing Line Loans and shall no longer be due under the Swing Line Note of Swing Line Lender but shall instead constitute part of Swing Line Lender’s outstanding Revolving Loans to Company and shall be due under the Revolving Loan Note issued by Company to Swing Line Lender. Company hereby authorizes Administrative Agent and Swing Line Lender to charge Company’s accounts with Administrative Agent and Swing Line Lender (up to the amount available in each such account) in order to immediately pay Swing Line Lender the amount of the Refunded Swing Line Loans to the extent of the proceeds of such Revolving Loans made by Lenders, including the Revolving Loans deemed to be made by Swing Line Lender, are not sufficient to repay in full the Refunded Swing Line Loans. If any portion of any such amount paid (or deemed to be paid) to Swing Line Lender should be recovered by or on behalf of Company from Swing Line Lender in bankruptcy, by assignment for the benefit of creditors or otherwise, the loss of the amount so 46 --------------------------------------------------------------------------------   recovered shall be ratably shared among all Lenders in the manner contemplated by Section 2.17.           (v) If for any reason Revolving Loans are not made pursuant to Section 2.3(b)(iv) in an amount sufficient to repay any amounts owed to Swing Line Lender in respect of any outstanding Swing Line Loans on or before the third Business Day after demand for payment thereof by Swing Line Lender, each Lender holding a Revolving Commitment shall be deemed to, and hereby agrees to, have purchased a participation in such outstanding Swing Line Loans, and in an amount equal to its Pro Rata Share of the applicable unpaid amount together with accrued interest thereon. Upon one Business Day’s notice from Swing Line Lender, each Lender holding a Revolving Commitment shall deliver to Swing Line Lender an amount equal to its respective participation in the applicable unpaid amount in same day funds at the Principal Office of Swing Line Lender. In order to evidence such participation each Lender holding a Revolving Commitment agrees to enter into a participation agreement at the request of Swing Line Lender in form and substance reasonably satisfactory to Swing Line Lender. In the event any Lender holding a Revolving Commitment fails to make available to Swing Line Lender the amount of such Lender’s participation as provided in this paragraph, Swing Line Lender shall be entitled to recover such amount on demand from such Lender together with interest thereon for three Business Days at the rate customarily used by Swing Line Lender for the correction of errors among banks and thereafter at the Base Rate, as applicable.           (vi) Notwithstanding anything contained herein to the contrary, (1) each Lender’s obligation to make Revolving Loans for the purpose of repaying any Refunded Swing Line Loans pursuant to the second preceding paragraph and each Lender’s obligation to purchase a participation in any unpaid Swing Line Loans pursuant to the immediately preceding paragraph shall be absolute and unconditional and shall not be affected by any circumstance, including without limitation (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against Swing Line Lender, any Credit Party or any other Person for any reason whatsoever; (B) the occurrence or continuation of a Default or Event of Default; (C) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of any Credit Party; (D) any breach of this Agreement or any other Credit Document by any party thereto; or (E) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing; provided that such obligations of each Lender are subject to the condition that Swing Line Lender believed in good faith that all conditions under Section 3.2 to the making of the applicable Refunded Swing Line Loans or other unpaid Swing Line Loans, were satisfied at the time such Refunded Swing Line Loans or unpaid Swing Line Loans were made, or the satisfaction of any such condition not satisfied had been waived by the Requisite Lenders prior to or at the time such Refunded Swing Line Loans or other unpaid Swing Line Loans were made; and (2) Swing Line Lender shall not be obligated to make any Swing Line Loans (A) if it has elected not to do so after the occurrence and during the continuation of a Default or Event of Default or (B) at a time when a Funding Default exists unless Swing Line Lender has entered into arrangements satisfactory to it and Company to eliminate Swing Line Lender’s risk with respect to the Defaulting Lender’s participation in such Swing Line Loan, including by cash collateralizing such Defaulting Lender’s Pro Rata Share of the outstanding Swing Line Loans. 47 --------------------------------------------------------------------------------        2.4. Issuance of Letters of Credit and Purchase of Participations Therein.           (a) Revolving Letters of Credit. During the Revolving Commitment Period, subject to the terms and conditions hereof, each Revolving Issuing Bank agrees to issue Revolving Letters of Credit for the account of Company and for the benefit of Company or any of its Subsidiaries in the aggregate amount up to but not exceeding the Revolving Letter of Credit Sublimit; provided, (i) each Revolving Letter of Credit shall be denominated in Dollars; (ii) the Stated Amount of each Revolving Letter of Credit shall not be less than $5,000 or such lesser amount as is acceptable to the applicable Revolving Issuing Bank; (iii) after giving effect to such issuance, in no event shall the Total Utilization of Revolving Commitments exceed the Revolving Commitments then in effect; (iv) after giving effect to such issuance, in no event shall the Revolving Letter of Credit Usage exceed the Revolving Letter of Credit Sublimit then in effect; (v) in no event shall any standby Revolving Letter of Credit have an expiration date later than the earlier of (1) the date that is five (5) Business Days prior to the Revolving Commitment Termination Date and (2) the date which is one year from the date of issuance of such standby Revolving Letter of Credit; (vi) in no event shall any commercial Revolving Letter of Credit (x) have an expiration date later than the earlier of (1) the Revolving Loan Commitment Termination Date and (2) the date which is 180 days from the date of issuance of such commercial Revolving Letter of Credit or (y) be issued if such commercial Revolving Letter of Credit is otherwise unacceptable to the applicable Revolving Issuing Bank in its reasonable discretion, and (vii) regarding Revolving Letters of Credit issued by JPMC, the same shall be subject to the terms of letter of credit documentation executed by Company in connection therewith (it being agreed and understood that in the event of any conflict or inconsistency between the provisions of such documentation and the provisions of this Agreement, the provisions of this Agreement shall govern and control in all respects). Subject to the foregoing, a Revolving Issuing Bank may agree that a standby Revolving Letter of Credit will automatically be extended for one or more successive periods each not to exceed one year each, unless such Revolving Issuing Bank elects not to extend for any such additional period; provided, a Revolving Issuing Bank shall not extend any such Revolving Letter of Credit if it has received written notice from Administrative Agent not to do so and that an Event of Default has occurred and is continuing at the time such Revolving Issuing Bank must elect to allow such extension; provided, further, in the event a Funding Default exists, a Revolving Issuing Bank shall not be required to issue any Revolving Letter of Credit unless Revolving Issuing Bank has entered into arrangements reasonably satisfactory to it and Company to eliminate such Revolving Issuing Bank’s risk with respect to the participation in Revolving Letters of Credit of the Defaulting Lender, including by cash collateralizing such Defaulting Lender’s Pro Rata Share of the Revolving Letter of Credit Usage.           (b) Funded Letters of Credit. Subject to and upon the terms and conditions herein set forth, at any time and from time to time on and after the Effective Date and during the Funded Letter of Credit Commitment Period, Company may request that a Funded LC Issuing Bank issue for the account of Company a commercial or standby letter of credit or letters of credit under the Funded Letter of Credit Commitment (each, a “Funded Letter of Credit”), provided that each Funded Letter of Credit shall be used by Company solely to support the obligations of Company and its Subsidiaries under Projects and other Contractual Obligations of Company and its Subsidiaries and for other general corporate uses of Company and its Subsidiaries. Notwithstanding the foregoing, (i) each Funded Letter of Credit shall be denominated in Dollars; (ii) the Stated Amount of each Funded Letter of Credit shall not be less 48 --------------------------------------------------------------------------------   than $5,000 or such lesser amount as is acceptable to such Funded LC Issuing Bank issuing the same; (iii) no Funded Letter of Credit shall be issued the Stated Amount of which, (x) when added to all other Funded Letters of Credit Outstanding at such time, would exceed the Total Funded Letter of Credit Commitment or the Total Credit Linked Deposit then in effect (with such Funded LC Issuing Bank being entitled to rely on a certificate from Company as to this item) or (y) when added to all other Funded Letters of Credit Outstanding at such time issued by such Funded LC Issuing Bank, would exceed the amount corresponding to such Funded LC Issuing Bank that is set forth in Schedule 1.1(c) (as each amount may be adjusted pursuant to Section 2.4(n)) or the amount of the New Credit Linked Deposits held by such Funded LC Issuing Bank at such time; (iv) in no event shall any standby Funded Letter of Credit have an expiration date later than the earlier of (1) the date that is five (5) Business Days prior to the Funded Letter of Credit Termination Date and (2) (other than in respect of Detroit Letters Of Credit, which shall initially and upon each renewal thereof, each be available for a term of up to three years and thirty-five days) the date which is one year from the date of issuance of such standby Funded Letter of Credit; (v) in no event shall any commercial Funded Letter of Credit (x) have an expiration date later than the earlier of (1) the Funded Letter of Credit Termination Date and (2) the date which is 180 days from the date of issuance of such commercial Funded Letter of Credit or (y) be issued if such commercial Funded Letter of Credit is otherwise unacceptable to such Funded LC Issuing Bank in its reasonable discretion; (vi) the Letters of Credit specified on Schedule 1.1(c)(1) shall in accordance with Section 2.4(m) be deemed Funded Letters of Credit issued by JPMC and the Letters of Credit specified on Schedule 1.1(c)(2) shall be deemed Funded Letters of Credit issued by UBS, each in its capacity as a Funded LC Issuing Bank hereunder; and (vii) regarding Funded Letters of Credit issued by JPMC, the same shall be subject to the terms of letter of credit documentation executed by Company in connection therewith (it being agreed and understood that in the event of any conflict or inconsistency between the provisions of such documentation and the provisions of this Agreement, the provisions of this Agreement shall govern and control in all respects). Subject to the foregoing, a Funded LC Issuing Bank may (but shall not be obligated to) agree that a standby Funded Letter of Credit will automatically be extended for one or more successive periods not to exceed one year each (other than in respect of Detroit Letters Of Credit), unless such Funded LC Issuing Bank elects not to extend for any such additional period; provided, a Funded LC Issuing Bank shall not extend any such Funded Letter of Credit if it has received written notice that an Event of Default has occurred and is continuing at the time such Funded LC Issuing Bank must elect to allow such extension. The Total Funded Letter of Credit Commitment shall terminate on the Funded Letter of Credit Termination Date.           (c) Notice of Issuance. Whenever Company desires the issuance of a Letter of Credit, it shall deliver to Administrative Agent and to the relevant Issuing Bank, an Issuance Notice no later than 12:00 p.m. (New York City time) at least three Business Days (in the case of standby letters of credit) or five Business Days (in the case of commercial letters of credit), or in each case such shorter period as may be agreed to by an Issuing Bank in any particular instance, in advance of the proposed date of issuance. Upon satisfaction or waiver of the conditions set forth in Section 3.2, an Issuing Bank shall issue the requested Letter of Credit only in accordance with such Issuing Bank’s standard operating procedures. Upon the issuance of any Revolving Letter of Credit or amendment or modification to a Revolving Letter of Credit, the applicable Issuing Bank shall promptly notify each Revolving Lender of such issuance, which notice shall be accompanied by a copy of such Revolving Letter of Credit or amendment or modification to a 49 --------------------------------------------------------------------------------   Revolving Letter of Credit and the amount of such Revolving Lender’s respective participation in such Revolving Letter of Credit pursuant to Section 2.4(g). Upon the issuance of any Funded Letter of Credit or amendment or modification to a Funded Letter of Credit, the applicable Funded LC Issuing Bank shall promptly notify the Administrative Agent of such issuance and the Administrative Agent shall notify each Funded Letter of Credit Participant of such issuance, which notice shall be accompanied by a copy of such Funded Letter of Credit or amendment or modification to a Funded Letter of Credit and the amount of such Funded Letter of Credit Participant’s respective participation in such Funded Letter of Credit pursuant to Section 2.4(h).           (d) Responsibility of Issuing Banks With Respect to Requests for Drawings and Payments. In determining whether to honor any drawing under any Letter of Credit by the beneficiary thereof, such Issuing Bank shall be responsible only to examine the documents delivered under such Letter of Credit with reasonable care so as to ascertain whether they appear on their face to be in accordance with the terms and conditions of such Letter of Credit. As between Company and such Issuing Bank, Company assumes all risks of the acts and omissions of, or misuse of the Letters of Credit issued by such Issuing Bank or by the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, but subject to the first sentence of this subsection (d), such Issuing Bank shall not be responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) failure of the beneficiary of any such Letter of Credit to comply fully with any conditions required in order to draw upon such Letter of Credit; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of such Issuing Bank, including any Governmental Acts; none of the above shall affect or impair, or prevent the vesting of, any of such Issuing Bank’s rights or powers hereunder. Without limiting the foregoing and in furtherance thereof, any action taken or omitted by such Issuing Bank under or in connection with the Letters of Credit or any documents and certificates delivered thereunder, if taken or omitted in good faith, shall not give rise to any liability on the part of such Issuing Bank to Company. Notwithstanding anything to the contrary contained in this Section 2.4(d), Company shall retain any and all rights it may have against an Issuing Bank for any liability arising solely out of the gross negligence or willful misconduct of such Issuing Bank.           (e) Reimbursement by Company of Amounts Drawn or Paid Under Letters of Credit. (i) In the event an Issuing Bank has determined to honor a drawing under a Letter of Credit (each such amount so paid until reimbursed, an “Unpaid Drawing”), it shall promptly notify Company and Administrative Agent, and Company may reimburse such Issuing Bank on or before the Business Day immediately following the date on which such notice of such drawing is provided (the “Reimbursement Date”) in an amount in Dollars and in same day 50 --------------------------------------------------------------------------------   funds equal to the amount of such honored drawing; provided, anything contained herein to the contrary notwithstanding, (i) unless Company shall have notified Administrative Agent and such Issuing Bank prior to 10:00 a.m. (New York City time) on or before the Business Day immediately following the date such drawing is honored that Company intends to reimburse such Issuing Bank for the amount of such honored drawing with funds other than the proceeds of Revolving Loans with respect to any Revolving Letter of Credit, Company shall be deemed, in the case of any Revolving Letters of Credit, to have given a timely Funding Notice to Administrative Agent requesting Lenders to make Revolving Loans that are Base Rate Loans on the Reimbursement Date in an amount in Dollars equal to the amount of such honored drawing, and (ii) provided no Event of Default under Sections 8.1(a), (f) or (g) shall have occurred and be continuing, Lenders shall, on the Reimbursement Date, make Revolving Loans that are Base Rate Loans in the amount of such honored drawing, the proceeds of which shall be applied directly by Administrative Agent to reimburse such Revolving Issuing Bank for the amount of such honored drawing; and provided further, if for any reason proceeds of Revolving Loans are not received by such Revolving Issuing Bank on the Reimbursement Date in an amount equal to the amount of such honored drawing, Company shall reimburse such Revolving Issuing Bank, on demand, in an amount in same day funds equal to the excess of the amount of such honored drawing over the aggregate amount of such Revolving Loans, if any, which are so received. Nothing in this Section 2.4(e) shall be deemed to relieve any Lender from its obligation to make Revolving Loans on the terms and conditions set forth herein, and Company shall retain any and all rights it may have against any Lender resulting from the failure of such Lender to make such Revolving Loans under this Section 2.4(e).           (f) Repayment by Funded Letter of Credit Participants of Amounts Drawn or Paid Under Funded Letters of Credit. In the event that a Funded LC Issuing Bank makes any payment under any Funded Letter of Credit and Company shall not have repaid such amount in full to such Funded LC Issuing Bank pursuant to Section 2.4(e), such Funded LC Issuing Bank shall notify Administrative Agent and Administrative Agent shall notify each Funded Letter of Credit Participant of such failure, and such Funded LC Issuing Bank shall apply from the New Credit Linked Deposits held by such Funded LC Issuing Bank toward the reimbursement of such payment each Funded Letter of Credit Participant’s Pro Rata Share of such unreimbursed payment from the Credit Linked Deposit Account held by such Funded LC Issuing Bank. In the event a Funded LC Issuing Bank applies the New Credit Linked Deposits held by such Funded LC Issuing Bank to an unreimbursed disbursement under a Funded Letter of Credit pursuant to the preceding sentence, Company shall have the right, one time only following the Closing Date (provided no Default or Event of Default shall have occurred and be continuing), within 5 Business Days of the Reimbursement Date, to pay over to Administrative Agent in reimbursement thereof an amount equal to the full amount of such unreimbursed disbursement, and such payment shall be applied by Administrative Agent in accordance with clause (ii) of the immediately following sentence. Promptly following receipt by Administrative Agent of any payment by Company in respect of any disbursement under a Funded Letter of Credit, Administrative Agent shall distribute such payment (i) to the Funded LC Issuing Bank that issued such Funded Letters of Credit or (ii) subject to the immediately preceding sentence, to the extent payments have been made from the New Credit Linked Deposits, to the Credit Linked Deposit Account with respect to such Funded Letter of Credit to be added to the New Credit Linked Deposits held by such Funded LC Issuing Bank. Company acknowledges that each payment made pursuant to this paragraph in respect of any unreimbursed payment is required to 51 --------------------------------------------------------------------------------   be made for the benefit of the Funded LC Issuing Bank indicated in the immediately preceding sentence. Provided no Event of Default under Section 8.1(f) or (g) shall have occurred and be continuing, any payment made from the Credit Linked Deposit Account (except to the extent of a one-time repayment by Company within 5 Business Days of the Reimbursement Date as expressly permitted above) pursuant to this paragraph to reimburse a Funded LC Issuing Bank for any unreimbursed payment shall be deemed an extension of Tranche C Term Loans made on such date by the Funded Letter of Credit Participants ratably in accordance with their Pro Rata Share of the Total Credit Linked Deposit, and the amount so funded shall permanently reduce the Total Credit Linked Deposit; any amount so funded pursuant to this paragraph shall, on and after the funding date thereof, be deemed to be Tranche C Term Loans for all purposes hereunder and have the same terms as other Tranche C Terms Loans hereunder (such deemed Tranche C Term Loan, a “New Term Loan”). Any New Term Loans deemed made on the same day shall be designated a separate series (a “Series”) of New Term Loans for all purposes of this Agreement. In the event that Company is required to reimburse a Funded LC Issuing Bank for any disbursement under a Funded Letter of Credit issued by such Funded LC Issuing Bank, for a period of 91 days following such reimbursement payment by Company, the Funded Letter of Credit Exposures shall be deemed to include (as if such Funded Letter of Credit were still outstanding) for purposes of determining availability for the issuance of any new Funded Letter of Credit during such period, the amount of such reimbursement payment until the end of such 91-day period.           (g) Lenders’ Purchase of Participations in Revolving Letters of Credit. Immediately upon the issuance of each Revolving Letter of Credit, each Lender having a Revolving Commitment (each, a “Revolving Letter of Credit Participant”) shall be deemed to have purchased, and hereby agrees to irrevocably purchase, from the applicable Revolving Issuing Bank a participation in such Revolving Letter of Credit and any drawings honored thereunder in an amount equal to such Lender’s Pro Rata Share (with respect to the Revolving Commitments) of the maximum amount which is or at any time may become available to be drawn thereunder. In the event that Company shall fail for any reason to reimburse a Revolving Issuing Bank as provided in Section 2.4(e), such Revolving Issuing Bank shall promptly notify each Revolving Letter of Credit Participant of the unreimbursed amount of such honored drawing and of such Revolving Letter of Credit Participant’s respective participation therein based on such Revolving Letter of Credit Participant’s Pro Rata Share of the Revolving Commitments. Each Revolving Letter of Credit Participant shall make available to such Revolving Issuing Bank an amount equal to its respective participation, in Dollars and in same day funds, at the office of such Revolving Issuing Bank specified in such notice, not later than 12:00 p.m. (New York City time) on the first business day (under the laws of the jurisdiction in which such office of such Revolving Issuing Bank is located) after the date notified by such Revolving Issuing Bank. In the event that any Revolving Letter of Credit Participant fails to make available to such Revolving Issuing Bank on such business day the amount of such Revolving Letter of Credit Participant’s participation in such Revolving Letter of Credit as provided in this Section 2.4(g), the applicable Revolving Issuing Bank shall be entitled to recover such amount on demand from such Lender together with interest thereon for three Business Days at the rate customarily used by such Revolving Issuing Bank for the correction of errors among banks and thereafter at the Base Rate. Nothing in this Section 2.4(g) shall be deemed to prejudice the right of any Revolving Letter of Credit Participant to recover from a Revolving Issuing Bank any amounts made available by such Revolving Letter of Credit 52 --------------------------------------------------------------------------------   Participant to a Revolving Issuing Bank pursuant to this Section in the event that it is determined that the payment with respect to a Revolving Letter of Credit in respect of which payment was made by such Revolving Letter of Credit Participant constituted gross negligence or willful misconduct on the part of such Revolving Issuing Bank. In the event a Revolving Issuing Bank shall have been reimbursed by other Revolving Letter of Credit Participants pursuant to this Section 2.4(g) for all or any portion of any drawing honored by such Revolving Issuing Bank under a Revolving Letter of Credit, such Revolving Issuing Bank shall distribute to each Revolving Letter of Credit Participant which has paid all amounts payable by it under this Section 2.4(g) with respect to such honored drawing such Revolving Letter of Credit Participant’s Pro Rata Share of all payments subsequently received by such Revolving Issuing Bank from Company in reimbursement of such honored drawing when such payments are received. Any such distribution shall be made to a Revolving Letter of Credit Participant at its primary address set forth below its name on Appendix B or at such other address as such Revolving Letter of Credit Participant may request.           (h) Funded Letter of Credit Participant’s Purchase of Participations in Funded Letters of Credit. On the Effective Date, without any further action on the part of the Funded LC Issuing Banks or the Lenders, the Funded LC Issuing Banks hereby grant to each Funded Letter of Credit Participant, and each such Funded Letter of Credit Participant shall be deemed irrevocably and unconditionally to have purchased and received from each Funded LC Issuing Bank that has issued any Funded Letter of Credit, without recourse or warranty, an undivided interest and participation (each, a “Funded Letter of Credit Participation”), in each Funded Letter of Credit that may be issued pursuant to Section 2.4(b) or deemed issued pursuant to Section 2.4(m) equal to such Funded Letter of Credit Participant’s Pro Rata Share of the aggregate amount available to be drawn under each such Funded Letter of Credit and the Funded LC Participation Interests in respect thereof together with rights to receive payments under Section 2.4(j)(iv). The aggregate purchase price for the Funded Letter of Credit Participations of each Funded Letter of Credit Participant shall equal the amount of the Funded Letter of Credit Commitment of such Funded Letter of Credit Participant paid to the Administrative Agent on the Effective Date pursuant to the next sentence, and, unless and until the Funded Letter of Credit Termination Date has occurred and all Funded Letters of Credit issued by a Funded LC Issuing Bank have expired without draw, or to the extent of any draws, have been reimbursed in full, or are cash collateralized by Company pursuant to Section 2.4(j)(iv), each such New Credit Linked Deposit held by a Funded LC Issuing Bank shall be the property of such Funded LC Issuing Bank as the consideration paid by each such Funded Letter of Credit Participant for such purchase price as it relates to any Funded Letters of Credit issued or deemed issued by such Funded LC Issuing Bank. Each Funded Letter of Credit Participant shall pay to Administrative Agent in full on the Effective Date an amount equal to such Funded Letter of Credit Participant’s Funded Letter of Credit Commitment, and Administrative Agent shall immediately transfer and allocate such New Credit Linked Deposits to each Funded LC Issuing Bank in the amounts set forth on Schedule 2.4(f). Each Funded Letter of Credit Participant hereby absolutely and unconditionally agrees that if a Funded LC Issuing Bank makes a disbursement in respect of any Funded Letter of Credit issued by such Funded LC Issuing Bank which is not reimbursed by Company on the date due pursuant to Section 2.4(e), or is required to refund any reimbursement payment in respect of any Funded Letter of Credit issued or deemed issued by such Funded LC Issuing Bank to Company for any reason, the amount of such disbursement shall be satisfied, ratably as among the Funded Letter of Credit Participants in accordance with their Pro Rata 53 --------------------------------------------------------------------------------   Share (with the Administrative Agent having the responsibility to determine and keep record of the Pro Rata Shares of the Funded Letter of Credit Participants for this purpose and all other purposes hereunder) of the Total Credit Linked Deposit from the New Credit Linked Deposit on deposit with the Funded LC Issuing Bank. Without limiting the foregoing, each Funded Letter of Credit Participant irrevocably authorizes the Administrative Agent and each Funded LC Issuing Bank, as applicable, to apply amounts of the New Credit Linked Deposits as provided in this paragraph.           (i) [Intentionally left blank].           (j) Credit Linked Deposit Accounts.           (i) Subject to the terms and conditions hereof, (i) each Continuing Funded Letter of Credit Participant severally agrees that the Existing Credit Linked Deposit made by such Continuing Funded Letter of Credit Participant under the Existing Credit Agreement shall remain outstanding on and after the Effective Date as a “New Credit Linked Deposit” made pursuant to this Agreement in the same pro rata amount of such Continuing Funded Letter of Credit Participant’s pro rata share of the Existing Credit Linked Deposits and such Existing Credit Linked Deposits shall on and after the Effective Date have all of the rights and benefits of New Credit Linked Deposits as set forth in this Agreement and the other Credit Documents and (ii) each Funded Letter of Credit Participant (other than a Continuing Funded Letter of Credit Participant holding only Existing Credit Linked Deposits) severally agrees to make, on the Effective Date, a payment to Administrative Agent in an amount equal to such Funded Letter of Credit Participant’s Funded Letter of Credit Commitment (or, in the case of any such Funded Letter of Credit Participant holding Existing Credit Linked Deposits, an additional New Credit Linked Deposit in an amount equal to the excess of (A) such Lender’s Funded Letter of Credit Commitment over (B) the principal amount of its Existing Credit Linked Deposit) and Administrative Agent shall use such payments to establish a New Credit Linked Deposit Account at each Funded LC Issuing Bank and deposit with each such Funded LC Issuing Bank an amount as set forth on Schedule 2.4(f). The New Credit Linked Deposits paid to a Funded LC Issuing Bank shall be held by such Funded LC Issuing Bank in its Credit Linked Deposit Account, and no party other than the Funded LC Issuing Bank shall have a right of withdrawal from the Credit Linked Deposit Account, or any other right, power or interest in or with respect to the New Credit Linked Deposits, except as expressly set forth in Sections 2.4(f), (h), (j) and Section 2.13(b)(iii). Notwithstanding any provision in this Agreement to the contrary, the sole funding obligation of each Funded Letter of Credit Participant in respect of its Funded Letter of Credit Commitment and Funded Letter of Credit Participation shall be satisfied in full upon the payment of its purchase price on the Effective Date.           (ii) Each of Company, Administrative Agent, each Funded LC Issuing Bank and each Funded Letter of Credit Participant hereby acknowledges and agrees that each Funded Letter of Credit Participant is making its payment (or deemed payment) on the Effective Date pursuant to Section 2.4(j)(i) to be paid into the Credit Linked Deposit Account for application in the manner contemplated by Sections 2.4(f) and (h). Regarding the New Credit Linked Deposits to be held by JPMC in its capacity as a Funded LC Issuing Bank, JPMC has agreed (except during periods when such New Credit Linked Deposits, or funds 54 --------------------------------------------------------------------------------   applied by or on behalf of JPMC against such New Credit Linked Deposits, are used to cover Unpaid Drawings under Funded Letters of Credit) to direct the investment of the New Credit Linked Deposits as follows: (1) Company shall advise such Funded LC Issuing Bank (in writing copied at the same time to the Administrative Agent) at least two Business Days prior to the commencement of each Interest Period of the first and last Business Day of such Interest Period (it being understood, without the requirement for any further notification, that the first Business Day of the first Interest Period shall be the Closing Date; (2) on the first Business Day of each Interest Period, JPMC in its capacity as Funded LC Issuing Bank shall invest the New Credit Linked Deposits held by it in a JPMC Certificate of Deposit having a rate that is identified to the Administrative Agent by JPMC in its capacity as Funded LC Issuing Bank on such Business Day for the period commencing on the first day of such Interest Period and ending on the last day of such Interest Period and (3) on the last Business Day of such Interest Period JPMC in its capacity as a Funded LC Issuing Bank shall disburse to the Administrative Agent (for further distribution to the Funded Letter of Credit Participants in accordance with their Pro Rata Shares) the amount of the earnings for such Interest Period on the New Credit Linked Deposits held by it at the rate identified pursuant to the foregoing clause (2) (the “JPMC Relevant Return”). Regarding the New Credit Linked Deposits to be held by UBS in its capacity as a Funded LC Issuing Bank, UBS has agreed (except during periods when such New Credit Linked Deposits, or funds applied by or on behalf of UBS against such New Credit Linked Deposits, are used to cover Unpaid Drawings under Funded Letters of Credit) to direct the investment of the New Credit Linked Deposits as follows: (1) Company shall advise such Funded LC Issuing Bank (in writing copied at the same time to the Administrative Agent) at least two Business Days prior to the commencement of each Interest Period of the first and last Business Day of such Interest Period (it being understood, without the requirement for any further notification, that the first Business Day of such Interest Period shall be the Closing Date); (2) on the first Business Day of each Interest Period, UBS in its capacity as Funded LC Issuing Bank shall invest the New Credit Linked Deposits held by it in a UBS time deposit (or in respect of the first Interest Period from the Closing Date to June 27th in overnight time deposits) having a rate that is identified to the Administrative Agent by UBS in its capacity as Funded LC Issuing Bank on such Business Day for the period commencing or the first day of such Interest Period and ending on the last day of such Interest Period and (3) on the last Business Day of each Interest Period UBS in its capacity as a Funded LC Issuing Bank shall disburse to the Administrative Agent (for further distribution to the Funded Letter of Credit Participants in accordance with their Pro Rata Shares) the amount of the earnings for such Interest Period on the New Credit Linked Deposits held by it (the “UBS Relevant Return” and together with the JPMC Relevant Return, the “Relevant Return”). In addition to the foregoing payments by or on behalf of Administrative Agent, Company agrees to make payments to each Funded Letter of Credit Participant in accordance with its Pro Rata Share when payments of the Relevant Return are made as above on the last day of each Interest Period (and made together with such payments) in an amount equal to the amount by which the Relevant Return for such Interest Period is less than the amount which would have been earned on the total aggregate New Credit Linked Deposits held by all Funded LC Issuing Banks for such Interest Period had such New Credit Linked Deposits earned a return equal to the Adjusted Eurodollar Rate for such Interest Period (such Adjusted Eurodollar Rate shall be calculated as if in respect of a Eurodollar Rate Loan hereunder for such Interest Period). The Adjusted 55 --------------------------------------------------------------------------------   Eurodollar Rate for the New Credit Linked Deposits that have been converted from Existing Credit Linked Deposits pursuant to Section 2.4(j)(i) on the Effective Date shall be determined in the same manner and with the same Interest Periods as the Existing Credit Linked Deposits (for the avoidance of doubt, only the Applicable Margin component of the interest rate shall change on the Effective Date). Each Funded Letter of Credit Participant (whether a Continuing Funded Letter of Credit Participant or a new Funded Letter of Credit Participant) shall be allocated its pro rata share of the New Credit Linked Deposits set at the corresponding Adjusted Eurodollar Rate and Interest Periods as the Existing Credit Linked Deposits.           (iii) Company shall have no right, title or interest in or to the New Credit Linked Deposits and no obligations with respect thereto (except for the reimbursement obligations in respect of Funded Letters of Credit provided in Sections 2.4(f) and (h)), it being acknowledged and agreed by the parties hereto that the making of the New Credit Linked Deposits by the Funded Letter of Credit Participants, the payments to the Funded Letter of Credit Participants contemplated in Section 2.4(j)(ii), the provisions of this Section 2.4(j)(iii) and the application of the New Credit Linked Deposits in the manner contemplated by Sections 2.4(f) and (h) constitute agreements among Administrative Agent, the Funded LC Issuing Banks and the Funded Letter of Credit Participants with respect to payments of each Funded Letter of Credit Participant in respect of its Funded Letter of Credit Participation and do not constitute any loan or extension of credit to Company.           (iv) Following the occurrence of any of the events identified in clauses (i), (ii) or (iii) of the definition of Funded Letter of Credit Termination Date (but solely in the case of clause (ii), only to the extent at such time Company shall have paid all outstanding obligations then due and payable under this Agreement), and subject to Company’s cash collateralization to the extent of a Funded LC Issuing Bank’s outstanding Funded Letters of Credit, in an amount (but in no event greater than 105% of the aggregate undrawn face amount) and manner reasonably satisfactory to the Collateral Agent and the Funded LC Issuing Bank that issued such Funded Letters of Credit (which cash collateralization is hereby expressly required of Company on any Funded Letter of Credit Termination Date), each Funded LC Issuing Bank shall repurchase the Funded Letter of Credit Participation Interests from the Funded Letter Credit Participants with the remaining New Credit Linked Deposits held by it at such time according to each Funded Letter of Credit Participant’s Pro Rata Share (whereupon such remaining amount that has been so paid shall no longer be considered the property of the Funded LC Issuing Banks).           (k) Obligations Absolute. The obligation of Company to reimburse each Issuing Bank for drawings honored under the Letters of Credit issued by it and to repay any Revolving Loans made by Lenders pursuant to Section 2.4(e) and the obligations of Lenders under Sections 2.4(f) and (h) shall be unconditional and irrevocable and shall be paid strictly in accordance with the terms hereof under all circumstances including any of the following circumstances: (i) any lack of validity or enforceability of any Letter of Credit; (ii) the existence of any claim, set-off, defense or other right which Company or any Lender may have at any time against a beneficiary or any transferee of any Letter of Credit (or any Persons for whom any such transferee may be acting), such Issuing Bank, Lender or any other Person or, in the case of a Lender, against Company, whether in connection herewith, the transactions contemplated herein or any unrelated 56 --------------------------------------------------------------------------------   transaction (including any underlying transaction between Company or one of its Subsidiaries and the beneficiary for which any Letter of Credit was procured); (iii) any draft or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) payment by such Issuing Bank under any Letter of Credit against presentation of a draft or other document which substantially complies with the terms of such Letter of Credit; (v) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of Company or any of its Subsidiaries; (v) any breach hereof or any other Credit Document by any party thereto; (vi) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing; or (vii) the fact that an Event of Default or a Default shall have occurred and be continuing; provided, in each case, that payment by an Issuing Bank under the applicable Letter of Credit shall not have constituted gross negligence or willful misconduct of such Issuing Bank under the circumstances in question.           (l) Indemnification. Without duplication of any obligation of Company under Section 10.2 or 10.3, in addition to amounts payable as provided herein, Company hereby agrees to protect, indemnify, pay and save harmless each Issuing Bank from and against any and all claims, demands, liabilities, damages, losses, reasonable costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel) which such Issuing Bank may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing Bank, other than as a result of (1) the gross negligence or willful misconduct of, such Issuing Bank under the circumstances in question or (2) the wrongful dishonor by such Issuing Bank of a proper demand for payment made under any Letter of Credit issued by it, or (ii) the failure of such Issuing Bank to honor a drawing under any such Letter of Credit as a result of any Governmental Act.           (m) Existing Letters of Credit.1 On the Effective Date, (i) each Existing Funded Letter of Credit, to the extent outstanding, shall automatically and without further action by the parties thereto be deemed converted to Funded Letters of Credit issued pursuant to this Section 2.4 for the account of Company and subject to the provisions hereof, and for this purpose the fees payable with respect to such Funded Letters of Credit issued hereunder pursuant to Section 2.11(b)(i) and 2.11(c) shall be payable (in substitution for any fees set forth in the applicable letter of credit reimbursement agreements or applications relating to such letters of credit, except to the extent that such fees are of the type payable hereunder pursuant to Section 2.11(c)(iii), in which event such fees shall be payable without duplication) as if such Funded Letters of Credit had been issued on the Effective Date and (ii) each of the Issuing Banks listed on Schedule 1.1(c) with respect to its respective Existing Funded Letter of Credit shall be deemed to be a Funded LC Issuing Bank hereunder with respect to its Funded Letters of Credit, but UBS shall not be an Issuing Bank except as to the Detroit Letters of Credit. UBS and Company agree for the sake of clarity that the references to the “Credit Agreement” in the Detroit Letters of Credit are intended to mean the Credit Agreement under which the Detroit Letters of Credit are deemed issued (as such Credit Agreement may be amended or replaced from time to time).   1   Note: Information regarding LCs outstanding on the proposed Effective Date to be provided. 57 --------------------------------------------------------------------------------             (n) Upon the prior written consent of JPMC and at least 3 Business Days’ prior written notice to Administrative Agent and UBS, Company may request the transfer of all or a portion of the New Credit Linked Deposit held by UBS at such time from UBS to JPMC (each such institution in its capacity as a Funded LC Issuing Bank) on the last day of any Interest Period relating to the New Credit Linked Deposits (the date of such transfer being a “Transfer Date”) in an amount not to exceed, at such time, the difference between (i) the New Credit Linked Deposits held by UBS at such time minus (ii) the Funded Letters of Credit Outstanding at such time in respect of Funded Letters of Credit issued by UBS (or, if greater, the amount to which such Funded Letters of Credit by their terms permit the Stated Amount thereof to be increased to) (such difference being the “UBS Excess Transfer Amount”). No later than 12:00 p.m. (New York City time) on such Transfer Date, UBS shall transfer to such Credit Linked Deposit Account as JPMC may designate, an amount equal to the UBS Excess Transfer Amount in immediately available funds. Upon such transfer (i) the New Credit Linked Deposit held by JPMC, and (without further action) the amount corresponding to JPMC on Schedule 1.1(c), shall each be increased in an amount equal to the UBS Excess Transfer Amount and (ii) the New Credit Linked Deposit held by UBS, and (without further action) the amount corresponding to UBS on Schedule 1.1(c), shall be reduced by an amount equal to the UBS Excess Transfer Amount.      2.5. Pro Rata Shares; Availability of Funds.           (a) Pro Rata Shares. All Loans and New Credit Linked Deposits shall be made, and all participations purchased, by Lenders simultaneously and proportionately to their respective Pro Rata Shares, it being understood that no Lender shall be responsible for any default by any other Lender in such other Lender’s obligation to make a Loan requested hereunder or purchase a participation required hereby nor shall any Term Loan Commitment, Funded Letter of Credit Commitment or any Revolving Commitment of any Lender be increased or decreased as a result of a default by any other Lender in such other Lender’s obligation to make a Loan or New Credit Linked Deposit requested hereunder or purchase a participation required hereby.           (b) Availability of Funds. Unless Administrative Agent shall have been notified by any Lender prior to the applicable Credit Date that such Lender does not intend to make available to Administrative Agent the amount of such Lender’s Loan requested on such Credit Date, Administrative Agent may assume that such Lender has made such amount available to Administrative Agent on such Credit Date and Administrative Agent may, in its sole discretion, but shall not be obligated to, make available to Company a corresponding amount on such Credit Date. If such corresponding amount is not in fact made available to Administrative Agent by such Lender, Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the customary rate set by Administrative Agent for the correction of errors among banks for three Business Days and thereafter at the Base Rate. If such Lender does not pay such corresponding amount forthwith upon Administrative Agent’s demand therefor, Administrative Agent shall promptly notify Company and Company shall immediately pay such corresponding amount to Administrative Agent together with interest thereon, for each day from such Credit Date until the date such amount is paid to Administrative Agent, at the rate payable hereunder for Base Rate Loans for 58 --------------------------------------------------------------------------------   such Class of Loans. Nothing in this Section 2.5(b) shall be deemed to relieve any Lender from its obligation to fulfill its Term Loan Commitments and Revolving Commitments hereunder or to prejudice any rights that Company may have against any Lender as a result of any default by such Lender hereunder.      2.6. Use of Proceeds. The proceeds of the Tranche C Term Loans shall be applied on the Effective Date by Company to (a) repay in full the Existing Term Loans that are not converting to Tranche C Term Loans on the Effective Date and (b) be deemed to repay in full the Existing Term Loans that are converting to Tranche C Term Loans as of the Effective Date that shall remain outstanding on and after the Effective Date as “Tranche C Term Loans” made pursuant to this Agreement. The proceeds of the Delayed Draw Term Loans shall be applied on the Delayed Draw Term Loan Credit Date by Company to prepay up to $140,000,000 in the aggregate of Second Lien Term Loans and any premium related thereto. The proceeds of the Revolving Loans and Swing Line Loans made after the Effective Date shall be applied by Company for working capital and general corporate purposes of Company and its Subsidiaries, including permitted Consolidated Capital Expenditures, Permitted Acquisitions and to (in an aggregate amount not to exceed $25,000,000) pay MSW Put-Related Costs. The proceeds of the Funded Letters of Credit and Revolving Letters of Credit shall be used by Company to support Company’s and its Subsidiaries’ obligations under the Projects and other Contractual Obligations of Company and its Subsidiaries and other general corporate purposes, but shall in no event be used to make or facilitate any Investment or Restricted Junior Payment not otherwise permitted hereunder. No portion of the proceeds of any Credit Extension shall be used in any manner that causes or might cause such Credit Extension or the application of such proceeds to violate Regulation U or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation thereof or to violate the Exchange Act.      2.7. Evidence of Debt; Register; Lenders’ Books and Records; Notes.           (a) Lenders’ Evidence of Debt. Each Lender shall maintain on its internal records an account or accounts evidencing the Obligations of Company to such Lender, including the amounts of the Loans and the New Credit Linked Deposits made by it and each repayment and prepayment in respect thereof. Any such recordation shall be conclusive and binding on Company, absent manifest error; provided, that the failure to make any such recordation, or any error in such recordation, shall not affect any Lender’s Revolving Commitments or Company’s Obligations in respect of any applicable Loans or New Credit Linked Deposits; and provided further, in the event of any inconsistency between the Register and any Lender’s records, the recordations in the Register shall govern.           (b) Register. Administrative Agent (or its agent or sub-agent appointed by it) shall maintain at the Principal Office a register for the recordation of the names and addresses of Lenders and the Revolving Commitments, the Delayed Draw Term Loan Commitments, the Loans and the New Credit Linked Deposits of each Lender from time to time (the “Register”). The Register, as in effect at the close of business on the preceding Business Day, shall be available for inspection by Company or any Lender at any reasonable time and from time to time upon reasonable prior notice. Administrative Agent shall record, or shall cause to be recorded, in the Register the Revolving Commitments, the Delayed Draw Term Loan Commitments, the Loans and the New Credit Linked Deposits in accordance with the provisions of Section 10.6, 59 --------------------------------------------------------------------------------   and each repayment or prepayment in respect of the principal amount of the Loans or the New Credit Linked Deposits, and any such recordation shall be conclusive and binding on Company and each Lender, absent manifest error; provided, that the failure to make any such recordation, or any error in such recordation, shall not affect any Lender’s Revolving Commitments or Delayed Draw Term Loan Commitments or Company’s Obligations in respect of any Loan or the New Credit Linked Deposits. The Administrative Agent shall correct any failures to record or errors in recording in the Register reasonably promptly after discovery of such failure or error. Company hereby designates GSCP to serve as Company’s agent solely for purposes of maintaining the Register as provided in this Section 2.7, and Company hereby agrees that, to the extent GSCP serves in such capacity, GSCP and its officers, directors, employees, agents, sub-agents and affiliates shall constitute “Indemnitees.” The Obligations are registered obligations and the right, title and interest of any Lender or Issuing Bank and/or its assignees in and to such Obligations shall be transferable only upon notation of such transfer in the Register. This Section 2.7(b) shall be construed so that the Obligations are at all times maintained in “registered form” within the meaning of sections 163(f), 871(h)(2) and 881(c)(2) of the Internal Revenue Code and any related Treasury Regulations.           (c) Notes. If so requested by any Lender by written notice to Company (with a copy to Administrative Agent) at least two Business Days prior to the Effective Date, or at any time thereafter, Company shall execute and deliver to such Lender (and/or, if applicable and if so specified in such notice, to any Person who is an assignee of such Lender pursuant to Section 10.6) on the Effective Date (or, if such notice is delivered after the Effective Date, promptly after Company’s receipt of such notice) a Note or Notes to evidence such Lender’s Tranche C Term Loan, Delayed Draw Term Loan, Revolving Loan or Swing Line Loan, as the case may be. Each Continuing Term Lender who has a Note evidencing its Existing Term Loan shall promptly deliver to Company such Note in exchange for a Term Loan Note evidencing its Tranche C Term Loan.      2.8. Interest on Loans.           (a) Except as otherwise set forth herein, each Class of Loan shall bear interest on the unpaid principal amount thereof from the date made through repayment (whether by acceleration or otherwise) thereof as follows:                (1) if a Base Rate Loan, at the Base Rate plus the Applicable Margin; or                (2) if a Eurodollar Rate Loan, at the Adjusted Eurodollar Rate plus the Applicable Margin.           (b) The basis for determining the rate of interest with respect to any Loan (except a Swing Line Loan which can be made and maintained as Base Rate Loans only), and the Interest Period with respect to any Eurodollar Rate Loan, shall be selected by Company and notified to Administrative Agent pursuant to the applicable Funding Notice or Conversion/Continuation Notice, as the case may be. The Base Rate and the Adjusted Eurodollar Rate for the Tranche C Term Loans of Continuing Term Lenders that have been converted from Existing Term Loans pursuant to Section 2.1(a)(i) on the Effective Date shall be determined in 60 --------------------------------------------------------------------------------   the same manner and with the same Interest Periods as the Existing Term Loans (for the avoidance of doubt, only the Applicable Margin component of the interest rate shall change on the Effective Date). Each Tranche C Term Loan Lender (whether a Continuing Lender or a new Lender having a Tranche C Term Loan Commitment) shall be allocated its pro rata share of Tranche C Term Loans set at the corresponding Base Rate and the Adjusted Eurodollar Rate and Interest Periods as the Existing Term Loans. Upon expiration of the applicable Interest Period for such Tranche C Term Loans existing on the Effective Date, each Eurodollar Rate Loan shall either be converted to a Base Rate Loan or continued as a Eurodollar Rate Loan at Company’s option pursuant to Section 2.9 hereof. If on any day a Loan is outstanding with respect to which a Funding Notice or Conversion/Continuation Notice has not been delivered to Administrative Agent in accordance with the terms hereof specifying the applicable basis for determining the rate of interest, then for that day such Loan shall be a Base Rate Loan.           (c) In connection with Eurodollar Rate Loans there shall be no more than eight (8) Interest Periods outstanding at any time. In the event Company fails to specify between a Base Rate Loan or a Eurodollar Rate Loan in the applicable Funding Notice or Conversion/Continuation Notice, such Loan (if outstanding as a Eurodollar Rate Loan) will be automatically converted into a Base Rate Loan on the last day of the then-current Interest Period for such Loan (or if outstanding as a Base Rate Loan will remain as, or (if not then outstanding) will be made as, a Base Rate Loan). In the event Company fails to specify an Interest Period for any Eurodollar Rate Loan in the applicable Funding Notice or Conversion/Continuation Notice, Company shall be deemed to have selected an Interest Period of one month. As soon as practicable after 10:00 a.m. (New York City time) on each Interest Rate Determination Date, Administrative Agent shall determine (which determination shall, absent manifest error, be final, conclusive and binding upon all parties) the interest rate that shall apply to the Eurodollar Rate Loans for which an interest rate is then being determined for the applicable Interest Period and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to Company and each Lender.           (d) Interest payable pursuant to Section 2.8(a) shall be computed (i) in the case of Base Rate Loans on the basis of a 365-day or 366-day year, as the case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of a 360-day year, in each case for the actual number of days elapsed in the period during which it accrues. In computing interest on any Loan, the date of the making of such Loan or the first day of an Interest Period applicable to such Loan or, with respect to a Tranche C Term Loan, the last Interest Payment Date with respect to such Tranche C Term Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be included, and the date of payment of such Loan or the expiration date of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded; provided, if a Loan is repaid on the same day on which it is made, one day’s interest shall be paid on that Loan.           (e) Except as otherwise set forth herein, interest on each Loan (i) shall accrue on a daily basis and shall be payable in arrears on each Interest Payment Date with respect to interest accrued on and to each such payment date; (ii) shall accrue on a daily basis and shall be payable in arrears upon any prepayment of that Loan, whether voluntary or mandatory, to the 61 --------------------------------------------------------------------------------   extent accrued on the amount being prepaid; and (iii) shall accrue on a daily basis and shall be payable in arrears at maturity of the Loans, including final maturity of the Loans; provided, however, with respect to any voluntary prepayment of a Base Rate Loan, accrued interest shall instead be payable on the applicable Interest Payment Date.           (f) Company agrees to pay to each Revolving Issuing Bank, with respect to drawings honored under any Revolving Letter of Credit issued by such Revolving Issuing Bank, interest on the amount paid by such Revolving Issuing Bank in respect of each such honored drawing from the date such drawing is honored to but excluding the date such amount is reimbursed by or on behalf of Company (including any such reimbursement out of the proceeds of any Revolving Loans), at a rate equal to (i) for the period from the date such drawing is honored to but excluding the applicable Reimbursement Date, the rate of interest otherwise payable hereunder with respect to Revolving Loans that are Base Rate Loans, and (ii) thereafter, a rate which is 2% per annum in excess of the rate of interest otherwise payable hereunder with respect to Revolving Loans that are Base Rate Loans.           (g) Company agrees to pay to such Funded LC Issuing Bank, with respect to drawings honored under any Funded Letter of Credit issued by such Funded LC Issuing Bank, interest on the amount paid by such Funded LC Issuing Bank in respect of each such honored drawing from the date such drawing is honored to but excluding the date such amount is reimbursed by or on behalf of Company or from New Credit Linked Deposits at a rate equal to the rate of interest otherwise payable hereunder with respect to Term Loans that are Base Rate Loans.           (h) Interest payable pursuant to Sections 2.8(f) or (g) shall be computed on the basis of a 365/366-day year for the actual number of days elapsed in the period during which it accrues, and shall be payable on demand or, if no demand is made, on the date on which the related drawing under a Letter of Credit is reimbursed in full. Promptly upon receipt by an Issuing Bank of any payment of interest pursuant to Section 2.8(f) or (g), such Issuing Bank shall distribute to each Letter of Credit Participant, out of the interest received by such Issuing Bank in respect of the period from the date such drawing is honored to but excluding the date on which such Issuing Bank is reimbursed for the amount of such drawing (including any such reimbursement out of the proceeds of any Revolving Loans), the amount that such Letter of Credit Participant would have been entitled to receive in respect of the letter of credit fee that would have been payable in respect of such Letter of Credit for such period if no drawing had been honored under such Letter of Credit. In the event an Issuing Bank shall have been reimbursed by Letter of Credit Participants for all or any portion of such honored drawing, such Issuing Bank shall distribute to each Letter of Credit Participant which has paid all amounts payable by it under Section 2.4(h) with respect to such honored drawing such Letter of Credit Participant’s Pro Rata Share of any interest received by such Issuing Bank in respect of that portion of such honored drawing so reimbursed by Letter of Credit Participants for the period from the date on which such Issuing Bank was so reimbursed by Letter of Credit Participants to but excluding the date on which such portion of such honored drawing is reimbursed by Company. 62 --------------------------------------------------------------------------------        2.9. Conversion/Continuation.           (a) Subject to Section 2.18 and (with respect to continuations of, or conversions into, Eurodollar Rate Loans) so long as no Default or Event of Default shall have occurred and then be continuing, Company shall have the option:           (i) to convert at any time all or any part of any Term Loan or Revolving Loan equal to $500,000 and integral multiples of $250,000 in excess of that amount from one Type of Loan to another Type of Loan; provided, a Eurodollar Rate Loan may only be converted on the expiration of the Interest Period applicable to such Eurodollar Rate Loan unless Company shall pay all amounts due under Section 2.18 in connection with any such conversion; or           (ii) upon the expiration of any Interest Period applicable to any Eurodollar Rate Loan, to continue all or any portion of such Loan equal to $500,000 and integral multiples of $250,000 in excess of that amount as a Eurodollar Rate Loan.           (b) Company shall deliver a Conversion/Continuation Notice to Administrative Agent no later than 10:00 a.m. (New York City time) at least one Business Day in advance of the proposed conversion date (in the case of a conversion to a Base Rate Loan) and at least three Business Days in advance of the proposed conversion/continuation date (in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan). Except as otherwise provided herein, a Conversion/Continuation Notice for conversion to, or continuation of, any Eurodollar Rate Loans (or telephonic notice in lieu thereof) shall be irrevocable on and after the related Interest Rate Determination Date, and Company shall be bound to effect a conversion or continuation in accordance therewith.      2.10. Default Interest. The principal amount of all Loans not paid when due and, to the extent permitted by applicable law, any interest payments on the Loans or any fees or other amounts owed hereunder but not paid when due, shall thereafter bear interest (including post-petition interest in any proceeding under the Bankruptcy Code or other applicable bankruptcy laws) payable on demand at a rate that is 2% per annum in excess of the highest interest rate otherwise payable hereunder with respect to the applicable Loans (or, in the case of any such fees and other amounts, at a rate which is 2% per annum in excess of the highest interest rate otherwise then payable hereunder for Base Rate Loans); provided, in the case of Eurodollar Rate Loans, upon the expiration of the Interest Period in effect at the time any such increase in interest rate is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans and shall thereafter bear interest payable upon demand at a rate which is 2% per annum in excess of the highest interest rate otherwise then payable hereunder for Base Rate Loans. Payment or acceptance of the increased rates of interest provided for in this Section 2.10 is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of Administrative Agent or any Lender. 63 --------------------------------------------------------------------------------        2.11. Fees.           (a) Company agrees to pay to Administrative Agent for the ratable benefit of each Lender having Revolving Exposure:           (i) commitment fees equal to (1) the average of the daily difference between (a) the Revolving Commitments, and (b) the Total Utilization of Revolving Commitments (disregarding item (ii) of the definition thereof), times (2) 0.50% per annum; and           (ii) letter of credit fees equal to (1) the Applicable Margin for Revolving Loans that are Eurodollar Rate Loans, times (2) the average aggregate daily maximum amount available to be drawn under all such Revolving Letters of Credit (regardless of whether any conditions for drawing could then be met and determined as of the close of business on any date of determination).           (b) Company agrees to pay to Administrative Agent for the ratable benefit of each Lender having Funded Letter of Credit Exposure, a fee in respect of such Lender’s Pro Rata Share of the New Credit Linked Deposits (the “Funded Letter of Credit Fee”), for the period from and including the Effective Date to but excluding the date on which final payment made to such Lender pursuant to Section 2.4(j)(iv), computed at the per annum rate for each date equal to (x) the Applicable Margin for New Credit Linked Deposits then in effect for Funded Letters of Credit times (y) the average daily amount of such New Credit Linked Deposit.           (c) Company agrees to pay directly to each Issuing Bank, for its own account, the following fees:           (i) a fronting fee equal to 0.125%, per annum, times the average aggregate daily maximum amount available to be drawn under all Revolving Letters of Credit issued by such Issuing Bank (determined as of the close of business on any date of determination);           (ii) a fronting fee equal to 0.125%, per annum, times the average aggregate daily maximum amount available to be drawn under all Funded Letters of Credit issued by such Issuing Bank (determined as of the close of business on any date of determination); and           (iii) such documentary and processing charges for any issuance, amendment, transfer or payment of a Letter of Credit as are in accordance with such Issuing Bank’s standard schedule for such charges and as in effect (and delivered to Company) at the time of such issuance, amendment, transfer or payment, as the case may be.           (d) Company agrees to pay to Administrative Agent for the ratable benefit of each Lender having a Delayed Draw Term Loan Commitment commitment fees equal to the Delayed Draw Term Loan Commitment times 0.50% per annum; and           (e) All fees referred to in Sections 2.11(a), (b) and (c) shall be paid to Administrative Agent at its Principal Office and upon receipt, Administrative Agent shall promptly distribute to each Lender its Pro Rata Share thereof. 64 --------------------------------------------------------------------------------             (f) All fees referred to in Sections 2.11(a), (b), (c) and (d) shall be calculated on the basis of a 360-day year and the actual number of days elapsed and shall be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year during the Revolving Commitment Period, the Funded Letter of Credit Commitment Period or the Delayed Draw Term Loan Commitment Period, as applicable, commencing on the first such date to occur after the Effective Date, and on the Revolving Commitment Termination Date, the Funded Letter of Credit Termination Date or Delayed Draw Term Loan Commitment Termination Date, as applicable, and with respect to Section 2.11(b) on the date of return to any Funded Letter of Credit Participant of any of such Funded Letter of Credit Participant’s New Credit Linked Deposits in respect of the amount so returned, as applicable.           (g) In addition to any of the foregoing fees, Company agrees to pay to Agents such other fees in the amounts and at the times separately agreed upon.      2.12. Scheduled Payments. The principal amounts of the Term Loans (other than New Term Loans, the repayment of which shall be governed by the proviso below) shall be repaid in consecutive quarterly installments (each, an “Installment”) in the aggregate amounts set forth below on the last day of each Fiscal Quarter (each, an “Installment Date”), commencing September 30, 2006:                             Installments of     Installments of       Tranche C     Delayed Draw Installment Dates          Term Loans     Term Loans September 30, 2006     $ 573,281.25       $ 350,000.00   December 31, 2006     $ 573,281.25       $ 350,000.00   March 31, 2007     $ 573,281.25       $ 350,000.00   June 30, 2007     $ 573,281.25       $ 350,000.00   September 30, 2007     $ 573,281.25       $ 350,000.00   December 31, 2007     $ 573,281.25       $ 350,000.00   March 31, 2008     $ 573,281.25       $ 350,000.00   June 30, 2008     $ 573,281.25       $ 350,000.00   September 30, 2008     $ 573,281.25       $ 350,000.00   December 31, 2008     $ 573,281.25       $ 350,000.00   March 31, 2009     $ 573,281.25       $ 350,000.00   June 30, 2009     $ 573,281.25       $ 350,000.00   September 30, 2009     $ 573,281.25       $ 350,000.00   December 31, 2009     $ 573,281.25       $ 350,000.00   March 31, 2010     $ 573,281.25       $ 350,000.00   June 30, 2010     $ 573,281.25       $ 350,000.00   September 30, 2010     $ 573,281.25       $ 350,000.00   December 31, 2010     $ 573,281.25       $ 350,000.00   March 31, 2011     $ 573,281.25       $ 350,000.00   June 30, 2011     $ 573,281.25       $ 350,000.00   65 --------------------------------------------------------------------------------                             Installments of     Installments of       Tranche C   Delayed Draw Installment Dates        Term Loans   Term Loans September 30, 2011     $ 54,461,718.71     $ 33,250,000.00   December 31, 2011     $ 54,461,718.71     $ 33,250,000.00   March 31, 2012     $ 54,461,718.71     $ 33,250,000.00   June 30, 2012     $ 54,461,718.71     $ 33,250,000.00   ;provided, that in the event any New Term Loans are deemed made, such New Term Loans shall be repaid on each Installment Date occurring on or after the date on which such New Term Loans are deemed made pursuant to Section 2.4(f) in an amount equal to (i) the aggregate principal amount of such New Term Loans, times (ii) the ratio (expressed as a percentage) of (y) the amount of all other Term Loans being repaid on such date and (z) the total aggregate principal amount of all other Term Loans outstanding on such deemed date of making of such New Term Loans. Notwithstanding the foregoing, (x) such Installments shall be reduced in connection with any voluntary or mandatory prepayments of the Term Loan in accordance with Sections 2.13, 2.14 and 2.15, as applicable; and (y) and the Term Loan, together with all other amounts owed hereunder with respect thereto, shall, in any event, be paid in full no later than the Term Loan Maturity Date.      2.13. Voluntary Prepayments/Commitment Reductions.           (a) Voluntary Prepayments.           (i) Any time and from time to time:           (1) with respect to Base Rate Loans, Company may prepay any such Loans on any Business Day in whole or in part, in an aggregate minimum amount of $500,000 and integral multiples of $250,000 in excess of that amount;           (2) with respect to Eurodollar Rate Loans, Company may prepay any such Loans on any Business Day in whole or in part in an aggregate minimum amount of $500,000 and integral multiples of $250,000 in excess of that amount; and           (3) with respect to Swing Line Loans, Company may prepay any such Loans on any Business Day in whole or in part in an aggregate minimum amount of $500,000, and in integral multiples of $250,000 in excess of that amount.           (ii) All such prepayments shall be made:           (1) upon not less than one Business Day’s prior written or telephonic notice in the case of Base Rate Loans; 66 --------------------------------------------------------------------------------             (2) upon not less than three Business Days’ prior written or telephonic notice in the case of Eurodollar Rate Loans; and           (3) upon written or telephonic notice on the date of prepayment, in the case of Swing Line Loans; in each case given to Administrative Agent or Swing Line Lender, as the case may be, by 12:00 p.m. (New York City time) on the date required and, if given by telephone, promptly confirmed in writing to Administrative Agent (and Administrative Agent will promptly transmit such telephonic or original notice for Term Loans or Revolving Loans, as the case may be, by telefacsimile or telephone to each Lender) or Swing Line Lender, as the case may be. Upon the giving of any such notice, the principal amount of the Loans specified in such notice shall become due and payable on the prepayment date specified therein. Any such voluntary prepayment shall be applied as specified in Section 2.15(a).           (b) Voluntary Commitment Reductions.           (i) Company may, upon not less than one Business Day’s prior written or telephonic notice promptly confirmed in writing to Administrative Agent (which original written or telephonic notice Administrative Agent will promptly transmit by telefacsimile or telephone to each applicable Lender), at any time and from time to time terminate in whole or permanently reduce in part, without premium or penalty, the Delayed Draw Term Loan Commitments and at any time from time to time terminate in whole or permanently reduce in part, without premium or penalty, the Revolving Commitments in an amount up to the amount by which the Revolving Commitments exceed the Total Utilization of Revolving Commitments at the time of such proposed termination or reduction; provided, any such partial reduction of the Delayed Draw Term Loan Commitments or the Revolving Commitments shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $1,000,000 in excess of that amount.           (ii) Company’s notice to Administrative Agent shall designate the date (which shall be a Business Day) of such termination or reduction and the amount of any partial reduction, and such termination or reduction of the Delayed Draw Term Loan Commitments or the Revolving Commitments shall be effective on the date specified in Company’s notice and shall reduce the Revolving Commitment or Delayed Draw Term Loan Commitments, as applicable, of each Lender proportionately to its Pro Rata Share thereof.           (iii) Upon at least one Business Day’s prior written notice (or telephonic notice promptly confirmed in writing) to Administrative Agent at Administrative Agent’s Principal Office (which notice Administrative Agent shall promptly transmit to each of the Funded LC Issuing Banks and each of the Lenders), Company shall have the right, without premium or penalty, on any day, permanently to reduce the New Credit Linked Deposits in whole or in part, provided that (i) any partial reduction pursuant to this Section 2.13(b)(iii) shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $1,000,000 in excess of that amount, and shall be allocated among the New Credit Linked Deposits held by the Funded LC Issuing Banks on a pro rata basis and (ii) after giving effect to such 67 --------------------------------------------------------------------------------   reduction and to any cancellation or cash collateralization of Funded Letters of Credit made on the date thereof in accordance with this Agreement, the aggregate amount of the Lenders’ Funded Letter of Credit Exposures (after giving effect to any required increase in the Stated Amount of any Funded Letters of Credit) shall not exceed the Total Credit Linked Deposit. In the event the New Credit Linked Deposits shall be reduced as provided in the immediately preceding sentence, each Funded LC Issuing Bank shall repurchase the Funded LC Participation Interests in respect of such reduced New Credit Linked Deposits held by the Funded Letter of Credit Participants with the New Credit Linked Deposits held by such Funded LC Issuing Bank in an amount that corresponds to the portion of such reduction allocable to such Funded LC Issuing Bank (such repurchase price to be deposited by such Funded LC Issuing Bank with Administrative Agent) and Administrative Agent shall repay such amount to the Funded Letter of Credit Participants ratably in accordance with their Pro Rata Shares of the Total Credit Linked Deposit (as determined immediately prior to such reduction).      2.14. Mandatory Prepayments/Commitment Reductions.           (a) Asset Sales. No later than the fifth Business Day following the date of receipt by Company or any of its Subsidiaries of any Net Asset Sale Proceeds (or, in the event such Net Asset Sale Proceeds are subject to distribution limitations contained in the ARC Indenture, any ARC Refinancing Indenture, any New ARC Indenture, either MSW Indenture, any MSW Refinancing Indenture, any New MSW Indenture or any Project document or any instrument or agreement governing the terms of any permitted refinancing thereof, no later than the fifth Business Day after the last of such distribution limitations (as the same relates to such Net Asset Sale Proceeds) expires), Company shall prepay the Loans and/or the Revolving Commitments shall be permanently reduced as set forth in Section 2.15(b) in an aggregate amount equal to 100% of such Net Asset Sale Proceeds; provided, (i) so long as no Default or Event of Default shall have occurred and be continuing on the date of the related Asset Sale, and (ii) to the extent that aggregate of such Net Asset Sale Proceeds from the Closing Date through the applicable date of determination do not exceed $5,000,000 in any Fiscal Year or $10,000,000 in the aggregate since the Closing Date (excluding, but only for the purposes of calculating such cap and not the reinvestment provision itself, Net Asset Sale Proceeds from the sale or other disposition of those assets identified on Schedule 6.9-A), Company shall have the option, directly or through one or more of its Subsidiaries, to invest such Net Asset Sale Proceeds within three hundred sixty days of receipt thereof in long-term productive assets of the general type used in the business of Company and its Subsidiaries; provided further, pending any such investment all such Net Asset Sale Proceeds shall be applied to prepay Revolving Loans to the extent outstanding (without a reduction in Revolving Commitments).           (b) Insurance/Condemnation Proceeds. No later than the fifth Business Day following the date of receipt by Company or any of its Subsidiaries, or Collateral Agent or Administrative Agent as loss payee, of any Net Insurance/Condemnation Proceeds (or, in the event such Net Insurance/Condemnation Proceeds are subject to distribution limitations contained in the ARC Indenture, any ARC Refinancing Indenture, New ARC Indenture, either MSW Indenture, any MSW Refinancing Indenture and New MSW Indenture or any Project document or any instrument or agreement governing the terms of any permitted refinancing thereof, no later than the fifth Business Day after the last of such distribution limitations (as the 68 --------------------------------------------------------------------------------   same relates to such Net Insurance/Condemnation Proceeds) expires), Company shall prepay the Loans and/or the Revolving Commitments shall be permanently reduced as set forth in Section 2.15(b) in an aggregate amount equal to such Net Insurance/Condemnation Proceeds; provided, so long as no Default or Event of Default shall have occurred and be continuing on the date of such receipt, Company shall have the option, directly or through one or more of its Subsidiaries to invest or commit to reinvest such Net Insurance/Condemnation Proceeds within three hundred sixty days of receipt thereof in long term productive assets of the general type used in the business of Company and its Subsidiaries, which investment may include the repair, restoration or replacement of the applicable assets thereof (or to reimburse Company and its Subsidiaries for costs incurred in respect of such loss); provided further, pending any such investment all such Net Insurance/Condemnation Proceeds, as the case may be, shall be applied to prepay Revolving Loans to the extent outstanding (without a reduction in Revolving Commitments).           (c) Issuance of Equity Securities. On the fifth Business Day following date of receipt by Company of any Cash proceeds from a capital contribution to, or the issuance of any Capital Stock of, Company or any of its Subsidiaries (other than (i) the Rights Offering and any equity contribution or investment made by Holding in Company with the proceeds thereof, (ii) the Put-Related Equity Offering and any equity contribution or investment made by Holding in Company with the proceeds thereof, (iii) an equity contribution from Holding to Company to occur within 120 days of the Closing Date in an aggregate amount not to exceed $25,000,000, the proceeds of which are on-lent pursuant to Section 6.1(e) or invested pursuant Section 6.7(n)(iii) to pay MSW Put-Related Costs, (iv) proceeds received by a Subsidiary of Company from Company or another Subsidiary of Company, (v) pursuant to any employee and/or director stock or stock option compensation plan and (vi) cash equity contributions from Holding to Company, the proceeds of which are used by Company or its Subsidiaries to fund Permitted Acquisitions (such contribution being an “Acquisition Holding Contribution”)), Company shall prepay the Loans and/or the Revolving Commitments shall be permanently reduced as set forth in Section 2.15(b) in an aggregate amount equal to 50% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses provided, that if any such commissions, costs or expenses have not been incurred or invoiced at such time, Company may deduct its good faith estimate thereof to extent subsequently paid; provided, further, that the amount of such proceeds required to be prepaid shall be reduced in an amount equal to the amount of proceeds Subsidiaries of Company are legally bound, or required, pursuant to the ARC Indenture, the ARC Refinancing Indenture, any New ARC Indenture, the MSW Indentures, MSW Refinancing Indenture, MSW Refinancing Notes, any New MSW Indenture or any refinancings thereof to use for prepayments thereunder.           (d) Issuance of Debt. No later than the fifth Business Day following the date of receipt by Company or any of its Subsidiaries of any Cash proceeds from the incurrence of any Indebtedness for borrowed money of Company or any of its Subsidiaries (other than with respect to any Indebtedness permitted to be incurred pursuant to Section 6.1), Company shall prepay the Loans and/or the Revolving Commitments shall be permanently reduced as set forth in Section 2.15(b) in an aggregate amount equal to 100% of such proceeds, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses; provided, that if any such commissions, costs or expenses 69 --------------------------------------------------------------------------------   have not been incurred or invoiced at such time, Company may deduct its good faith estimate thereof to the extent subsequently paid.           (e) Excess Cash Flow. In the event that there shall be Excess Cash Flow for any Fiscal Year (commencing with Fiscal Year 2005, but for Fiscal Year 2005 calculated solely for the period from July 1, 2005 to the end of such Fiscal Year), Company shall, no later than ninety days after the end of such Fiscal Year, prepay the Loans and/or the Revolving Commitments shall be permanently reduced as set forth in Section 2.15(b) in an aggregate amount equal to 50% of such Excess Cash Flow; provided, during any period in which the Company Leverage Ratio (determined for any such period by reference to the most recent Compliance Certificate delivered pursuant to Section 5.1(d) calculating the Company Leverage Ratio) shall be 4.00:1.00 or less, Company shall only be required to make the prepayments and/or reductions otherwise required hereby in an amount equal to 25% of such Excess Cash Flow. In calculating amounts owing under this clause (e), credit shall be given for any voluntary prepayments of the Loans (excluding repayments of Revolving Loans or Swing Line Loans except to the extent the Revolving Commitments are permanently reduced in connection with such repayments) and, to the extent expressly permitted by the Intercreditor Agreement, the Second Lien Term Loans made during the applicable Fiscal Year.           (f) Revolving Loans and Swing Loans. Company shall from time to time prepay first, the Swing Line Loans, and second, the Revolving Loans to the extent necessary so that the Total Utilization of Revolving Commitments shall not at any time exceed the Revolving Commitments then in effect.           (g) Prepayment Certificate. Concurrently with any prepayment of the Loans and/or reduction of the Revolving Commitments pursuant to Sections 2.14(a) through 2.14(e), Company shall deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the calculation of the amount of the applicable net proceeds or Excess Cash Flow, as the case may be. In the event that Company shall subsequently determine that the actual amount received exceeded the amount set forth in such certificate, Company shall promptly make an additional prepayment of the Loans and/or the Revolving Commitments shall be permanently reduced in an amount equal to such excess, and Company shall concurrently therewith deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the derivation of such excess.           (h) Second Lien Debt Override. Notwithstanding anything to the contrary contained in this Section 2.14, Company shall not be required to repay any of the Loans with proceeds, from any source, that are required to be applied to a reduction of the loans under the Second Lien Credit Agreement and/or the Second Lien Notes both under the terms thereof and the Intercreditor Agreement.           (i) Effective Date. Notwithstanding the foregoing, upon its receipt of the proceeds of the Tranche C Term Loans, Company shall be deemed pursuant to Section 2.1(a) to apply a portion of such proceeds sufficient to (i) prepay in full the Existing Term Loans, (ii) pay all accrued and unpaid interest and fees, if any, on all Existing Term Loans and Existing Credit Linked Deposits held by Existing First Lien Lenders that are not Continuing Term Lenders and (iii) pay to each Existing First Lien Lender that is not a Continuing Lender all amounts then due 70 --------------------------------------------------------------------------------   and owing as a result of the prepayment of such Lender’s Existing Term Loans and (v) pay all other Obligations then due and owing to (A) the Existing First Lien Lenders, in their capacity as such, under the Existing First Lien Credit Agreement.      2.15. Application of Prepayments.           (a) Application of Voluntary Prepayments by Type of Loans. Subject to Section 4.1 of the Intercreditor Agreement, any prepayment of any Loan pursuant to Section 2.13(a) shall be applied as specified by Company in the applicable notice of prepayment; provided, in the event Company fails to specify the Loans to which any such prepayment shall be applied, such prepayment shall be applied as follows:           first, to repay outstanding Swing Line Loans to the full extent thereof;           second, to repay outstanding Revolving Loans to the full extent thereof; and           third, to reduce the Tranche C Term Loans, any Delayed Draw Term Loans and any New Term Loans on a pro rata basis (in accordance with the respective outstanding principal amounts thereof).           Any prepayment of any Term Loan pursuant to Section 2.13(a) shall be further applied to reduce the next four scheduled Installments of principal on such Term Loan and thereafter on a pro rata basis to the remaining scheduled Installments of principal on the Term Loans.           (b) Application of Mandatory Prepayments by Type of Loans. Subject to Section 4.1(a) of the Intercreditor Agreement and Section 2.14(h) hereof, any amount required to be paid pursuant to Sections 2.14(a) through 2.14(e) shall be applied as follows:           first, prepay Term Loans on a pro rata basis (in accordance with the respective outstanding principal amounts thereof) and shall be further applied to prepay Term Loans on a pro rata basis to the remaining scheduled Installments of principal of Term Loans;           second, to prepay the Swing Line Loans to the full extent thereof and to permanently reduce the Revolving Commitments by the amount of such prepayment;           third, to prepay the Revolving Loans to the full extent thereof and to further permanently reduce the Revolving Commitments by the amount of such prepayment;           fourth, to prepay outstanding reimbursement obligations with respect to Revolving Letters of Credit and to further permanently reduce the Revolving Commitments by the amount of such prepayment; 71 --------------------------------------------------------------------------------             fifth, to cash collateralize Revolving Letters of Credit and to further permanently reduce the Revolving Commitments by the amount of such cash collateralization; and           sixth, to further permanently reduce the Delayed Draw Term Loan Commitments to the full extent thereof.           seventh, to further permanently reduce the Revolving Commitments to the full extent thereof.           (c) Application of Prepayments of Loans to Base Rate Loans and Eurodollar Rate Loans. Considering each Class of Loans being prepaid separately, any prepayment thereof shall be applied first to Base Rate Loans to the full extent thereof before application to Eurodollar Rate Loans, in each case in a manner which minimizes the amount of any payments required to be made by Company pursuant to Section 2.18(c).      2.16. General Provisions Regarding Payments.           (a) All payments by Company of principal, interest, fees and other Obligations shall be made in Dollars in same day funds, without defense, setoff or counterclaim, free of any restriction or condition, and delivered to Administrative Agent not later than 12:00 p.m. (New York City time) on the date due at the Principal Office designated by Administrative Agent for the account of Lenders; for purposes of computing interest and fees, funds received by Administrative Agent after that time on such due date shall be deemed to have been paid by Company on the next succeeding Business Day.           (b) All payments in respect of the principal amount of any Loan (other than voluntary prepayments of Revolving Loans) shall be accompanied by payment of accrued interest on the principal amount being repaid or prepaid.           (c) Administrative Agent (or its agent or sub-agent appointed by it) shall promptly distribute to each Lender at such address as such Lender shall indicate in writing, such Lender’s applicable Pro Rata Share of all payments and prepayments of principal and interest due hereunder, together with all other amounts due thereto, including, without limitation, all fees payable with respect thereto, to the extent received by Administrative Agent.           (d) Notwithstanding the foregoing provisions hereof, if any Conversion/Continuation Notice is withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans, Administrative Agent shall give effect thereto in apportioning payments received thereafter.           (e) Subject to the provisos set forth in the definition of “Interest Period” as they may apply to Revolving Loans, whenever any payment to be made hereunder with respect to any Loan shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and, with respect to Revolving Loans only, such extension of time shall be included in the computation of the payment of interest hereunder or of the Revolving Commitment fees hereunder. 72 --------------------------------------------------------------------------------             (f) Company hereby authorizes Administrative Agent to charge Company’s accounts with Administrative Agent in order to cause timely payment to be made to Administrative Agent of all principal, interest, fees and expenses due hereunder (subject to sufficient funds being available in its accounts for that purpose).           (g) Administrative Agent shall deem any payment by or on behalf of Company hereunder that is not made in same day funds prior to 12:00 p.m. (New York City time) to be a non-conforming payment. Any such payment shall not be deemed to have been received by Administrative Agent until the later of (i) the time such funds become available funds, and (ii) the applicable next Business Day. Administrative Agent shall give prompt telephonic notice to Company and each applicable Lender (confirmed in writing) if any payment is non-conforming. Any non-conforming payment may constitute or become a Default or Event of Default in accordance with the terms of Section 8.1(a). Interest shall continue to accrue on any principal as to which a non-conforming payment is made until such funds become available funds (but in no event less than the period from the date of such payment to the next succeeding applicable Business Day) at the rate determined pursuant to Section 2.10 from the date such amount was due and payable until the date such amount is paid in full.           (h) If an Event of Default shall have occurred and not otherwise been cured or waived, and the maturity of the Obligations shall have been accelerated pursuant to Section 8.1, all payments or proceeds received by Agents hereunder in respect of any of the Obligations, shall be applied in accordance with the application arrangements described in Section 7.2 of the Pledge and Security Agreement.      2.17. Ratable Sharing. Lenders hereby agree among themselves that, except as otherwise provided in the Collateral Documents with respect to amounts realized from the exercise of rights with respect to Liens on the Collateral, if any of them shall, whether by voluntary payment (other than a voluntary prepayment of Loans made and applied in accordance with the terms hereof), through the exercise of any right of set-off or banker’s lien, by counterclaim or cross action or by the enforcement of any right under the Credit Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a proportion of the aggregate amount of principal, interest, amounts payable in respect of Letters of Credit, fees and other amounts then due and owing to such Lender hereunder or under the other Credit Documents (collectively, the “Aggregate Amounts Due” to such Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater payment shall (a) notify Administrative Agent and each other Lender of the receipt of such payment and (b) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided, if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of Company or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest. Company expressly consents to the foregoing arrangement and agrees that 73 --------------------------------------------------------------------------------   any holder of a participation so purchased may exercise any and all rights of banker’s lien, set-off or counterclaim with respect to any and all monies owing by Company to that holder with respect thereto as fully as if that holder were owed the amount of the participation held by that holder.      2.18. Making or Maintaining Eurodollar Rate Loans.           (a) Inability to Determine Applicable Interest Rate. In the event that Administrative Agent shall have determined in good faith (which determination shall be final and conclusive and binding upon all parties hereto), on any Interest Rate Determination Date with respect to any Eurodollar Rate Loans, that by reason of circumstances affecting the London interbank market adequate and fair means do not exist for ascertaining the interest rate applicable to such Loans on the basis provided for in the definition of Adjusted Eurodollar Rate, Administrative Agent shall on such date give notice (by telefacsimile or by telephone confirmed in writing) to Company and each Lender of such determination, whereupon (i) no Loans may be made as, or converted to, Eurodollar Rate Loans until such time as Administrative Agent notifies Company and Lenders that the circumstances giving rise to such notice no longer exist, and (ii) any Funding Notice or Conversion/Continuation Notice given by Company with respect to the Loans in respect of which such determination was made shall be deemed to be rescinded by Company.           (b) Illegality or Impracticability of Eurodollar Rate Loans. In the event that on any date any Lender shall have determined in good faith (which determination shall be final and conclusive and binding upon all parties hereto but shall be made only after consultation with Company and Administrative Agent) that the making, maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful as a result of compliance by such Lender in good faith with any law, treaty, governmental rule, regulation, guideline or order (or would conflict with any such treaty, governmental rule, regulation, guideline or order not having the force of law even though the failure to comply therewith would not be unlawful), or (ii) has become impracticable, as a result of contingencies occurring after the Closing Date which materially and adversely affect the London interbank market or the position of such Lender in that market, then, and in any such event, such Lender shall be an “Affected Lender” and it shall on that day give notice (by telefacsimile or by telephone confirmed in writing) to Company and Administrative Agent of such determination (which notice Administrative Agent shall promptly transmit to each other Lender). Thereafter (1) the obligation of the Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate Loans shall be suspended until such notice shall be withdrawn by the Affected Lender, (2) to the extent such determination by the Affected Lender relates to a Eurodollar Rate Loan then being requested by Company pursuant to a Funding Notice or a Conversion/Continuation Notice, the Affected Lender shall make such Loan as (or continue such Loan as or convert such Loan to, as the case may be) a Base Rate Loan, (3) the Affected Lender’s obligation to maintain its outstanding Eurodollar Rate Loans (the “Affected Loans”) shall be terminated at the earlier to occur of the expiration of the relevant Interest Periods, then in effect with respect to the Affected Loans or when required by law, and (4) the Affected Loans shall automatically convert into Base Rate Loans on the date of such termination. Notwithstanding the foregoing, to the extent a determination by an Affected Lender as described above relates to a Eurodollar Rate Loan then being requested by Company pursuant to a Funding Notice or a Conversion/Continuation Notice, Company shall have the option, subject to the 74 --------------------------------------------------------------------------------   provisions of Section 2.18(c), to rescind such Funding Notice or Conversion/Continuation Notice as to all Lenders by giving notice (by telefacsimile or by telephone confirmed in writing) to Administrative Agent of such rescission on the date on which the Affected Lender gives notice of its determination as described above (which notice of rescission Administrative Agent shall promptly transmit to each other Lender). If Company does not rescind such Funding Notice or Conversion/Continuation Notice, the Affected Lender’s Pro-Rata Share of such Loan shall constitute a Base Rate Loan. Except as provided in the immediately preceding sentence, nothing in this Section 2.18(b) shall affect the obligation of any Lender other than an Affected Lender to make or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in accordance with the terms hereof.           (c) Compensation for Breakage or Non-Commencement of Interest Periods. Company shall compensate each Lender and each Funded LC Issuing Bank, upon written request by such Lender or such Funded LC Issuing Bank, as the case may be (which request shall set forth the basis for requesting such amounts), for all reasonable losses, expenses and liabilities (including (x) the difference between any interest paid by such Lender to lenders of funds borrowed by it to make or carry its Eurodollar Rate Loans or make its New Credit Linked Deposits and the Adjusted Eurodollar Rate such Lender would receive in connection with the liquidation or re-employment of such funds and (y) any expense or liability sustained by such Lender in connection with the liquidation or re-employment of such funds) which such Lender or such Funded LC Issuing Bank may sustain: (i) if for any reason (other than a default by any such Lender or Funded LC Issuing Bank) a borrowing of any Eurodollar Rate Loan does not occur on a date specified therefor in a Funding Notice or a telephonic request for borrowing, or a conversion to or continuation of any Eurodollar Rate Loan does not occur on a date specified therefor in a Conversion/Continuation Notice or a telephonic request for conversion or continuation; (ii) if any prepayment or other principal payment of, or any conversion of, any of its Eurodollar Rate Loans occurs on a date prior to the last day of an Interest Period applicable to that Loan; (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on any date specified in a notice of prepayment given by Company; (iv) if any New Credit Linked Deposit is reduced prior to the last day of the Interest Period applicable thereto (including as a result of an Event of Default) or any New Credit Linked Deposit is not reduced on the date specified in any notice delivered pursuant hereto or (v) if any New Credit Linked Deposit held by such Funded LC Issuing Bank is reduced in order to reimburse such Funded LC Issuing Bank pursuant to Sections 2.4(f) or 2.4(h); provided, Company shall not be obligated to compensate any Lender or Funded LC Issuing Bank for any such losses, expenses or liabilities attributable to any such circumstance occurring prior to the date that is 90 days prior to the date on which such Lender or Funded LC Issuing Bank requested such compensation from Company.           (d) Booking of Eurodollar Rate Loans. Any Lender may make, carry or transfer Eurodollar Rate Loans at, to, or for the account of any of its branch offices or the office of an Affiliate of such Lender.           (e) Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation of all amounts payable to a Lender under Section 2.18(c) shall be made as though such Lender had actually funded each of its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit bearing interest at the rate obtained pursuant to clause (i) of the definition of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar Rate Loan and having a 75 --------------------------------------------------------------------------------   maturity comparable to the relevant Interest Period and through the transfer of such Eurodollar deposit from an offshore office of such Lender to a domestic office of such Lender in the United States of America; provided, however, each Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit and the foregoing assumptions shall be utilized only for the purposes of calculating amounts payable under Section 2.18(c).      2.19. Increased Costs; Capital Adequacy.           (a) Compensation For Increased Costs and Taxes. Subject to the provisions of Section 2.20 (which shall be controlling with respect to the matters covered thereby), in the event that any Lender (which term shall include each Issuing Bank for purposes of this Section 2.19(a)) shall determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or governmental authority, in each case that becomes effective after the Closing Date, or compliance by such Lender with any guideline, request or directive issued or made after the Closing Date by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law): (i) subjects such Lender (or its applicable lending office) to any additional Tax (other than any Tax on the overall net income of such Lender) with respect to this Agreement or any of the other Credit Documents or any of its obligations hereunder or thereunder or any payments to such Lender (or its applicable lending office) of principal, interest, fees or any other amount payable hereunder; (ii) imposes, modifies or holds applicable any reserve (including any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender (other than any such reserve or other requirements with respect to Eurodollar Rate Loans or New Credit Linked Deposits that are reflected in the definition of Adjusted Eurodollar Rate, or (iii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder or the London interbank market; and the result of any of the foregoing is to increase the cost to such Lender of agreeing to make, making or maintaining Loans or New Credit Linked Deposits hereunder or to reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; then (A) as necessary, the New Credit Linked Deposits shall be invested so as to earn a return equal to the greater of the Federal Funds Effective Rate and a rate determined by Administrative Agent in accordance with banking industry rules in interbank compensation and (B) in any such case, Company shall promptly pay to such Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall determine) as may be necessary to compensate such Lender for any such increased cost or reduction in amounts received or receivable hereunder; provided, Company shall not be obligated to pay such Lender any compensation attributable to any period prior to the date that is 180 days prior to the date on which such Lender gave notice to Company of the circumstances entitling such Lender to compensation. Such Lender shall deliver to Company (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional 76 --------------------------------------------------------------------------------   amounts owed to such Lender under this Section 2.19(a) and in the calculation thereof, which statement shall be conclusive and binding upon all parties hereto absent manifest error.           (b) Capital Adequacy Adjustment. In the event that any Lender (which term shall include each Issuing Bank for purposes of this Section 2.19(b)) shall have determined that the adoption, effectiveness, phase-in or change in applicability after the Closing Date of any law, rule or regulation (or any provision thereof) regarding capital adequacy, or any change therein or in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its applicable lending office) with any guideline, request or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of, or with reference to, such Lender’s Loans, Revolving Commitments, Delayed Draw Term Loan Commitments, Letters of Credit or New Credit Linked Deposits, or participations therein or other obligations hereunder with respect to the Loans or the Letters of Credit to a level below that which such Lender or such controlling corporation could have achieved but for such adoption, effectiveness, phase-in, change in applicability, change or compliance (taking into consideration the policies of such Lender or such controlling corporation with regard to capital adequacy), then from time to time, within five Business Days after receipt by Company from such Lender of the statement referred to in the next sentence, Company shall pay to such Lender such additional amount or amounts as will compensate such Lender or such controlling corporation on an after-tax basis for such reduction; provided, Company shall not be obligated to pay such Lender any compensation attributable to any period prior to the date that is 180 days prior to the date on which such Lender gave notice to Company of the circumstances entitling such Lender to compensation. Such Lender shall deliver to Company (with a copy to Administrative Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to Lender under this Section 2.19(b) and in the calculation thereof, which statement shall be conclusive and binding upon all parties hereto absent manifest error.      2.20. Taxes; Withholding, etc.           (a) Payments to Be Free and Clear. All sums payable by any Credit Party hereunder and under the other Credit Documents shall (except to the extent required by law) be paid free and clear of, and without any deduction or withholding on account of, any Tax (other than a Tax on the overall net income of any Lender (which term shall include each Issuing Bank for purposes of this Section 2.20(a)) imposed, levied, collected, withheld or assessed by or within the United States of America or any political subdivision in or of the United States of America or any other jurisdiction from or to which a payment is made by or on behalf of any Credit Party.           (b) Withholding of Taxes. If any Credit Party or any other Person is required by law to make any deduction or withholding on account of any such Tax from any sum paid or payable by any Credit Party to Administrative Agent or any Lender (which term shall include each Issuing Bank for purposes of this Section 2.20(b)) under any of the Credit Documents: (i) Company shall notify Administrative Agent of any such requirement or any change in any such requirement reasonably promptly after Company becomes aware of it; (ii) Company shall 77 --------------------------------------------------------------------------------   pay or cause to be paid any such Tax before the date on which penalties attach thereto; (iii) the sum payable by such Credit Party in respect of which the relevant deduction, withholding or payment is required shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment, Administrative Agent or such Lender, as the case may be, receives on the due date a net sum equal to what it would have received had no such deduction, withholding or payment been required or made; and (iv) within thirty days after paying any sum from which it is required by law to make any deduction or withholding, and within thirty days after the due date of payment of any Tax which it is required by clause (ii) above to pay, Company shall deliver to Administrative Agent evidence reasonably satisfactory to the other affected parties of such deduction, withholding or payment and of the remittance thereof to the relevant taxing or other authority; provided, no such additional amount shall be required to be paid to Administrative Agent or any Lender under clause (iii) above except to the extent that any change in any applicable law, treaty or governmental rule, regulation, or order or, or any change in the interpretation, administration or application thereof, after the Closing Date (in the case of each Lender listed on the signature pages hereof on the Closing Date) or after the effective date of the Assignment Agreement pursuant to which such Lender became a Lender (in the case of each other Lender) in any such requirement for a deduction, withholding or payment as is mentioned therein shall result in an increase in the rate of such deduction, withholding or payment from that in effect at the Closing Date or at the date of such Assignment Agreement, as the case may be, in respect of payments to Administrative Agent or such Lender.           (c) Evidence of Exemption From U.S. Withholding Tax. Each Non-US Lender shall deliver to Administrative Agent and Company, on or prior to the Effective Date (in the case of each Lender (which term shall include each Issuing Bank for purposes of this Section 2.20(c)) party hereto on the Effective Date) or on or prior to the date of the Assignment Agreement pursuant to which it becomes a Lender (in the case of each other Lender), and at such other times as may be necessary in the determination of Company or Administrative Agent (each in the reasonable exercise of its discretion), (i) two original copies of Internal Revenue Service Form W-8BEN, W-8ECI or W-8IMY (including therewith any withholding certificates and withholding statements required under applicable Treasury Regulations) (or any successor forms), properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and the applicable Treasury Regulations and reasonably requested by Company to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Credit Documents, or (ii) if such Lender is not a “bank” or other Person described in Section 881(c)(3) of the Internal Revenue Code and cannot deliver Internal Revenue Service Form W-8ECI pursuant to clause (i) above, a Certificate re Non-Bank Status together with two original copies of Internal Revenue Service Form W-8BEN (or any successor form), properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and the applicable Treasury Regulations and reasonably requested by Company to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of interest payable under any of the Credit Documents. Each Lender required to deliver any forms, certificates or other evidence with respect to United States federal income tax withholding matters pursuant to this Section 2.20(c) hereby agrees, from time to time after the initial delivery by such Lender of such forms, certificates or other evidence, whenever a lapse in time or change in circumstances renders such forms, certificates or 78 --------------------------------------------------------------------------------   other evidence obsolete or inaccurate in any material respect, that such Lender shall promptly deliver to Administrative Agent and Company two new original copies of Internal Revenue Service Form W-8BEN, W-8ECI or W-8IMY (including therewith any withholding certificates and withholding statements required under applicable Treasury Regulations), or a Certificate re Non-Bank Status and two original copies of Internal Revenue Service Form W-8BEN (or any successor form), as the case may be, properly completed and duly executed by such Lender, and such other documentation required under the Internal Revenue Code and the applicable Treasury Regulations and reasonably requested by Company to confirm or establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to payments to such Lender under the Credit Documents, or notify Administrative Agent and Company of its inability to deliver any such forms, certificates or other evidence. Each Lender that is organized under the laws of the United States or any State or political subdivision thereof and that is not an “exempt recipient” (as defined in Treasury Regulations section 1.6049-4(c)) with respect to which no backup withholding is required shall, on or prior to the Closing Date (in the case of each Lender listed on the signature pages hereof on the Closing Date), or on or prior to the date of the Assignment Agreement pursuant to which it becomes a Lender (in the case of each other Lender) provide Administrative Agent and Company with two original copies of Internal Revenue Service Form W-9 (certifying that such Person is entitled to an exemption from United States backup withholding tax) or any successor form, and each such Lender shall thereafter provide Administrative Agent and Company with such supplements and amendments thereto and such additional forms, certificates, statements or documents as may from time to time be required by applicable law. Company shall not be required to pay any additional amount to any Lender under Section 2.20(b)(iii) if such Lender shall have failed (1) to deliver the forms, certificates or other evidence referred to in this Section 2.20(c), or (2) to notify Administrative Agent and Company of its inability to deliver any such forms, certificates or other evidence, as the case may be; provided, if such Lender shall have satisfied the requirements of the first sentence or third sentence, as applicable, of this Section 2.20(c) on the Closing Date or on the date of the Assignment Agreement pursuant to which it became a Lender, as applicable, nothing in this last sentence of this Section 2.20(c) shall relieve Company of its obligation to pay any additional amounts pursuant to Section 2.20(b)(iii) in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in the interpretation, administration or application thereof, such Lender is no longer legally entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender is not subject to withholding as described herein.           (d) If any Lender (which term shall include each Issuing Bank for purposes of this Section 2.20(d)) or Administrative Agent shall become aware that it is entitled to receive a refund in respect of Taxes paid by Company or as to which it has received additional amounts under Section 2.20(b)(iii), it shall promptly notify Company of the availability of such refund and shall, within ninety days after receipt of a request by Company, apply for such refund at Company’s expense. If any Lender or Administrative Agent actually receives a refund in respect of any Taxes paid by Company or as to which it has received additional amounts under Section 2.20(b)(iii), it shall promptly notify Company of such refund and shall, within ninety days after receipt of a request by Company (or promptly upon receipt, if Company has requested application for such refund pursuant hereto), repay such refund to Company (to the extent of amounts that have been paid by Company under Section 2.20(b)(iii) with respect to such refund plus interest that is received by such Lender or Administrative Agent as part of the refund), net 79 --------------------------------------------------------------------------------   of all reasonable out-of-pocket expenses of such Lender or Administrative Agent and without additional interest thereon; provided, that Company, upon the request of such Lender or Administrative Agent, agrees to return such refund to such Lender or Administrative Agent in the event such Lender or Administrative Agent is required to repay such refund. Nothing contained in this Section 2.20(d) shall require any Lender or Administrative Agent to make available any of its tax returns (or any other information relating to its taxes that it deems to be confidential).      2.21. Obligation to Mitigate. Each Lender (which term shall include each Issuing Bank for purposes of this Section 2.21) agrees that, as promptly as practicable after the officer of such Lender responsible for administering its Loans or Letters of Credit, as the case may be, becomes aware of the occurrence of an event or the existence of a condition that would cause such Lender to become an Affected Lender or that would entitle such Lender to receive payments under Section 2.18, 2.19 or 2.20, it will, to the extent not inconsistent with the internal policies of such Lender and any applicable legal or regulatory restrictions, use reasonable efforts to (a) make, issue, fund or maintain its Credit Extensions, including any Affected Loans, through another office of such Lender, or (b) take such other measures as such Lender may in good faith deem reasonable, if as a result thereof the circumstances which would cause such Lender to be an Affected Lender would cease to exist or the additional amounts which would otherwise be required to be paid to such Lender pursuant to Section 2.18, 2.19 or 2.20 would be materially reduced and if, as determined by such Lender in its sole discretion, the making, issuing, funding or maintaining of such Revolving Commitments, Delayed Draw Term Loan Commitments, Loans or Letters of Credit through such other office or in accordance with such other measures, as the case may be, would not otherwise adversely affect such Revolving Commitments, Delayed Draw Term Loan Commitments, Loans or Letters of Credit or the interests of such Lender; provided, such Lender will not be obligated to utilize such other office pursuant to this Section 2.21 unless Company agrees to pay all incremental expenses incurred by such Lender as a result of utilizing such other office as described in clause (i) above. A certificate as to the amount of any such expenses payable by Company pursuant to this Section 2.21 (setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender to Company (with a copy to Administrative Agent) shall be conclusive absent manifest error.      2.22. Defaulting Lenders. Anything contained herein to the contrary notwithstanding, in the event that any Lender, other than at the direction or request of any regulatory agency or authority, defaults (a “Defaulting Lender”) in its obligation to fund (a “Funding Default”) any Revolving Loan, its portion of any unreimbursed payment under Section 2.3(b)(iv) or 2.4(e), to fund its New Credit Linked Deposit, or to fund any Delayed Draw Term Loan (in each case, a “Defaulted Loan”), then (a) during any Default Period with respect to such Defaulting Lender, such Defaulting Lender shall be deemed not to be a “Lender” for purposes of voting on any matters (including the granting of any consents or waivers) with respect to any of the Credit Documents; (b) to the extent permitted by applicable law, until such time as the Default Excess with respect to such Defaulting Lender shall have been reduced to zero, (i) any voluntary prepayment of the Revolving Loans or Delayed Draw Term Loans shall, if Company so directs at the time of making such voluntary prepayment, be applied to the Revolving Loans or the Delayed Draw Term Loans, as applicable, of other Lenders as if such Defaulting Lender had no Revolving Loans or the Delayed Draw Term Loans, as applicable, outstanding and the Revolving Exposure of such Defaulting Lender were zero, and (ii) any mandatory prepayment of 80 --------------------------------------------------------------------------------   the Revolving Loans or the Delayed Draw Term Loans, as applicable, shall, if Company so directs at the time of making such mandatory prepayment, be applied to the Revolving Loans or the Delayed Draw Term Loans, as applicable, of other Lenders (but not to the Revolving Loans or the Delayed Draw Term Loans, as applicable, of such Defaulting Lender) as if such Defaulting Lender had funded all Defaulted Loans of such Defaulting Lender, it being understood and agreed that Company shall be entitled to retain any portion of any mandatory prepayment of the Revolving Loans or the Delayed Draw Term Loans, as applicable, that is not paid to such Defaulting Lender solely as a result of the operation of the provisions of this clause (b); (c)(i) such Defaulting Lender’s Revolving Commitment, Delayed Draw Term Loan Commitment, outstanding Revolving Loans and outstanding Delayed Draw Term Loans and such Defaulting Lender’s Pro Rata Share of the Revolving Letter of Credit Usage shall be excluded for purposes of calculating the Revolving Commitment and such Defaulting Lender’s Pro Rata Share of the Delayed Draw Term Loan Commitment fee payable to Lenders in respect of any day during any Default Period with respect to such Defaulting Lender, and such Defaulting Lender shall not be entitled to receive any Revolving Commitment fee or Delayed Draw Term Loan Commitment fee pursuant to Section 2.11 with respect to such Defaulting Lender’s Revolving Commitment or Delayed Draw Term Loan Commitment, as applicable, in respect of any Default Period with respect to such Defaulting Lender and (ii) such Defaulting Lender shall not be entitled to receive any Funded Letter of Credit Fees pursuant to Section 2.11 with respect to such Lenders’ New Credit Linked Deposit in respect of any Default Period with respect to such Default under; and (d) the Total Utilization of Revolving Commitments as at any date of determination shall be calculated as if such Defaulting Lender had funded all Defaulted Loans of such Defaulting Lender. No Revolving Commitment, Delayed Draw Term Loan Commitment or New Credit Linked Deposit of any Lender shall be increased or otherwise affected, and, except as otherwise expressly provided in this Section 2.22, performance by Company of its obligations hereunder and the other Credit Documents shall not be excused or otherwise modified as a result of any Funding Default or the operation of this Section 2.22. The rights and remedies against a Defaulting Lender under this Section 2.22 are in addition to other rights and remedies which Company may have against such Defaulting Lender with respect to any Funding Default and which Administrative Agent or any Lender may have against such Defaulting Lender with respect to any Funding Default.      2.23. Removal or Replacement of a Lender. Anything contained herein to the contrary notwithstanding, in the event that: (a) (i) any Lender (an “Increased-Cost Lender”) shall give notice to Company that such Lender is an Affected Lender or that such Lender is entitled to receive payments under Section 2.18, 2.19 or 2.20, (ii) the circumstances which have caused such Lender to be an Affected Lender or which entitle such Lender to receive such payments shall remain in effect, and (iii) such Lender shall fail to withdraw such notice within five Business Days after Company’s request for such withdrawal; or (b) (i) any Lender shall become a Defaulting Lender (or any Lender at the direction or request or any regulatory agency or authority shall default in its obligation to fund, for the purposes of this Section 2.23 only, such Lender also a “Defaulting Lender”), (ii) the Default Period for such Defaulting Lender shall remain in effect, and (iii) such Defaulting Lender shall fail to cure the default as a result of which it has become a Defaulting Lender within five Business Days after Company’s request that it cure such default; or (c) in connection with any proposed amendment, modification, termination, waiver or consent with respect to any of the provisions hereof as contemplated by Section 10.5(b), the consent of Requisite Lenders shall have been obtained, but the consent of one or 81 --------------------------------------------------------------------------------   more of such other Lenders (each a “Non-Consenting Lender”) whose consent is required shall not have been obtained; then, with respect to each such Increased-Cost Lender, Defaulting Lender or Non-Consenting Lender (the “Terminated Lender”), Company may, by giving written notice to Administrative Agent and any Terminated Lender of its election to do so, elect to cause such Terminated Lender (and such Terminated Lender hereby irrevocably agrees) to assign all or any part of its outstanding Loans, its Revolving Commitments, its Delayed Draw Term Loan Commitments and its New Credit Linked Deposits, if any, in full to one or more Eligible Assignees (each a “Replacement Lender”) in accordance with the provisions of Section 10.6 and Terminated Lender shall pay any fees payable thereunder in connection with such assignment; provided, (1) on the date of such assignment, the Replacement Lender shall pay to Terminated Lender an amount equal to the sum of (A) an amount equal to the principal of, and all accrued interest on, all outstanding Loans and New Credit Linked Deposits of the Terminated Lender, (B) an amount equal to all unreimbursed drawings that have been funded by such Terminated Lender, together with all then unpaid interest with respect thereto at such time and (C) an amount equal to all accrued, but theretofore unpaid fees owing to such Terminated Lender pursuant to Section 2.11; (2) on the date of such assignment, Company shall pay any amounts payable to such Terminated Lender pursuant to Section 2.18(c), 2.19 or 2.20; and (3) in the event such Terminated Lender is a Non-Consenting Lender, each Replacement Lender shall consent, at the time of such assignment, to each matter in respect of which such Terminated Lender was a Non-Consenting Lender; provided, Company may not make such election with respect to any Terminated Lender that is also an Issuing Bank unless, prior to the effectiveness of such election, Company shall have caused each outstanding Letter of Credit issued thereby to be cancelled, fully cash collateralized or supported by a “back-to-back” Letter of Credit reasonably satisfactory to such Terminated Lender. In connection with any such replacement, if the replaced Lender does not execute and deliver to the Administrative Agent a duly completed Assignment and Acceptance reflecting such replacement within a period of time deemed reasonable by the Administrative Agent, then such replaced Lender shall be deemed to have executed and delivered such Assignment and Acceptance. Upon the prepayment of all amounts owing to any Terminated Lender and the termination of such Terminated Lender’s Revolving Commitments, Delayed Draw Term Loan Commitments and New Credit Linked Deposits, if any, such Terminated Lender shall no longer constitute a “Lender” for purposes hereof; provided, any rights of such Terminated Lender to indemnification hereunder shall survive as to such Terminated Lender. SECTION 3. CONDITIONS PRECEDENT      3.1. Closing Date. The obligation of any Lender to make a Credit Extension on the Closing Date is subject to the satisfaction, or waiver in accordance with Section 10.5, of the following conditions on or before the Closing Date:           (a) Credit Documents. Administrative Agent shall have received sufficient copies of each Credit Document originally executed and delivered by Holding, Company and each of its Subsidiaries, as applicable, for each Lender.           (b) Organizational Documents; Incumbency. Administrative Agent shall have received (i) sufficient copies of each Organizational Document of Holding, Company and each 82 --------------------------------------------------------------------------------   Guarantor Subsidiary, as applicable, and, to the extent applicable, certified as of a recent date by the appropriate governmental official, for each Lender, each dated the Closing Date or a recent date prior thereto; (ii) signature and incumbency certificates of the officers of such Person executing the Credit Documents to which it is a party; (iii) resolutions of the board of directors or similar governing body of Holding, Company and each Guarantor Subsidiary approving and authorizing the execution, delivery and performance of this Agreement and the other Credit Documents and the Related Agreements to which it is a party or by which it or its assets may be bound as of the Closing Date, certified as of the Closing Date by its secretary or an assistant secretary as being in full force and effect without modification or amendment; (iv) a good standing certificate from the applicable Governmental Authority (A) of the jurisdiction of incorporation, organization or formation of Holding, Company and each Guarantor Subsidiary, (B), with respect to Company, of each jurisdiction in which it is qualified as a foreign corporation or other entity to do business and (C), with respect to Holding and each Guarantor Subsidiary, of each jurisdiction in which each such entity has its principal assets, each dated a recent date prior to the Closing Date; and (v) such other documents as Administrative Agent may reasonably request.           (c) Organizational and Capital Structure. The organizational structure and capital structure of Holding, Company and its Subsidiaries, both before and after giving effect to the Transactions, shall be as set forth on Schedule 4.1.           (d) Consummation of Transactions.           (i) Company shall have received the gross proceeds from the borrowings of the Second Lien Term Loan in an aggregate amount in cash of not less than $400,000,000;           (ii) Company shall have delivered to Administrative Agent complete, correct and conformed copies of the Second Lien Credit Agreement.           (iii) Administrative Agent shall have received a fully executed or conformed copy of each Related Agreement (except the Second Lien Notes Indenture, the MSW Refinancing Indentures, the New MSW Indentures, the ARC Refinancing Indenture, the New ARC Indenture and the Put-Related Equity Offering Agreement and all collateral documents related to each) executed on or prior to the Closing Date and each such Related Agreement shall be in full force and effect.           (iv) Since the date of execution thereof, there shall have been no amendment, restatement, or other modification or waiver of the terms and conditions of the Stock Purchase Agreement which, in the reasonable opinion of Administrative Agent, is in any manner materially adverse to the Lenders without the prior written consent of Administrative Agent (which consent shall not be unreasonably withheld).           (v) Holding shall have completed the Rights Offering and Company shall have received at least $399,000,000 from (i) the cash contribution to Company by Holding of the proceeds of the Rights Offering, (ii) the cash contribution to Company by Holding of unrestricted cash on hand at Holding and/or (iii) no more than $25,000,000 in cash from pro forma consolidated cash on hand at Company. 83 --------------------------------------------------------------------------------             (vi) There shall not exist, after giving effect to the Transactions, any default or potential event of default under the Second Lien Credit Agreement, or any Credit Document or (except to the extent expressly described as Schedule 3.1(d)) any material Indebtedness of Holding and its Subsidiaries including, without limitation, the MSW Indentures and the ARC Indenture.           (e) Existing Indebtedness. On the Closing Date, Company and its Subsidiaries shall have (i) repaid in full all Existing Indebtedness, (ii) terminated any commitments to lend or make other extensions of credit under Existing Indebtedness, (iii) delivered to Administrative Agent all documents or instruments necessary to release all Liens securing Existing Indebtedness or other obligations of Company and its Subsidiaries thereunder being repaid on the Closing Date or otherwise made arrangements reasonably satisfactory to Administrative Agent with respect thereto, and (iv) made arrangements reasonably satisfactory to Administrative Agent with respect to the cancellation of any letters of credit outstanding thereunder or the deemed issuance of such letters of credit as Funded Letters of Credit under Section 2.4(m) or the issuance of Letters of Credit to support the obligations of Company and its Subsidiaries with respect thereto.           (f) Transaction Costs. On or prior to the Closing Date, Company shall have delivered to Administrative Agent Company’s estimate of the Transactions Costs.           (g) Governmental Authorizations and Consents. Each Credit Party shall have obtained all Governmental Authorizations and all consents of other Persons, in each case that are necessary in connection with the transactions contemplated by the Credit Documents and the Related Agreements to be entered into on or prior to the Closing Date and each of the foregoing shall be in full force and effect and in form and substance reasonably satisfactory to Administrative Agent. All applicable waiting periods shall have expired without any action being taken or threatened by any competent authority which would restrain, prevent or otherwise impose adverse conditions on the Transactions or the financing thereof and no action, request for stay, petition for review or rehearing, reconsideration, or appeal with respect to any of the foregoing shall be pending, and the time for any applicable agency to take action to set aside its consent on its own motion shall have expired.           (h) Real Estate Assets. In order to create in favor of Collateral Agent, for the benefit of Secured Parties, a valid and, subject to any filing and/or recording referred to herein, perfected First Priority security interest in certain Real Estate Assets, Collateral Agent shall have received from Company and each applicable Guarantor Subsidiary:           (i) fully executed and notarized Mortgages, in proper form for recording in all appropriate places in all applicable jurisdictions, encumbering each Real Estate Asset listed in Schedule 3.1(h) (each, a “Closing Date Mortgaged Property’’);           (ii) an opinion of counsel (which counsel shall be reasonably satisfactory to Collateral Agent) in each state in which a Closing Date Mortgaged Property is located with respect to the enforceability of the Mortgages to be recorded in such state and such other matters as Collateral Agent may reasonably request, in each case in form and substance reasonably satisfactory to Collateral Agent; 84 --------------------------------------------------------------------------------             (iii) (a) ALTA mortgagee title insurance policies or unconditional commitments therefor issued by one or more title companies reasonably satisfactory to Collateral Agent with respect to each Closing Date Mortgaged Property (each, a “Title Policy”), in amounts not less than the fair market value of each Closing Date Mortgaged Property or such other amount reasonably required by Collateral Agent, together with a title report issued by a title company with respect thereto, dated not more than thirty days prior to the Closing Date and copies of all recorded documents listed as exceptions to title or otherwise referred to therein, each in form and substance reasonably satisfactory to Collateral Agent and (B) evidence satisfactory to Collateral Agent that Company or such Guarantor Subsidiary has paid to the title company or to the appropriate governmental authorities all expenses and premiums of the title company and all other sums required in connection with the issuance of each Title Policy and all recording and stamp taxes (including mortgage recording and intangible taxes) payable in connection with recording the Mortgages for each Closing Date Mortgaged Property in the appropriate real estate records;           (iv) evidence of flood insurance with respect to each Flood Hazard Property that is located in a community that participates in the National Flood Insurance Program, in each case in compliance with any applicable regulations of the Board of Governors of the Federal Reserve System, in form and substance reasonably satisfactory to Collateral Agent; and           (v) ALTA surveys of all Closing Date Mortgaged Properties, certified to Collateral Agent with a form of certification reasonably satisfactory to Collateral Agent and dated not more than thirty days prior to the Closing Date (each a “Survey”).           (i) Personal Property Collateral. In order to create in favor of Collateral Agent, for the benefit of Secured Parties, a valid, perfected First Priority security interest in the personal property Collateral, Collateral Agent shall have received:           (i) evidence satisfactory to Collateral Agent of the compliance by Holding with the Holding Pledge Agreement and by Company or each Guarantor Subsidiary of their obligations under the Pledge and Security Agreement and the other Collateral Documents (including, without limitation, their obligations to execute and/or deliver UCC financing statements, originals of securities, instruments and chattel paper and any agreements governing deposit and/or securities accounts as provided therein);           (ii) (A) the results of a recent search, by a Person reasonably satisfactory to Collateral Agent, of the UCC filing offices in the jurisdictions specified by Company, together with copies of all such filings disclosed by such search, and (B) UCC termination statements (or similar documents) duly authorized by all applicable Persons for filing in all applicable jurisdictions as may be necessary to terminate any effective UCC financing statements (or equivalent filings) disclosed in such search (other than any such financing statements in respect of Permitted Liens);           (iii) opinions of counsel (which counsel shall be reasonably satisfactory to Collateral Agent) with respect to the creation and perfection of the security interests in favor of Collateral Agent in such Collateral and such other matters governed by the laws of each 85 --------------------------------------------------------------------------------   jurisdiction in which Company or any Guarantor Subsidiary is located as Collateral Agent may reasonably request, in each case in form and substance reasonably satisfactory to Collateral Agent; and           (iv) evidence that Company or each Guarantor Subsidiary shall have taken or caused to be taken any other action, executed and delivered or caused to be executed and delivered any other agreement, document and instrument (including without limitation, any intercompany notes evidencing Indebtedness permitted to be incurred pursuant to Section 6.1(b) including, without limitation, the Intercompany Master Note) and made or caused to be made any other filing and recording (other than as set forth herein) reasonably required by Collateral Agent to create or perfect a First Priority Lien on the personal property Collateral, in each case except for matters contemplated in Section 5.18 of the Existing Credit Agreement.           (j) Environmental Reports. Administrative Agent shall have received reports and other information, in form and substance satisfactory to Administrative Agent, regarding environmental matters relating to the Facilities.           (k) Financial Statements; Projections. Administrative Agent shall have received from Holding, Company and Acquired Business (i) the Historical Financial Statements, (ii) pro forma consolidated balance sheets of Holding, Company and Acquired Business as at December 31, 2004, and reflecting the consummation of the Transactions, the related financings, which pro forma financial statements shall be in form and substance reasonably satisfactory to Administrative Agent, and (iii) the Projections.           (l) Evidence of Insurance. Collateral Agent shall have received a certificate from Company’s insurance broker or other evidence reasonably satisfactory to it that all insurance required to be maintained pursuant to Section 5.5 is in full force and effect, together with endorsements naming the Collateral Agent, for the benefit of Lenders, as additional insured and loss payee thereunder to the extent required under Section 5.5.           (m) Opinions of Counsel to Credit Parties. Lenders and their respective counsel shall have received originally executed copies of the favorable written opinions of (i) Skadden, Arps, Slate, Meagher & Flom LLP, counsel for Credit Parties, (ii) LeBoeuf, Lamb, Greene & MacRae LLP, and (iii) Timothy Simpson as general counsel to Company, in the form of Exhibit D-1, Exhibit D-2 and Exhibit D-3, respectively, dated as of the Closing Date and otherwise in form and substance reasonably satisfactory to Administrative Agent (and each Credit Party hereby instructs such counsel to deliver such opinions to Agents and Lenders).           (n) Chief Financial Officer Certificate. Company shall have delivered to Administrative Agent and Lenders an originally executed chief financial officer certificate certifying that the pro forma Consolidated Adjusted EBITDA of Company and its Subsidiaries for the twelve-month period ended December 31, 2004 and for the latest twelve-month period for which financial statements are available (which pro forma ratio shall be calculated reflecting the Transactions on a pro forma basis and reflecting the methodology set forth in Exhibit 1 to the commitment letter delivered by GSCP and Credit Suisse to Holding with respect to the transactions contemplated by this Agreement) is not less than $485,000,000. 86 --------------------------------------------------------------------------------             (o) Holding Restricted Account. Administrative Agent shall be satisfied that Holding has funded a segregated account in an amount not less than $6,471,000 (the “Insurance Deposit Amount”) for the sole purpose of funding any regulatory capital or other requirements relating to the Insurance Subsidiaries of Holding (the “Insurance Regulatory Account”).           (p) Plan of Reorganization Restricted Account. Administrative Agent shall be satisfied that Company has established and funded a segregated account in an amount not less than $4,000,000 (the “Plan of Reorganization Initial Deposit Amount”) for the sole purpose of satisfying the “Class 4 Claims” (as such term is defined in the Plan of Reorganization) (the “Plan of Reorganization Account”), and shall have paid to U.S. Bank Trust National Association as Trustee under the Indenture dated as of March 10, 2004, between Company and U.S. Bank Trust National Association in respect of the 7.5% Subordinated Unsecured Notes due 2012 an amount sufficient to discharge all obligations under all notes issued under such indenture.           (q) Fees. Company shall have paid to Co-Syndication Agents, Joint Lead Arrangers, Administrative Agent and Co-Documentation Agents under the Existing Credit Agreement, the fees payable on the Closing Date referred to in Section 2.11(f).           (r) Solvency Certificate. On the Closing Date, Administrative Agent shall have received a Solvency Certificate from Holding dated the Closing Date and addressed to Administrative Agent and Lenders, and in the form of Exhibit G-3 hereto demonstrating that after giving effect to the consummation of the Acquisition, the Refinancing, the Rights Offering and the borrowings under this Agreement and the Second Lien Credit Agreement, Holding and its Subsidiaries on a consolidated basis are Solvent.           (s) Closing Date Certificate. Holding and Company shall have delivered to Administrative Agent an originally executed Closing Date Certificate, together with all attachments thereto.           (t) Credit Rating. The credit facilities provided for under this Agreement shall have been assigned a credit rating by each of S&P and Moody’s.           (u) Closing Date. Lenders shall have made the Term Loans (as defined in the Existing Credit Agreement) to Company.           (v) No Litigation. There shall not exist any action, suit, investigation, litigation or proceeding or other legal or regulatory developments, pending or threatened in any court or before any arbitrator or Governmental Authority, singly or in the aggregate, that seeks to prohibit the Transactions, the financing thereof or any of the other transactions contemplated by the Credit Documents or that has had or could reasonably be expected to have a Material Adverse Effect.           (w) Completion of Proceedings. All partnership, corporate and other similar proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incidental thereto shall be reasonably satisfactory in form and substance to Administrative Agent, and Administrative Agent shall have received all such counterpart originals or certified copies of such documents as Administrative Agent may reasonably request. 87 --------------------------------------------------------------------------------   Each Lender, by delivering its signature page to the Existing Credit Agreement and funding a Loan or funding a Credit Linked Deposit (as defined in the Existing Credit Agreement) on the Closing Date, shall be deemed to have acknowledged receipt of, and consented to and approved, each Credit Document and each other document required to be approved by any Agent, Requisite Lenders or Lenders, as applicable on the Closing Date.      3.2. Conditions to Each Credit Extension.           (a) Conditions Precedent. The obligation of each Lender to make any Loan on any Credit Date or fund its New Credit Linked Deposit on the Effective Date, or any Issuing Bank to issue any Letter of Credit, on any Credit Date, including the Effective Date, are subject to the satisfaction, or waiver in accordance with Section 10.5, of the following conditions precedent:           (i) Administrative Agent shall have received a fully executed and delivered Funding Notice or Issuance Notice, as the case may be;           (ii) after making the Credit Extensions requested on such Credit Date, the Total Utilization of Revolving Commitments shall not exceed the Revolving Commitments then in effect;           (iii) as of such Credit Date, the representations and warranties contained herein and in the other Credit Documents shall be true and correct in all material respects on and as of that Credit Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects on and as of such earlier date;           (iv) as of such Credit Date, no event shall have occurred and be continuing or would result from the consummation of the applicable Credit Extension that would constitute an Event of Default or a Default;           (v) on or before the date of issuance of any Letter of Credit, Administrative Agent shall have received all other information required by the applicable Issuance Notice, and such other documents or information as the Issuing Bank may reasonably require in connection with the issuance of such Letter of Credit; and           (vi) on the Delayed Draw Term Loan Credit Date, Company and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 6.8 on a pro forma basis after giving effect to the incurrence of the Delayed Draw Term Loans as of the last day of the Fiscal Quarter most recently ended.           (b) Notices. Any Notice shall be executed by an Authorized Officer in a writing delivered to Administrative Agent. In lieu of delivering a Notice, Company may give Administrative Agent telephonic notice by the required time of any proposed borrowing, conversion/continuation or issuance of a Letter of Credit, as the case may be; provided each such notice shall be promptly confirmed in writing by delivery of the applicable Notice to Administrative Agent on or before the applicable date of borrowing, continuation/conversion or 88 --------------------------------------------------------------------------------   issuance. Neither Administrative Agent nor any Lender shall incur any liability to Company in acting upon any telephonic notice referred to above that Administrative Agent believes in good faith to have been given by a duly authorized officer or other person authorized on behalf of Company or for otherwise acting in good faith.      3.3. Effective Date. The amendments set forth herein shall be effective as of the date on which each of the following conditions shall have been satisfied (or waived in accordance with Section 10.5 of the Existing Credit Agreement):           (a) Credit Documents. Administrative Agent shall have received sufficient copies of signature pages to this Agreement from (i) each Credit Party, (ii) the Administrative Agent on behalf of each Tranche C Term Loan Lender and Delayed Draw Term Loan Lender and each Continuing Lender that has executed and delivered a Lender Consent Letter; and (iii) the Administrative Agent on behalf of Requisite Lenders (as defined in the Existing Credit Agreement), which have executed and delivered Lender Consent Letters.           (b) Organizational Documents; Incumbency. Administrative Agent shall have received (i) sufficient copies of each Organizational Document of Holding, Company and each Guarantor Subsidiary, as applicable, and, to the extent applicable, certified as of a recent date by the appropriate governmental official, for each Lender, each dated the Effective Date or a recent date prior thereto, provided that in lieu of delivering each Organizational Document, Company may deliver a certificate of an Authorized Officer or its secretary or an assistant secretary certifying that there have been no material amendments to those Organizational Documents previously delivered to GSCP, as Administrative Agent, in connection with the Existing Credit Agreement; (ii) signature and incumbency certificates of the officers of such Person executing the Credit Documents to which it is a party; (iii) resolutions of the board of directors or similar governing body of Company and each Guarantor Subsidiary approving and authorizing the execution, delivery and performance of this Agreement and the other Credit Documents and the Related Agreements to which it is a party or by which it or its assets may be bound as of the Effective Date, certified as of the Effective Date by its secretary or an assistant secretary as being in full force and effect without modification or amendment; (iv) a good standing certificate from the applicable Governmental Authority of the jurisdiction of incorporation, organization or formation of Holding, Company and each Guarantor Subsidiary; and (v) such other documents as Administrative Agent may reasonably request.           (c) Real Estate Assets. In order to reaffirm in favor of Collateral Agent, for the benefit of Secured Parties, a valid and, subject to any filing and/or recording referred to herein, perfected First Priority security interest in certain Real Estate Assets, Collateral Agent shall have received from Company and each applicable Guarantor Subsidiary:           (i) fully executed and notarized modifications (“Modifications”) to all Mortgages (as defined in the Existing Credit Agreement) delivered in connection with the Existing Credit Agreement, in proper form for recording in all appropriate places in all applicable jurisdictions, encumbering each Closing Date Mortgaged Property;           (ii) (A) endorsements to each Title Policy (as defined in the Existing Credit Agreement) or unconditional commitments therefor issued by one or more title companies reasonably satisfactory to Collateral Agent with respect to the Modifications filed against 89 --------------------------------------------------------------------------------   each Closing Date Mortgaged Property, each in form and substance reasonably satisfactory to Collateral Agent and (B) evidence satisfactory to Collateral Agent that Company or such Guarantor Subsidiary has paid to the title company or to the appropriate governmental authorities all expenses and premiums of the title company and all other sums required in connection with the issuance of each endorsement to any such Title Policy and all recording and stamp taxes (including mortgage recording and intangible taxes) payable in connection with recording the Modifications for each Closing Date Mortgaged Property in the appropriate real estate records; and           (iii) evidence of flood insurance with respect to each Flood Hazard Property that is located in a community that participates in the National Flood Insurance Program, in each case in compliance with any applicable regulations of the Board of Governors of the Federal Reserve System, in form and substance reasonably satisfactory to Collateral Agent.           (d) Opinions of Counsel to Credit Parties. Lenders and their respective counsel shall have received originally executed copies of the favorable written opinions of (i) Skadden, Arps, Slate, Meagher & Flom LLP, counsel for Credit Parties and (ii) and Timothy Simpson as general counsel to Company, in the form of Exhibit D1 and Exhibit D-2, respectively, dated as of the Effective Date and otherwise in form and substance reasonably satisfactory to Administrative Agent (and each Credit Party hereby instructs such counsel to deliver such opinions to Agents and Lenders).           (e) Fees. Company shall have paid to Syndication Agent, Lead Arranger and Administrative Agent, the fees payable on the Effective Date referred to in Section 2.11(g).           (f) Solvency Certificate. On the Effective Date, Administrative Agent shall have received a Solvency Certificate from Holding dated the Effective Date and addressed to Administrative Agent and Lenders, and in the form of Exhibit G-3 hereto demonstrating that after giving effect to the consummation of the transactions contemplated herein, Holding and its Subsidiaries on a consolidated basis are Solvent.           (g) Effective Date Certificate. Holding and Company shall have delivered to Administrative Agent an originally executed Effective Date Certificate.           (h) Effective Date. Lenders shall have been deemed to have been made the Tranche C Term Loans to Company.           (i) Non-Continuing Lenders. The Administrative Agent shall have received written verification acceptable to it that the Existing First Lien Lenders under the Existing Credit Agreement that are not Continuing Lenders have been, or will be, paid in full all amounts required to be paid to them pursuant to Section 2.14(i).           (j) Simultaneous Amendments. Substantially simultaneously herewith, an amendment to the Second Lien Credit Agreement and a consent to the Intercreditor Agreement, in each case in a form acceptable to the Administrative Agent, shall have become effective. 90 --------------------------------------------------------------------------------   SECTION 4. REPRESENTATIONS AND WARRANTIES      In order to induce Lenders and Issuing Banks to enter into this Agreement and to make each Credit Extension to be made thereby, Company represents and warrants to each Lender and each Issuing Bank, on the Closing Date, on the Effective Date and on each Credit Date, that the following statements are true and correct (it being understood and agreed that the representations and warranties made on the Closing Date are deemed to be made concurrently with the consummation of the Transactions contemplated hereby):      4.1. Organization; Requisite Power and Authority; Qualification. Each of Holding, Company and its Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization as identified in Schedule 4.1, (b) has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Credit Documents, if any, to which it is a party and to carry out the transactions contemplated thereby, and (c) is qualified to do business and in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, except in jurisdictions where the failure to be so qualified or in good standing has not had, and could not be reasonably expected to have, a Material Adverse Effect.      4.2. Capital Stock and Ownership. The Capital Stock of each of Company and its Subsidiaries the shares of which are pledged under the Pledge and Security Agreement has been duly authorized and validly issued and is fully paid and non-assessable. Except as set forth on Schedule 4.2, as of the date hereof, there is no existing option, warrant, call, right, commitment or other agreement to which, Company or any of its Subsidiaries is a party requiring, and there is no membership interest or other Capital Stock of Company or any of its Subsidiaries outstanding which upon conversion or exchange would require, the issuance by Company or any of its Subsidiaries of any additional membership interests or other Capital Stock of Company or any of its Subsidiaries or other Securities convertible into, exchangeable for or evidencing the right to subscribe for or purchase, a membership interest or other Capital Stock of Company or any of its Subsidiaries. Schedule 4.2 correctly sets forth the ownership interest of Holding, Company and each of its Subsidiaries in their respective Subsidiaries as of the Effective Date. Each Domestic Subsidiary of Company which is not identified on Schedule 1.1(b)-1 or Schedule 1.1(b)-2 is a Guarantor as of the Effective Date.      4.3. Due Authorization. The execution, delivery and performance of the Credit Documents have been duly authorized by all necessary action on the part of each Credit Party that is a party thereto.      4.4. No Conflict. The execution, delivery and performance by Credit Parties of the Credit Documents to which they are parties and the consummation of the transactions contemplated by the Credit Documents do not and will not (a) violate any provision of any law or any governmental rule or regulation applicable to Holding, Company or any of its Subsidiaries, any of the Organizational Documents of Holding, Company or any of its Subsidiaries, or any order, judgment (other than de minimis judgments) or decree of any court or other agency of government binding on Holding, Company or any of its Subsidiaries; (b) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under 91 --------------------------------------------------------------------------------   any Contractual Obligation of Holding, Company or any of its Subsidiaries; (c) result in or require the creation or imposition of any Lien upon any of the properties or assets of Holding, Company or any of its Subsidiaries (other than any Liens created under any of the Credit Documents in favor of Collateral Agent, on behalf of Secured Parties, and Liens securing the obligations under the Second Lien Credit Agreement and the Second Lien Notes Indenture pursuant to Section 6.2(o)); or (d) require any material approval of stockholders, members or partners or any approval or material consent of any Person under any material Contractual Obligation of Holding, Company or any of its Subsidiaries, except for such approvals or consents which will be obtained on or before the Closing Date or the Effective Date, as applicable, and disclosed to Administrative Agent.      4.5. Governmental Consents. The execution, delivery and performance by Credit Parties of the Credit Documents to which they are parties and the consummation of the transactions contemplated by the Credit Documents do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any Governmental Authority except as contemplated in Section 3.1 or as otherwise set forth in the Related Agreements, and except for filings and recordings with respect to the Collateral to be made, or otherwise delivered to Collateral Agent and to the agent under the Second Lien Credit Agreement and Second Lien Notes Indenture for filing and/or recordation, as of the Closing Date.      4.6. Binding Obligation. Each Credit Document has been duly executed and delivered by each Credit Party that is a party thereto and is the legally valid and binding obligation of such Credit Party, enforceable against such Credit Party in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles (whether enforcement is sought in equity or at law).      4.7. Historical Financial Statements. The Historical Financial Statements were prepared in conformity with GAAP and fairly present, in all material respects, the financial position, on a consolidated basis, of the Persons described in such financial statements as at the respective dates thereof and the results of operations and cash flows, on a consolidated basis, of the entities described therein for each of the periods then ended, subject, in the case of any such unaudited financial statements, to changes resulting from audit and normal year-end adjustments and the absence of foot notes. As of the Closing Date, none of Holding, Company or any of Company’s Subsidiaries has any contingent liability or liability for taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the Historical Financial Statements or the notes thereto and which in any such case is material in relation to the business, operations, assets, liabilities or financial condition of Holding, Company and its Subsidiaries taken as a whole.      4.8. Projections. On and as of the Closing Date, the Projections of Company and its Subsidiaries for the period Fiscal Year 2005 through and including Fiscal Year 2012 (the “Projections”) are based on good faith estimates and assumptions made by the management of Company believed by management to have been reasonable at the time made; provided, the Projections are not to be viewed as facts and that actual results during the period or periods 92 --------------------------------------------------------------------------------   covered by the Projections may differ from such Projections and that the differences may be material.      4.9. No Material Adverse Change. Since December 31, 2004, no event, circumstance or change has occurred that has caused a Material Adverse Effect.      4.10. No Restricted Junior Payments. Since December 31, 2004, and prior to the Closing Date neither Company nor any of its Subsidiaries has directly or indirectly declared, ordered, paid or made, or set apart any sum or property for, any Restricted Junior Payment of the type identified in clauses (i) through (iv) of the definition thereof in excess of $10,000,000 or agreed to do so.      4.11. Adverse Proceedings, etc. There are no Adverse Proceedings, individually or in the aggregate, that could reasonably be expected to have a Material Adverse Effect. Neither Company nor any of its Subsidiaries (a) is in violation of any applicable laws (including Environmental Laws) that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, or (b) is subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.      4.12. Payment of Taxes. Except as otherwise permitted under Section 5.3, all income and other material tax returns and reports of Holding and its Subsidiaries required to be filed by any of them have been timely filed, and all taxes shown on such tax returns to be due and payable and all material assessments, fees and other governmental charges upon Holding and its Subsidiaries and upon their respective properties, assets, income, businesses and franchises which are due and payable have been paid when due and payable. Holding knows of no material tax assessment that has been proposed in writing against Holding or any of its Subsidiaries as of the Closing Date which is not being actively contested by Holding or such Subsidiary in good faith and by appropriate proceedings; provided, such reserves or other appropriate provisions, if any, as shall be required in conformity with GAAP shall have been made or provided therefor.      4.13. Properties.           (a) Title. Each of Company and its Subsidiaries has (i) good, sufficient and legal title to (in the case of fee interests in real property), (ii) valid leasehold interests in (in the case of leased personal property), and (iii) good title to or rights in (in the case of all other personal property), all of their respective properties and assets reflected in their respective Historical Financial Statements referred to in Section 4.7 and in the most recent financial statements delivered pursuant to Section 5.1, in each case except for assets disposed of since the date of such financial statements in the ordinary course of business or as otherwise permitted under Section 6.9. Except as permitted by this Agreement, all such properties and assets are free and clear of Liens.           (b) Real Estate. As of the Closing Date, Schedule 4.13 contains a true, accurate and complete list of (i) all Real Estate Assets, and (ii) all leases, subleases or assignments of 93 --------------------------------------------------------------------------------   leases (together with all amendments, modifications, supplements, renewals or extensions of any thereof) affecting each Real Estate Asset of Company or any of its Guarantor Subsidiaries, regardless of whether Company or such Guarantor Subsidiary is the landlord or tenant (whether directly or as an assignee or successor in interest) under such lease, sublease or assignment.      4.14. Environmental Matters. Neither Company nor any of its Subsidiaries nor any of their respective Facilities or operations are subject to any outstanding written order, consent decree or settlement agreement with any Person relating to any Environmental Law, any Environmental Claim, or any Release or threatened Release of Hazardous Materials that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Neither Company nor any of its Subsidiaries has received any letter or request for information under Section 104 of the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9604) or any comparable state law, except, with respect to matters that either have been fully resolved or matters that individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect. To Company’s and its Subsidiaries’ knowledge, there are and have been, no conditions or occurrences, including any Release, threatened Release, use, generation, storage, treatment, transportation, processing, disposal, removal or remediation of Hazardous Materials, which could reasonably be expected to form the basis of an Environmental Claim against Company or any of its Subsidiaries that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Neither Holding nor any Subsidiary has been issued or required to obtain a permit for the treatment, storage or disposal of hazardous waste for any of its currently owned or operated Facilities, pursuant to the federal Resource Conservation and Recovery Act, 42 U.S.C. § 6901, et. seq. and its implementing regulations (“RCRA”), or any equivalent State law, nor are any such Facilities regulated as “interim status” facilities required to undergo corrective action pursuant to RCRA, except in either case to the extent that such Facilities’ obligations pursuant to RCRA, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. Compliance with all current requirements of Environmental Law or, to Company’s and its Subsidiaries’ knowledge reasonably likely future requirements arising from (i) existing environmental regulations or (ii) environmental regulations that have been formally proposed but have not been finalized could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.      4.15. No Defaults. Neither Company nor any of its Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any of its Contractual Obligations, and no condition exists which, with the giving of notice or the lapse of time or both, could constitute such a default, except where the consequences, direct or indirect, of such default or defaults, if any, could not reasonably be expected to have a Material Adverse Effect.      4.16. Material Contracts. Schedule 4.16 contains a true, correct and complete list of all the Material Contracts in effect on the Closing Date, and except as described thereon, and to the knowledge of Company as of the Closing Date all such Material Contracts are in full force and effect and no defaults currently exist thereunder by Company and/or its Subsidiaries party thereto. 94 --------------------------------------------------------------------------------        4.17. Governmental Regulation. Neither Company nor any of its Subsidiaries is subject to regulation under the Federal Power Act or the Investment Company Act of 1940 or under any other federal or state statute or regulation which may limit its ability to incur Indebtedness or which may otherwise render all or any portion of the Obligations unenforceable. Neither Company nor any of its Subsidiaries is a “registered investment company” or a company “controlled” by a “registered investment company” as such terms are defined in the Investment Company Act of 1940.      4.18. Margin Stock. Neither Company nor any of its Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock. No part of the proceeds of the Loans or the New Credit Linked Deposits made to such Credit Party will be used to purchase or carry any such Margin Stock or to extend credit to others for the purpose of purchasing or carrying any such Margin Stock or for any purpose that violates, or is inconsistent with, the provisions of Regulation U or X of said Board of Governors.      4.19. Employee Matters. Neither Company nor any of its Subsidiaries is engaged in any unfair labor practice that could reasonably be expected to have a Material Adverse Effect. There is (a) no unfair labor practice complaint pending against Company or any of its Subsidiaries, or to the best knowledge of Company, threatened against any of them before the National Labor Relations Board and no grievance or arbitration proceeding arising out of or under any collective bargaining agreement that is so pending against Company or any of its Subsidiaries or to the best knowledge of Company, threatened against any of them, (b) no strike or work stoppage in existence or threatened involving Company or any of its Subsidiaries that could reasonably be expected to have a Material Adverse Effect, and (c) to the best knowledge of Company, no union representation question existing with respect to the employees of Company or any of its Subsidiaries and, to the best knowledge of Company, no union organization activity that is taking place, except (with respect to any matter specified in clause (a), (b) or (c) above, either individually or in the aggregate) such as is not reasonably likely to have a Material Adverse Effect.      4.20. Employee Benefit Plans. Company, each of its Subsidiaries and each of their respective ERISA Affiliates are in material compliance with all applicable provisions and requirements of ERISA and the Internal Revenue Code and the regulations and published interpretations thereunder with respect to each Employee Benefit Plan, and have performed all their obligations under each Employee Benefit Plan which the failure to perform would result in a Material Adverse Effect. Each Employee Benefit Plan which is intended to qualify under Section 401(a) of the Internal Revenue Code has received a favorable determination letter from the Internal Revenue Service indicating that such Employee Benefit Plan is so qualified and, to the knowledge of Company, nothing has occurred subsequent to the issuance of such determination letter which would cause such Employee Benefit Plan to lose its qualified status. No liability to the PBGC (other than required premium payments), the Internal Revenue Service, any Employee Benefit Plan or any trust established under Title IV of ERISA has been or is expected to be incurred by Company, any of its Subsidiaries or any of their ERISA Affiliates. No ERISA Event has occurred or is reasonably expected to occur. The present value of the aggregate benefit liabilities under each Pension Plan sponsored, maintained or contributed to by Holding, any of its Subsidiaries or any of their ERISA Affiliates, (determined as of the end of the 95 --------------------------------------------------------------------------------   most recent plan year on the basis of the actuarial assumptions specified for funding purposes in the most recent actuarial valuation for such Pension Plan), did not exceed the aggregate current value of the assets of such Pension Plan by more than $2,000,000. As of the most recent valuation date for each Multiemployer Plan for which the actuarial report is available, the potential liability of Holding, its Subsidiaries and their respective ERISA Affiliates for a complete withdrawal from such Multiemployer Plan (within the meaning of Section 4203 of ERISA), when aggregated with such potential liability for a complete withdrawal from all Multiemployer Plans, based on information available pursuant to Section 4221(e) of ERISA is not greater than $5,000,000. Company, each of its Subsidiaries and each of their ERISA Affiliates have complied with the requirements of Section 515 of ERISA with respect to each Multiemployer Plan and are not in material “default” (as defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan.      4.21. Certain Fees. Except as disclosed to Administrative Agent, no broker’s or finder’s fee or commission will be payable with respect hereto or any of the transactions contemplated hereby.      4.22. Solvency. Each Credit Party and its Subsidiaries on a consolidated basis, are Solvent on the Effective Date, and Company and its Subsidiaries on a consolidated basis will, upon the date of each Credit Extension, be Solvent.      4.23. Related Agreements.           (a) Delivery. Company has delivered to Administrative Agent complete and correct copies of each Related Agreement and of all exhibits and schedules thereto as of the date hereof as in effect on the date hereof.           (b) Representations and Warranties. Except to the extent otherwise expressly set forth herein or in the schedules hereto, and subject to the qualifications set forth therein, each of the representations and warranties given by any Credit Party in the Stock Purchase Agreement and in any other Related Agreement entered into on the Closing Date is true and correct in all material respects as of the Closing Date (or as of any earlier date to which such representation and warranty specifically relates).           (c) Governmental Approvals. As of the Closing Date, Governmental Authorizations and all other authorizations, approvals and consents of any other Person required by the Related Agreements in effect on such date or to consummate the Transactions have been obtained and are in full force and effect.           (d) Conditions Precedent. On the Closing Date, (i) all of the conditions to effecting or consummating the Transactions set forth in the Related Agreements in effect on such date have been duly satisfied or, with the consent of Administrative Agent, waived, and (ii) the Transactions being consummated on or prior to the Closing Date have been consummated in accordance with the Related Agreements in effect on such date and all applicable laws.      4.24. Disclosure. No representation or warranty of any Credit Party contained in any Credit Document or in any other documents, certificates or written statements furnished to Lenders by or on behalf of any Credit Party for use in connection with the transactions 96 --------------------------------------------------------------------------------   contemplated hereby contains, when taken as a whole with other representations, warranties, documents, certificates and statements, any untrue statement of a material fact or omits to state a material fact (known to the Credit Parties, in the case of any document not furnished by either of them) necessary in order to make the statements contained herein or therein not misleading in light of the circumstances in which the same were made. Any projections and pro forma financial information contained in such materials are based upon good faith estimates and assumptions believed by the Credit Parties to be reasonable at the time made, it being recognized by Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results and that such differences may be material. There are no facts known to the Credit Parties (other than matters of a general economic nature) as of the Effective Date that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect and that have not been disclosed herein or in such other documents, certificates and statements furnished to Lenders for use in connection with the transactions contemplated hereby.      4.25. Patriot Act. To the extent applicable, each Credit Party is in compliance, in all material respects, with the (i) Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the Untied States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (ii) Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act of 2001) (the “Act”). No part of the proceeds of the Loans or New Credit Linked Deposits will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.      4.26. Financing Statements. Other than the financing statements filed in favor of the Collateral Agent, no effective UCC financing statement, fixture filing or other instrument similar in effect under any applicable law which is effective to perfect a security interest under the UCC as in effect on the Closing Date in all or any part of the Collateral is on file in any filing or recording office on the Closing Date or has been authorized by such Grantor at any time thereafter except for (x) financing statements or other instruments similar in effect for which proper termination statements or releases have been delivered to the Collateral Agent for filing and (y) financing statements or other instruments similar in effect filed in connection with Permitted Liens. SECTION 5. AFFIRMATIVE COVENANTS      Each of Company and each Guarantor Subsidiary covenants and agrees that until the Termination Date each of Company and each Guarantor Subsidiary shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section. 97 --------------------------------------------------------------------------------        5.1. Financial Statements and Other Reports. Company will deliver to Administrative Agent and Lenders (which delivery to Lenders may be satisfied by the posting of relevant documents to Intralinks or other similar service reasonably satisfactory to Administrative Agent):           (a) Monthly Reports. As soon as available, and in any event within 30 days after the end of each month ending after the Closing Date (commencing in respect of August 2005) (or, for any month which is the end of a Fiscal Quarter or a Fiscal Year, no later than the date on which the financial statements for any such Fiscal Quarter or Fiscal Year are due pursuant to Section 5.1(b) or (c), as applicable), the unaudited consolidated balance sheet of Company and its Subsidiaries as at the end of such month and the related unaudited consolidated statements of income and cash flows of Company and its Subsidiaries for such month and for the period from the beginning of the then current Fiscal Year to the end of such month (in each case, without footnotes), setting forth in each case in comparative form the corresponding figures from the Financial Plan for the current Fiscal Year (commencing in respect of January 2006); provided that any cash flow reports delivered pursuant to this Section 5.1(a) shall be in a form consistent with the form presented to the Lenders prior to the Closing Date with such non-material changes thereto as Company shall adopt in connection with its internal board and management reporting and such other changes as to which the Administrative Agent may consent;           (b) Quarterly Financial Statements. As soon as available, and in any event within forty-five (45) days after the end of each of the first three Fiscal Quarters of each Fiscal Year, the unaudited consolidated balance sheets of Company and its Subsidiaries as at the end of such Fiscal Quarter and the related unaudited consolidated statements of income and cash flows of Company and its Subsidiaries for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, (in each case, without footnotes) setting forth in each case, commencing with the 2006 Fiscal Year, in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year all in reasonable detail, together with a copy of Holding’s Form 10-Q for such period;           (c) Annual Financial Statements. As soon as available, and in any event within ninety (90) days after the end of each Fiscal Year, (i) the consolidated balance sheets of Company and its Subsidiaries as at the end of such Fiscal Year and the related consolidated statements of income and cash flows of Company and its Subsidiaries for such Fiscal Year, setting forth in each case, commencing with the 2006 Fiscal Year, in comparative form the corresponding figures for the previous Fiscal Year in reasonable detail, together with a copy of Holding’s Form 10-K for such period; and (ii) with respect to such consolidated financial statements a report thereon of Ernst & Young LLP or other independent certified public accountants of recognized national standing selected by Company, and reasonably satisfactory to Administrative Agent (which report shall be unqualified as to going concern and scope of audit) a written statement by the independent certified public accountants stating that in connection with their audit, nothing came to their attention that caused them to believe that Company failed to comply with the terms and provisions of Section 6.8, insofar as they relate to accounting matters, or, if such a failure to comply has come to their attention, specifying the nature and, if readily discernable from the information gathered during the audit, period of existence thereof (it being understood that their audit is not directed primarily toward obtaining knowledge of non-compliance and that such accountants shall not be liable by reason of any failure to obtain knowledge of any such non-compliance that would not be disclosed in the course of their audit); 98 --------------------------------------------------------------------------------             (d) Compliance Certificate. Together with each delivery of financial statements of Company and its Subsidiaries pursuant to Sections 5.1(b) and 5.1(c), a duly executed and completed Compliance Certificate;           (e) Statements of Reconciliation after Change in Accounting Principles. If, as a result of any change in accounting principles and policies from those used in the preparation of the Historical Financial Statements, the consolidated financial statements of Company and its Subsidiaries delivered pursuant to Section 5.1(b) or 5.1(c) will differ in any material respect from the consolidated financial statements that would have been delivered pursuant to such subdivisions had no such change in accounting principles and policies been made, then, together with the first delivery of such financial statement after such change, one or more statements of reconciliation for all such prior financial statements in form and substance satisfactory to Administrative Agent;           (f) Notice of Default. Promptly upon any Authorized Officer of Company obtaining knowledge (i) of any condition or event that constitutes a Default or an Event of Default or that notice has been given to Company with respect thereto; (ii) that any Person has given any notice to Company or any of its Subsidiaries or taken any other action with respect to any event or condition set forth in Section 8.1(b); or (iii) of the occurrence of any event or change that has caused or evidences, either in any case or in the aggregate, a Material Adverse Effect, a certificate of its Authorized Officers specifying the nature and period of existence of such condition, event or change, or specifying the notice given and action taken by any such Person and the nature of such claimed Event of Default, Default, default, event or condition, and what action Company has taken, is taking and proposes to take with respect thereto;           (g) Notice of Litigation. Promptly upon any Authorized Officer of Company obtaining knowledge of (i) the institution of, or non-frivolous threat of, any Adverse Proceeding not previously disclosed in writing by Company to Lenders, or (ii) any material development in any Adverse Proceeding that, in the case of either (i) or (ii) could be reasonably expected to have a Material Adverse Effect, or seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated hereby, written notice thereof together with such other non-privileged information as may be reasonably available to Company to enable Lenders and their counsel to evaluate such matters;           (h) ERISA. (i) Promptly upon becoming aware of the occurrence of or forthcoming occurrence of any ERISA Event, a written notice specifying the nature thereof, what action Company, any of its Subsidiaries or any of their respective ERISA Affiliates has taken, is taking or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto; and (ii) with reasonable promptness, copies of (1) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by Company, any of its Subsidiaries or any of their respective ERISA Affiliates with the Internal Revenue Service with respect to each Pension Plan; (2) all notices received by Company, any of its Subsidiaries or any of their respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an ERISA Event; and (3) copies of such other documents or governmental reports or filings relating to any Employee Benefit Plan as Administrative Agent shall reasonably request; 99 --------------------------------------------------------------------------------             (i) Financial Plan. As soon as practicable and in any event no later than 30 days after the beginning of each Fiscal Year, the following projections (the “Financial Plan”) a consolidated plan and financial forecast consisting of (i) a forecasted consolidated balance sheet and forecasted consolidated statements of income and cash flows of Company and its Subsidiaries for the then current Fiscal Year, together with an explanation of the assumptions on which such forecasts are based, (ii) a forecasted consolidated statement of income and (in a form consistent with the form presented to the Lenders prior to the Closing Date with such non-material changes thereto as Company shall adopt in connection with its internal board and management reporting and such other changes as to which the Administrative Agent may consent) cash flows of Company and its Subsidiaries for each month of such Fiscal Year, and (iii) forecasted consolidated annual statements of income and cash flows of Company and its Subsidiaries for each Fiscal Year (or portion thereof) after the current Fiscal Year through the final maturity date of the Loans, which information shall be accompanied by a certificate from the chief financial officer of Company certifying that the projections contained therein are based upon good faith estimates and assumptions believed by Company to be reasonable at the time made;           (j) Insurance Report. As soon as practicable and in any event by the thirtieth day of each Fiscal Year, a report in form and substance reasonably satisfactory to Administrative Agent outlining all material insurance coverage maintained for such Fiscal Year by Company and its Subsidiaries; and           (k) MSW Put-Related Costs Certificate. As soon as practicable and in no event later than two (2) Business Days prior to payment in full of the MSW Put-Related Costs, a certificate in form and substance reasonably satisfactory to Administrative Agent certifying as to the total amount of the principal, interest and premiums comprised in the MSW Put-Related Costs and a good faith estimate of the reasonable costs and expenses directly incurred in connection therewith.           (l) Other Information. (A) Promptly upon their becoming available, copies of (i) all financial statements, reports, notices and proxy statements sent or made available generally by Holding to its security holders acting in such capacity or by any Subsidiary of Holding to its security holders other than Holding or another Subsidiary of Holding (other than Project specific information delivered to holders of Limited Recourse Debt or other Project participants), (ii) all regular and periodic reports and all registration statements (other than on Form S-8 or similar forms) and prospectuses, if any, filed by Holding or any of its Subsidiaries (other than Project specific information) with any securities exchange or with the Securities and Exchange Commission or any governmental or private regulatory authority, (iii) all press releases and other statements made available generally by Holding or any of its Subsidiaries to the public concerning material developments in the business of Holding or any of its Subsidiaries, and (B) such other information and data promptly upon request with respect to Holding or any of its Subsidiaries (including, without limitation, with respect to compliance with Sections 5.15 and 6.1) as from time to time may be reasonably requested by Administrative Agent or any Lender.           (m) Certification of Public Information. Concurrently with the delivery of any document or notice required to be delivered pursuant to this Section 5.1 or otherwise delivered to any Agent, Holding shall indicate in writing whether such document or notice contains 100 --------------------------------------------------------------------------------   Nonpublic Information. Any document or notice required to be delivered pursuant to this Section 5.1 or is otherwise delivered to any Agent shall be deemed to contain Nonpublic Information unless Holding specifies otherwise. Holding and each Lender acknowledges that certain of the Lenders may be “public-side” Lenders (Lenders that do not wish to receive material non-public information with respect to Holding, its Subsidiaries or their securities) and, if documents or notices required to be delivered pursuant to this Section 5.1 or otherwise are being distributed through IntraLinks/IntraAgency or another relevant website (the “Platform”), any document or notice which contains Nonpublic Information (or is deemed to contain Nonpublic Information) shall not be posted on that portion of the Platform designated for such public side Lenders.      5.2. Existence. Except as otherwise permitted under Section 6.9, each of Holding, Company and its Subsidiaries will at all times preserve and keep in full force and effect its existence and all rights and franchises, licenses and permits material to its business; provided, neither Company nor any Subsidiary of Company shall be required to preserve (a) any such existence of any Subsidiary of Company if such Persons board of directors (or similar governing body) shall determine that the preservation thereof is no longer desirable in the conduct of the business of such Person, and that the loss thereof is not disadvantageous in any material respect to such Person or to Lenders or (b) any such rights franchises, licenses or permits except to the extent that failure to do so could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate.      5.3. Payment of Taxes and Claims. Each Credit Party will, and will cause each of its Subsidiaries to pay all income and other material Taxes imposed upon it or any of its properties or assets or in respect of any of its income, businesses or franchises before any penalty or fine accrues thereon, and all claims (including claims for labor, services, materials and supplies) for material sums that have become due and payable and that by law have or may become a Lien (other than a Permitted Lien) upon any of its properties or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided, no such Tax or claim need be paid if it is being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as (a) adequate reserve or other appropriate provision, as shall be required in conformity with GAAP, shall have been made therefor, and (b) in the case of a Tax or claim which has or may become a Lien against any of the Collateral, such contest proceedings conclusively operate to stay the sale of any portion of the Collateral (other than a de minimis portion of the Collateral) to satisfy such Tax or claim. No Credit Party will, nor will it permit any of its Subsidiaries to, file or consent to the filing of any consolidated income tax return with any Person (other than Holding or any of its Subsidiaries).      5.4. Maintenance of Properties. Each of Company and its Subsidiaries will, and will cause each of their Subsidiaries to maintain or cause to be maintained in good repair, working order and condition, ordinary wear and tear excepted, all material properties used or useful in the business of Company and its Subsidiaries and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof except that Company and its Subsidiaries shall not be required to perform the foregoing obligations (i) with respect to Subsidiaries or assets to which Persons other than Company and its Subsidiaries have recourse under Limited Recourse Debt owed to such Persons where the amount of such Limited Recourse Debt exceeds the fair market value of such property (ii) to the extent that failure to perform such 101 --------------------------------------------------------------------------------   obligations, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.      5.5. Insurance. Company will maintain or cause to be maintained, with financially sound and reputable insurers, such public liability insurance, third party property damage insurance, business interruption insurance and casualty insurance with respect to liabilities, losses or damage in respect of the assets, properties and businesses of Company and its Subsidiaries as may customarily be carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses, in each case in such amounts (giving effect to self-insurance), with such deductibles, covering such risks and otherwise on such terms and conditions as shall be customary for such Persons except, in the case of Projects owned by Foreign Subsidiaries, to the extent not commercially available at a reasonable cost. Without limiting the generality of the foregoing, Company will maintain or cause to be maintained (a) flood insurance with respect to each Flood Hazard Property that is located in a community that participates in the National Flood Insurance Program, in each case in compliance with any applicable regulations of the Board of Governors of the Federal Reserve System, and (b) replacement value casualty insurance on the Collateral under such policies of insurance, with such insurance companies, in such amounts, with such deductibles, and covering such risks as are at all times carried or maintained under similar circumstances by Persons of established reputation engaged in similar businesses. Each such policy of insurance (other than business interruption insurance) shall with respect to Company and each Guarantor Subsidiary (i) in the case of liability insurance name Collateral Agent, on behalf of Lenders as an additional insured thereunder as its interests may appear, (ii) in the case of each casualty insurance policy, contain a loss payable clause or endorsement, reasonably satisfactory in form and substance to Collateral Agent, that names Collateral Agent, on behalf of Lenders as the loss payee thereunder, and (iii) provides for at least thirty days’ prior written notice to Collateral Agent of any cancellation or non-renewal of such policy except as the result of non-payment of premiums, in which case ten days’ prior written notice will be provided.      5.6. Inspections. Each of Company and its Subsidiaries will, and will cause each of their Subsidiaries to permit any authorized representatives designated by (i) Administrative Agent (prior to an Event of Default at Administrative Agent’s expense to the extent Administrative Agent visits more than once per year) or (ii) any Lender (at such Lender’s expense) to visit and inspect any of the properties of any of Company and its Subsidiaries and any of its respective Subsidiaries, to inspect, copy and take extracts from its and their financial and accounting records, and to discuss its and their affairs, finances and accounts with its and their officers and independent public accountants (provided, that Company may, if it so chooses, be present and participate in any such discussion), in each case all upon reasonable notice and at such reasonable times during normal business hours and as often as may reasonably be requested.      5.7. Lenders Meetings. Company will, upon the request of Administrative Agent or Requisite Lenders, participate in a meeting of Administrative Agent and Lenders once during each Fiscal Year to be held at Company’s corporate offices (or at such other location as may be agreed to by Company and Administrative Agent) at such time as may be agreed to by Company and Administrative Agent. 102 --------------------------------------------------------------------------------        5.8. Compliance with Laws. Each Credit Party will comply, and shall use all reasonable efforts to cause each of its Subsidiaries and all other Persons, if any, on or occupying any Facilities to comply, with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority (including all Environmental Laws), noncompliance with which could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.      5.9. Environmental.           (a) Environmental Disclosure. Company will deliver to Administrative Agent and Lenders:           (i) as soon as practicable following receipt thereof, copies of all environmental audits, investigations, analyses and reports of any kind or character, whether prepared by personnel of Company or any of its Subsidiaries or by independent consultants, governmental authorities or any other Persons, with respect to environmental matters at any Facility or to any Environmental Claims that could be reasonably expected to give rise to liability or expenses of Company or any of its Subsidiaries in excess of $2,000,000;           (ii) promptly upon the occurrence thereof, written notice describing in reasonable detail (1) any Release required to be reported to any federal, state or local governmental or regulatory agency under applicable Environmental Laws that could reasonably be expected to result in Environmental Claims or other liability or expenses of Company or any of its Subsidiaries in excess of $2,000,000, (2) any remedial action taken by Company or any other Person in response to (A) any Release or threatened Release of Hazardous Materials, which has a reasonable possibility of resulting in one or more Environmental Claims that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, or (B) any Environmental Claims that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and (3) Company’s discovery of any occurrence or condition on any real property adjoining or in the vicinity of any Facility that could cause such Facility or any part thereof to be subject to any material legal restrictions on the ownership, occupancy, transferability or use thereof under any Environmental Laws;           (iii) as soon as practicable following the sending or receipt thereof by Holding or any of its Subsidiaries, a copy of any and all written communications with respect to either (1) any Environmental Claims that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, or (2) any Release required to be reported to any federal, state or local governmental or regulatory agency that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;           (iv) prompt written notice describing in reasonable detail (1) any proposed acquisition of stock, assets, or property by Company or any of its Subsidiaries that could reasonably be expected to (A) expose Company or any of its Subsidiaries to, or result in, Environmental Claims that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect or (B) affect the ability of Company or any of its Subsidiaries to maintain in full force and effect all material Governmental Authorizations 103 --------------------------------------------------------------------------------   required under any Environmental Laws for their respective operations and (2) any proposed action to be taken by Company or any of its Subsidiaries to modify current operations in a manner that could reasonably be expected to subject Company or any of its Subsidiaries to any additional material obligations or requirements under any Environmental Laws; and           (v) with reasonable promptness, such other material and relevant documents and information as from time to time may be reasonably requested by Administrative Agent in relation to any matters disclosed pursuant to this Section 5.9(a).           (b) Hazardous Materials Activities, Etc. Each of Company and its Subsidiaries shall promptly take, and shall cause each of its Subsidiaries promptly to take, any and all actions necessary to (i) cure any violation of applicable Environmental Laws by such Company or its Subsidiaries that could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and (ii) make an appropriate response to any Environmental Claim against such Company or any of its Subsidiaries and discharge any obligations it may have to any Person thereunder where failure to do so could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.           (c) Right of Access and Inspection. With respect to any event described in Section 5.9(a), or if an Event of Default has occurred and is continuing, or if Administrative Agent reasonably believes that Company or any Subsidiary has breached any representation, warranty or covenant related to environmental matters (including those contained in Sections 4.11, 4.14, 5.8 or 5.9):           (i) Administrative Agent and its representatives shall have the right, but not the obligation or duty, to enter the Facilities at reasonable times for the purposes of observing the Facilities. Such access shall include, at the reasonable request of Administrative Agent, access to relevant documents and employees of Company and its Subsidiaries and to their outside representatives, to the extent necessary to obtain necessary information related to the event at issue. If an Event of Default has occurred and is continuing, the Credit Parties shall conduct such tests and investigations on the Facilities or relevant portion thereof, as reasonably requested by Administrative Agent, including the preparation of a Phase I Environmental Assessment or such other sampling or analysis as determined to be necessary under the circumstances by a qualified environmental engineer or consultant. If an Event of Default has occurred and is continuing, and if a Credit Party does not undertake such tests and investigations in a reasonably timely manner following the request of Administrative Agent, Administrative Agent may hire an independent engineer, at the Credit Parties’ expense, to conduct such tests and investigations. Administrative Agent will make all reasonable efforts to conduct any such tests and investigations so as to avoid interfering with the operation of the Facility           (ii) Any observations, tests or investigations of the Facilities by or on behalf of Administrative Agent shall be solely for the purpose of protecting the Lenders’ security interests and rights under the Credit Documents. The exercise of Administrative Agent’s rights under this Subsection (c) shall not constitute a waiver of any default of any Credit Party or impose any liability on Administrative Agent or any of the Lenders. In no event will any observation, test or investigation by or on behalf of Administrative Agent be a 104 --------------------------------------------------------------------------------   representation that Hazardous Materials are or are not present in, on or under any of the Facilities, or that there has been or will be compliance with any Environmental Law and Administrative Agent shall not be deemed to have made any representation or warranty to any party regarding the truth, accuracy or completeness of any report or findings with regard thereto. Neither any Credit Party nor any other party is entitled to rely on any observation, test or investigation by or on behalf of Administrative Agent. Administrative Agent and the Lenders owe no duty of care to protect any Credit Party or any other party against, or to inform any Credit Party or any other party of, any Hazardous Materials or any other adverse condition affecting any of the Facilities. Administrative Agent may, in its sole discretion, disclose to the applicable Credit Party, or to any other party if so required by law, any report or findings made as a result of, or in connection with, its observations, tests or investigations. If a request is made of Administrative Agent to disclose any such report or finding to any third party, then Administrative Agent shall endeavor to give the applicable Credit Party prior notice of such disclosure and afford such Credit Party the opportunity to object or defend against such disclosure at its own and sole cost; provided, that the failure of Administrative Agent to give any such notice or afford such Credit Party the opportunity to object or defend against such disclosure shall not result in any liability to Administrative Agent. Each Credit Party acknowledges that it may be obligated to notify relevant Governmental Authorities regarding the results of any observation, test or investigation disclosed to such Credit Party, and that such reporting requirements are site and fact-specific and are to be evaluated by such Credit Party without advice or assistance from Administrative Agent.           (d) If counsel to Company or any of its Subsidiaries reasonably determines (1) that provision to Administrative Agent of a document otherwise required to be provided pursuant to this Section 5.9 (or any other provision of this Agreement or any other Credit Document relating to environmental matters) would jeopardize an applicable attorney-client or work product privilege pertaining to such document, then Company or its Subsidiary shall not be obligated to deliver such document to Administrative Agent but shall provide Administrative Agent with a notice identifying the author and recipient of such document and generally describing the contents of the document. Upon request of Administrative Agent, Company and its Subsidiaries shall take all reasonable steps necessary to provide Administrative Agent with the factual information contained in any such privileged document.      5.10. Subsidiaries. In the event that any Person becomes a Domestic Subsidiary of Company (other than an Excluded Subsidiary or a Development Subsidiary) or any Domestic Subsidiary of Company ceases to be an Excluded Subsidiary or a Development Subsidiary, then in each case, Company shall, within twenty days of such event (a) cause such Domestic Subsidiary to become a Guarantor hereunder and a Grantor under the Pledge and Security Agreement by executing and delivering to Administrative Agent and Collateral Agent a Counterpart Agreement, and (b) take all such actions and execute and deliver, or cause to be executed and delivered, all such documents, instruments, agreements, and certificates as are similar to those described in Sections 3.1(b), 3.1(h) (to the extent applicable), 3.1(i), and 3.1(m). In the event that any Person becomes a Foreign Subsidiary of Company, and the ownership interests of such Foreign Subsidiary are directly owned by Company or by any Domestic Subsidiary thereof (other than an Excluded Subsidiary), Company shall or shall cause such Domestic Subsidiary to, deliver all such documents, instruments, agreements, and certificates as 105 --------------------------------------------------------------------------------   are similar to those described in Sections 3.1(b), and Company shall take, or shall cause such Domestic Subsidiary to take, all of the actions referred to in Section 3.1(i)(i) necessary to grant and to perfect a First Priority Lien in favor of Collateral Agent, for the benefit of Secured Parties, under the Pledge and Security Agreement in 65% of such ownership interests. With respect to each such Subsidiary, Company shall promptly send to Administrative Agent written notice setting forth with respect to such Person (i) the date on which such Person became a Subsidiary of Company, and (ii) all of the data required to be set forth in Schedules 4.1 and 4.2 with respect to all Subsidiaries of Company; provided, such written notice shall be deemed to supplement Schedule 4.1 and 4.2 for all purposes hereof.      5.11. Additional Material Real Estate Assets. In the event that Company or any Guarantor Subsidiary acquires a Material Real Estate Asset and such interest has not otherwise been made subject to the Lien of the Collateral Documents in favor of Collateral Agent, for the benefit of Secured Parties, then Company or such Guarantor Subsidiary, as soon as practicable after acquiring such Material Real Estate Asset, shall take all such actions and execute and deliver, or cause to be executed and delivered, all such mortgages, documents, instruments, agreements, opinions and certificates similar to those described in Sections 3.1(h), 3.1(i) and 3.1(j) and a Phase I Environmental Assessment with respect to each such Material Real Estate Asset that Collateral Agent shall reasonably request to create in favor of Collateral Agent, for the benefit of Secured Parties, a valid and, subject to any filing and/or recording referred to herein, First Priority Lien in such Material Real Estate Assets. In addition to the foregoing, Company shall, at the request of Requisite Lenders, deliver, from time to time, to Administrative Agent such appraisals as are required by law or regulation of Real Estate Assets with respect to which Collateral Agent has been granted a lien      5.12. Interest Rate Protection. No later than the earlier of (i) 90 days following the date of the issuance of the Second Lien Notes and (ii) 270 days following the Closing Date and at all times thereafter, Company shall maintain, or caused to be maintained, in effect one or more Interest Rate Agreements for a term of not less than three (3) years and otherwise in form and substance reasonably satisfactory to Administrative Agent, which Interest Rate Agreements shall effectively limit the Unadjusted Eurodollar Rate Component of the interest costs to Company with respect to an aggregate notional principal amount of not less than 50% of the aggregate principal amount of the Tranche C Term Loans, Delayed Draw Term Loans and the Second Lien Term Loans, to a rate reasonably acceptable to Administrative Agent.      5.13. Further Assurances. At any time or from time to time at the request of Administrative Agent, each Credit Party will, at its expense, promptly execute, acknowledge and deliver such further documents and do such other acts and things, as Administrative Agent or Collateral Agent may reasonably request in order to effect fully the purposes of the Credit Documents that do not involve material expansion of any Credit Party’s obligations or duties under the Credit Documents from those originally mutually intended or contemplated. In furtherance and not in limitation of the foregoing, each Credit Party shall take such actions as Administrative Agent or Collateral Agent may reasonably request from time to time to ensure that the Obligations are guarantied by the Guarantors and are secured by the Collateral (subject to limitations contained in the Credit Documents). 106 --------------------------------------------------------------------------------        5.14. Miscellaneous Business Covenants. Unless otherwise consented to by Agents or Requisite Lenders:           (a) Non-Consolidation. Company will and will cause each of its Subsidiaries to: (i) maintain entity records and books of account separate from those of any other entity which is an Affiliate of such entity; (ii) not commingle its funds (other than consistent with Company’s cash management requirements as permitted hereunder) or assets with those of any other entity which is an Affiliate of such entity; and (iii) provide that its board of directors or other analogous governing body will hold all appropriate meetings to authorize and approve such entity’s actions, which meetings will be separate from those of other entities.           (b) Filing of Agreement. No later than the earlier of the next filing of a quarterly report on Form 10Q or annual report on Form 10K, provided that Holding or any of its Subsidiaries is otherwise required to file periodic reports with the Securities and Exchange Commission, Holding or such Subsidiaries shall file a copy of this Agreement and the schedules hereto as a material contract with the Securities and Exchange Commission.      5.15. Cash Management Systems. Company and its Subsidiaries’ cash management systems on the Closing Date are outlined on Schedule 5.15. Company and its Subsidiaries may make such modifications to its cash management system as it may deem appropriate (subject to the requirements of this Section 5.15) provided that to the extent any such modification would (i) affect attributes of the cash management system described in paragraphs 5, 6, 7, 8, 11, 12, 13, 14, 15 and 19 of Part A of Schedule 5.15 and paragraphs 3, 4 and 5 of Part B of Schedule 5.15 or (ii) otherwise be material and adverse to the Secured Parties, such modifications shall have been approved by Administrative Agent. Company and each of its Guarantor Subsidiaries shall at all times after the Closing Date ensure that all Cash and Cash Equivalents held by it are subject to a valid and perfected First Priority security interest in favor of the Collateral Agent for the benefit of the Secured Parties; provided that (i) Cash and Cash Equivalents maintained in the deposit accounts and investment accounts identified on Schedule 2.2 of the Pledge and Security Agreement in respect of “Class 4 Claims” (as such term is defined in the Plan of Reorganization) and or in payroll, trusts and similar accounts (ii) other Cash and Cash Equivalents of up to $2,000,000 in the aggregate at any one time for Company and all Guarantor Subsidiaries shall not in either case be required to be maintained in deposit accounts or investments accounts subject to Control Agreements; provided further that Company and each of its Guarantor Subsidiaries shall at all times thereafter ensure that no funds accumulate at any Excluded Subsidiary, except (a) in the case of any Excluded Subsidiary owning an interest in a Project, funds required to be accumulated pursuant to restrictions in effect on the date hereof or in respect of Indebtedness permitted under Section 6.1(l), imposed under the documentation for the financing or operation of such Project and required for such financing or operation, (b) as required by any applicable requirement of law, (c) as required by Contractual Obligations in effect as of the date hereof or entered into after the date hereof in accordance with the provisions of this Agreement, (d) until the date that is six months after the Closing Date and in an amount (net of amounts held against uncleared drafts or wire payments) not to exceed $35,000,000, funds on deposit on the Closing Date in accounts in the name of Subsidiaries of Company constituting part of the Acquired Business, or (e) in an amount (net of amounts held against uncleared drafts or wire payments and in addition to amounts referred to in clause (d) above) not 107 --------------------------------------------------------------------------------   to exceed $5,000,000, funds in accounts in the name of Subsidiaries of Company constituting part of the Acquired Business.      5.16. Insurance Regulatory Account. Until the later of the fourth anniversary of the Closing Date and such time as the net operating loss of Holding and its Subsidiaries is less than $50,000,000, Holding shall maintain Cash and Cash Equivalents of not less than the Insurance Deposit Amount (less amounts applied from such account to the capitalization of the Insurance Subsidiaries) in the Insurance Regulatory Account.      5.17. Plan of Reorganization Account. Until all “Class 4 Claims” (as such term is defined in the Plan of Reorganization) have been satisfied and discharged as evidenced by a certificate delivered to Administrative Agent by Company, Company shall maintain in the Plan of Reorganization Account Cash of not less than the Plan of Reorganization Initial Deposit Amount minus the amount of any “Class 4 Claims” (as such term is defined in the Plan of Reorganization) which have been satisfied and discharged. Company shall maintain such account and shall not make distributions from such account other than to make payments of amounts due with regard to Class 4 Claims in accordance with the Plan of Reorganization until all Class 4 Claims have been satisfied and discharged. SECTION 6. NEGATIVE COVENANTS      Each of Company and Guarantor Subsidiaries covenants and agrees that, until the Termination Date, Company and its Guarantor Subsidiaries shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 6.      6.1. Indebtedness. Neither Company nor any Guarantor Subsidiary shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or guaranty, or otherwise become or remain directly or indirectly liable with respect to any Indebtedness, except:           (a) the Obligations;           (b) Indebtedness of any Guarantor Subsidiary to Company or to any other Guarantor Subsidiary, or of Company to any Guarantor Subsidiary; provided, (x) all such Indebtedness shall be evidenced by the Intercompany Master Note and (y) any payment by any such Guarantor Subsidiary under any guaranty of the Obligations shall result in a pro tanto reduction of the amount of any Indebtedness owed by such Guarantor Subsidiary to Company or to any of its Guarantor Subsidiaries for whose benefit such payment is made;           (c) Subject to continued compliance with Sections 5.15 and 5.1(k)(B) Indebtedness of any Subsidiary of Company other than the Guarantor Subsidiaries to Company or any Guarantor Subsidiary so long as the proceeds of such Indebtedness are applied to current requirements in respect of working capital, maintenance capital expenditures, operation or payroll in the ordinary course of business of such Subsidiary incurring such Indebtedness or to make payments of debt service in connection with the Alexandria, Virginia and Fairfax, Virginia 108 --------------------------------------------------------------------------------   facilities to the extent that such obligor with respect to such debt service does not otherwise have funds available to make such payments and lease payments in connection with the Delaware County, Pennsylvania facility, in each case to the extent that the obligor with respect to such debt service or lease payments is required to make such payments and payment of such debt service or lease payments would not be prohibited under Section 6.5; provided, that following the occurrence of and continuance of an Event of Default (without prejudicing or impairing any of the Secured Parties’ rights, privileges, powers and remedies with respect thereto, which rights, privileges, powers and remedies are reserved in full) no such Indebtedness may be incurred to make maintenance capital expenditures other than those that, if not made, would materially compromise the ability of a Subsidiary to operate and maintain one or more of the Projects in compliance with law, all such intercompany Indebtedness shall be evidenced by the Intercompany Master Note;           (d) (i) Indebtedness of Subsidiaries of Company to Company or any Guarantor Subsidiary, the proceeds of which are used solely to fund one or more Permitted Acquisitions, and (ii) Indebtedness of Foreign Subsidiaries of Company to Company in an amount not to exceed (A) $3,000,000 incurred in any Fiscal Year (with any unused amounts accumulating on a cumulative basis to each subsequent Fiscal Year) or (B) $15,000,000 in the aggregate at any one time outstanding which is incurred after the Closing Date (plus the principal amount of any Indebtedness repaid by a Foreign Subsidiary to Company or any Guarantor Subsidiary after the Closing Date), provided, that (1) the proceeds of such Indebtedness incurred in reliance on this clause (ii) are used to finance the development, construction or capital improvements to renewable energy or waste-to-energy Projects, and (2) no more than $2,000,000 of such Indebtedness incurred in any Fiscal Year in reliance on this clause (ii) may be incurred with respect to Projects located in jurisdictions outside of the United Kingdom or Europe, and provided, further, with regard to all Indebtedness incurred in reliance on this subsection (d) (1) no such Indebtedness may be incurred at any time that Company and its Subsidiaries are not in compliance with Section 6.8, (2) no such Indebtedness may be incurred to make capital expenditures if after giving effect to such expenditures Company and its Subsidiaries would not be in pro forma compliance with Section 6.8(d) and (3) all such intercompany Indebtedness shall be evidenced by the Intercompany Master Note;           (e) (i) Indebtedness of MSW I and/or MSW II to Company with respect to the on-lending of (A) Put Loans in an aggregate principal amount not to exceed $25,000,000, (B) the proceeds of the Put-Related Equity Offering (less the amount of any Investment made pursuant to Section 6.7(n)(i)), (C) Cash and Cash Equivalents from Company’s operations, provided that after giving effect to the incurrence of such Indebtedness and any Investment made pursuant to Section 6.7(n)(ii), unrestricted Cash and Cash Equivalents of Company and the Acquired Business shall not be less than $50,000,000 (provided that for the purposes of calculating such amount, no more than $5,000,000 of Marketable Securities shall be included in such calculation) and/or (D) an equity contribution from Holding to Company to occur within 120 days of the Closing Date in an aggregate amount not to exceed $25,000,000 (less the amount of any equity Investment made pursuant to Section 6.7(n)(iii)), provided that the amounts on-lent to MSW I and/or MSW II pursuant to clauses (A) through (D) immediately above shall be used to pay MSW Put-Related Costs and when added to the equity Investments made pursuant to Section 6.7(n) shall not exceed in the aggregate the amount set forth on the certificate delivered pursuant to Section 5.1(k), (ii) Indebtedness of MSW I and/or MSW II to ARC LLC with respect to the 109 --------------------------------------------------------------------------------   on-lending of the proceeds of the New ARC Notes by ARC LLC to fund MSW Put-Related Costs, (iii) Indebtedness of MSW I and/or MSW II to ARC LLC with respect to the on-lending of the proceeds of the ARC Refinancing Notes by ARC LLC to redeem, refinance, replace, renew or extend the MSW Notes in accordance with clause (n)(i) below, (iv) Indebtedness of ARC LLC to MSW I and/or MSW II with respect to the on-lending of the proceeds of the MSW Refinancing Notes by MSW I and/or MSW II to redeem, refinance, replace, renew or extend the ARC Notes in accordance with clause (n)(i) below, and (v) additional Indebtedness of Excluded Subsidiaries to Company or any Guarantor Subsidiary in an amount not to exceed (A) $10,000,000 incurred in any Fiscal Year (with any unused amounts accumulating on a cumulative basis to each subsequent Fiscal Year) or (B) $30,000,000 in the aggregate at any one time outstanding which is incurred after the Closing Date, provided, that in each case (1) no such Indebtedness may be incurred at any time such that Company and its Subsidiaries would not be in compliance with Section 6.8, (2) no such Indebtedness may be incurred to make capital expenditures if after giving effect to such expenditures Company and its Subsidiaries would not be in pro forma compliance with Section 6.8(d), and (3) all such intercompany Indebtedness shall be evidenced by the Intercompany Master Note, and provided further that notwithstanding anything to contrary in this Agreement, no Credit Party shall cancel any Indebtedness owed to it by any Subsidiary of Company (other than among Credit Parties) except (a) in connection with the Foreign Subsidiary restructuring disclosed on Schedule 6.9-B, (b) to the extent such cancellation directly results in material savings (taking into consideration any tax savings) to Company and its Subsidiaries on a group-wide basis and is not done in contemplation of any event which would give rise to an Event of Default under Sections 8.1(f) or 8.1(g), or (c) for adequate consideration and in the ordinary course of business;           (f) Indebtedness of any Excluded Subsidiary to another Excluded Subsidiary which is its direct or indirect parent or Subsidiary and Indebtedness for any Foreign Subsidiary to another Foreign Subsidiary;           (g) Indebtedness incurred by Company or any of its Subsidiaries arising from agreements providing for indemnification, adjustment of purchase price or similar obligations incurred in connection with Permitted Acquisitions;           (h) Indebtedness which may be deemed to exist pursuant to any guaranties, performance, surety, statutory, appeal, bid, payment (other than payment of Indebtedness) or similar obligations (including any bonds or Letters of Credit issued with respect thereto and all reimbursement and indemnity agreements entered into in connection therewith) incurred in the ordinary course of business;           (i) Indebtedness in respect of netting services, overdraft protections and otherwise in connection with deposit accounts;           (j) performance guaranties in the ordinary course of business and consistent with historic practices of the obligations of suppliers, customers, franchisees and licensees of Company and its Subsidiaries;           (k) Indebtedness of any Subsidiary of Company to Company or any other Subsidiary of Company, so long as the proceeds are used to fund capital expenditures relating to 110 --------------------------------------------------------------------------------   the modifications to Projects, to the extent required by applicable legal requirements; provided that if and to the extent that such additional capital expenditures are estimated by Company to exceed $40,000,000 in the aggregate during the term of this Agreement, and are not otherwise reimbursable by third parties, Company shall provide such estimate to Administrative Agent for its review, and shall not incur such capital expenditures in excess of $10,000,000 in connection with any such modification until Administrative Agent has had an opportunity to review and provide its comments, except to the extent failure to incur such capital expenditures would in Company’s reasonable judgment either (i) materially compromise its present ability to continue to operate and maintain one or more of its Projects in compliance with law or (ii) expose it or its Affiliates to material liability;           (l) Indebtedness described in Schedule 6.1, but not any extensions, renewals or replacements of such Indebtedness except (i) renewals, refinancings, replacements and extensions expressly provided for in, or contemplated by, the agreements relating to any such Indebtedness (or the related Projects) as the same are in effect on the date of this Agreement and (ii) refinancings, renewals, replacements and extensions of any such Indebtedness in whole or in part at the then prevailing market rates if the non-economic terms and conditions thereof are not less favorable to the obligor thereon or to the Lenders than the Indebtedness being renewed, refinanced, replaced or extended, taken as a whole (considering the economic benefits and disadvantages to Company and its Subsidiaries from such refinancing, replacement, renewal or extension, as well as the economic benefits and disadvantages to Company and its Subsidiaries of the Project to which such Indebtedness relates); provided, that the average life to maturity of such Indebtedness is greater than or equal to that of the Indebtedness being refinanced, replaced, renewed or extended (unless the client with respect thereto undertakes to service such principal through the lease, service or operating agreement of the applicable Project), and provided further, that such Indebtedness permitted under the immediately preceding clause (i) or (ii) above shall not (A) include Indebtedness of an obligor that was not an obligor with respect to the Indebtedness being extended, renewed, replaced or refinanced, (B) exceed the principal amount of the Indebtedness being renewed, extended, replaced or refinanced plus any reasonable and customary transaction costs and fees and any premium on the Indebtedness required to be paid in connection with such repayment unless the increase in the principal amount of such Indebtedness is permitted under another subsection of this Section 6.1 (provided that such limitation shall not apply with respect to Indebtedness that a client of a Project undertakes to service through the lease, service or operating agreement of the applicable Project) or (C) be incurred, created or assumed if any Default or Event of Default has occurred and is continuing or would result therefrom;           (m) (i) Indebtedness of Company or its Subsidiaries with respect to Capital Leases entered into after the Closing Date and (ii) purchase money Indebtedness of Subsidiaries of Company (excluding any Indebtedness acquired in connection with a Permitted Acquisition) in an aggregate amount in the case of (i) and (ii) together not to exceed $15,000,000 at any time; provided that any purchase money Indebtedness (A) shall be secured only by the asset acquired in connection with the incurrence of such Indebtedness, and (B) shall constitute not less than 85% of the aggregate consideration paid with respect to such asset;           (n) (i) any debt securities issued by MSW I, MSW II and/or ARC LLC in a combined aggregate principal amount not to exceed $665,000,000 plus any accrued interest and 111 --------------------------------------------------------------------------------   senior subordinated debt securities or other indebtedness issued by MSW I, MSW II and/or ARC LLC to redeem, refinance, replace, renew or extend any of the MSW I Notes, the MSW II Notes and/or ARC Notes in full, in an amount of up to the then aggregate outstanding principal amount of the MSW I Notes or the MSW II Notes (in each case, for the avoidance of doubt, after giving effect to any redemption, refinancing or replacement thereof pursuant to the Indebtedness permitted under 6.1(n)(ii)), or ARC Notes, as applicable in each case, plus any reasonable and customary transaction costs and fees and required premium and debt service reserve requirements in connection therewith (any such debt securities issued by MSW I and/or MSW II, the “MSW Refinancing Notes” and any such debt securities issued by ARC LLC, the “ARC Refinancing Notes”) and guaranties related thereto; provided that the proceeds thereof are used in each case to prepay or redeem the MSW Notes and/or ARC Notes so redeemed, refinanced, replaced, renewed or extended and reasonable and customary fees, commissions, legal fees and other costs and expenses incurred in connection with such issuance and redemption or prepayment; provided further that (A) (1) the terms of such additional Indebtedness shall not contain any cross-default provisions (other than for material non-payment, and may include a cross-acceleration provision), (2) the terms of such additional Indebtedness shall not contain any financial maintenance covenants, (3) such additional Indebtedness shall not be secured by any asset of Company or any of its Subsidiaries (other than restricted Cash or Cash Equivalents allocated from the funds representing such Indebtedness securing principal and interest payments to the extent required pursuant to the terms of such additional Indebtedness) that do not, in the case of MSW Refinancing Notes, secure the MSW Notes and in the case of ARC Refinancing Notes, secure the ARC Notes, (4) no portion of the principal of such additional Indebtedness shall be scheduled to be redeemed, repurchased or otherwise repaid or prepaid (other than as a result of a change of control, asset sales, receipt of equity and indebtedness proceeds, condemnation and eminent domain, change of control events, acceleration or such other provision as shall be customary for comparable high-yield debt securities) prior to the earlier of (x) the date on which the corresponding portion of the refinanced Indebtedness would be payable under, for MSW Refinancing Notes, the MSW Notes, or for ARC Refinancing Notes, the ARC Notes, and (y) the date that is six months after the Term Loan Maturity Date, and (5) such Indebtedness shall otherwise, taken as a whole, be on non-financial terms no less favorable to the obligors thereon, in any material respects, than the terms of, for MSW Refinancing Notes, the MSW Notes, or for ARC Refinancing Notes, the ARC Notes, taken as a whole (considering the economic benefits and disadvantages of such refinancing, replacement, renewal or extension); and (B) after giving effect to the incurrence of such Indebtedness, (1) Company and its Subsidiaries shall be in pro forma compliance with the financial covenants set forth in Section 6.8 and (2) no Default or Event of Default shall exist or would result therefrom, (ii) any debt securities issued by MSW I and/or MSW II to finance MSW Put-Related Costs, in an aggregate amount up to $425,000,000, plus any reasonable and customary transaction costs and fees and required premium in connection therewith (the “New MSW Notes”); provided that the proceeds thereof are used to pay MSW Put-Related Costs and reasonable and customary fees, commissions, legal fees and other costs and expenses incurred in connection with such issuance and payment; provided further that (A) (1) the terms of such additional In debtedness shall not contain cross-default provisions to the MSW Indentures, (2) such additional Indebtedness shall not be secured by any assets (other than Cash or Cash Equivalents allocated from the funds representing such Indebtedness securing principal and interest payments to the extent required pursuant to the terms of such additional Indebtedness) 112 --------------------------------------------------------------------------------   that do not secure the MSW Notes, and (3) no portion of the principal of such additional Indebtedness shall be scheduled to be redeemed, repurchased or otherwise repaid or prepaid (other than as a result of a change of control, asset sales, receipt of equity and indebtedness proceeds, condemnation and eminent domain, change of control events, acceleration or such other provision as shall be customary for comparable high-yield debt securities) prior to the earlier of (x) the date on which the corresponding portion of the Indebtedness would be payable under the MSW Notes and (y) the date that is six months after the Maturity Date; and (B) after giving effect to the incurrence of such Indebtedness, (1) Company and its Subsidiaries shall be in pro forma compliance with the financial covenants set forth in Section 6.8 and (2) no Default or Event of Default shall exist or would result therefrom, and (iii) any debt securities issued by ARC LLC to finance MSW Put-Related Costs, in an amount up to $425,000,000, plus any reasonable and customary transaction costs and fees and required premium in connection therewith (the “New ARC Notes”); provided that the proceeds thereof are used to pay MSW Put-Related Costs and reasonable and customary fees, commissions, legal fees and other costs and expenses incurred in connection with such issuance and payment; provided further that (A) (1) the terms of such additional Indebtedness shall not contain cross-default provisions to the ARC Indenture, (2) such additional Indebtedness shall not be secured by any assets (other than Cash or Cash Equivalents allocated from the funds representing such Indebtedness securing principal and interest payments to the extent required pursuant to the terms of such additional Indebtedness) that do not secure the ARC Notes, and (3) no portion of the principal of such additional Indebtedness shall be scheduled to be redeemed, repurchased or otherwise repaid or prepaid (other than as a result of a change of control, asset sales, receipt of equity and indebtedness proceeds, condemnation and eminent domain, change of control events, acceleration or such other provision as shall be customary for comparable high-yield debt securities) prior to the earlier of (x) the date on which the corresponding portion of the Indebtedness would be payable under the ARC Notes and (y) the date that is six months after the Maturity Date; and (B) after giving effect to the incurrence of such Indebtedness, (1) Company and its Subsidiaries shall be in pro forma compliance with the financial covenants set forth in Section 6.8 and (2) no Default or Event of Default shall exist or would result therefrom;           (o) the Second Lien Term Loans owed under the Second Lien Credit Agreement in an aggregate principal amount not to exceed $400,000,000 minus, following the Delayed Draw Term Loan Credit Date, the principal amount of the Delayed Draw Term Loan and the Second Lien Notes owed under the Second Lien Notes Indenture in an aggregate principal amount not to exceed $400,000,000 minus, following the Delayed Draw Term Loan Credit Date, the principal amount of the Delayed Draw Term Loan plus any accrued interest, and guaranties related thereto, and any Indebtedness incurred to refinance, renew, extend or replace such Indebtedness in whole or in part at the then-prevailing market rates, and guaranties related thereto; provided that, (i) the non-economic terms and conditions of such Indebtedness, taken as a whole (considering the economic benefits and disadvantages of such refinancing, replacement, renewal or extension), are no less favorable in any material respect to the obligors thereon than the Second Lien Credit Agreement or Second Lien Notes Indenture, as applicable, (ii) such refinancing, renewal, extension or replacement is incurred only by the Person who is the obligor on the Second Lien Term Loans or Second Lien Notes, as applicable, being refinanced, renewed, extended or replaced and guaranties related thereto and (iii) the average life to maturity thereof is greater than or equal to that of the Second Lien Term Loans and Second Lien Notes, as applicable; 113 --------------------------------------------------------------------------------             (p) to the extent no Default or Event of Default shall have occurred and be continuing or shall be caused thereby at the time of the incurrence thereof, Limited Recourse Debt, the proceeds of which are applied to make Expansions, incurred after the Closing Date in an aggregate amount not to exceed the greater of (i) $60,000,000 and (ii) 50% of the principal amount of Limited Recourse Debt of Subsidiaries of Company outstanding as of the Closing Date which has been permanently repaid (and not otherwise renewed, refinanced, replaced or extended pursuant to Section 6.1(l) or otherwise) since the Closing Date (up to a maximum principal amount under this clause (p) of $250,000,000;           (q) Company and its Subsidiaries may become and remain liable with respect to their obligations to pay for services rendered by Holding to them under and in accordance with the Corporate Services Reimbursement Agreement;           (r) Company and its Subsidiaries may become and remain liable with respect to usual and customary contingent obligations incurred in connection with insurance deductibles or self-insurance retentions required by third party insurers in connection with insurance arrangements entered into by Company and its Subsidiaries with such insurers in compliance with Section 5.5;           (s) Company and its Subsidiaries may become and remain liable with respect to Performance Guaranties supporting Projects, provided, that (a) the terms of any such Performance Guaranty shall be generally consistent with past practice of Company and its Subsidiaries, (b) in no event shall any such Performance Guaranty be secured by collateral, and (c) after the occurrence and during the continuation of an Event of Default, neither Company nor any if its Subsidiaries shall enter into any such Performance Guaranty or enter into a contractual commitment to provide any such Performance Guaranty;           (t) Indebtedness of any Covanta Warren Entity to Company or any of its Subsidiaries to the extent the proceeds thereof are immediately used to make the Restricted Junior Payment expressly permitted pursuant to Section 6.5(h) or to make the payments contemplated under Section 6.7(l)(ii);           (u) Company may become and remain liable with respect to Indebtedness consisting solely of its obligations under Insurance Premium Financing Arrangements, which obligations shall not exceed at any time $40,000,000 in the aggregate;           (v) Company and its Subsidiaries may become and remain liable with respect to Hedge Agreements and with respect to long-term or forward purchase contracts and option contracts to buy, sell or exchange commodities and similar agreements or arrangements, so long as such contracts, agreements or arrangements do not constitute Commodities Agreements;           (w) Company and its Subsidiaries may become and remain liable with respect to contingent obligations incurred in exchange (or in consideration) for (a) the release of cash collateral pledged by Company or its Subsidiaries or (b) the return and cancellation of undrawn letters of credit for which Company or its Subsidiaries are liable for reimbursement; 114 --------------------------------------------------------------------------------             (x) Indebtedness of any Subsidiary of Company to Company reflecting non-cash intercompany allocations of overhead and other parent-level costs in accordance with its customary allocation practices;           (y) Limited Recourse Debt of any Subsidiary of Company assumed in connection with a Permitted Acquisition of such Subsidiary existing at the time such Permitted Acquisition was consummated provided that such Limited Recourse Debt was not incurred in connection with or in anticipation of such Permitted Acquisition in an aggregate amount not to exceed at any time $50,000,000; and           (z) Additional unsecured Indebtedness of Company and its Guarantor Subsidiaries in an amount not to exceed $10,000,000 in the aggregate since the Closing Date.      To the extent that the creation, incurrence or assumption of any Indebtedness could be attributable to more than one subsection of this Section 6.1, Company may allocate such Indebtedness to any one or more of such subsections and in no event shall the same portion of Indebtedness be deemed to utilize or be attributable to more than one item.      6.2. Liens. Neither Company nor any Guarantor Subsidiary shall, and shall not permit any of its Subsidiaries to, directly or indirectly, create, incur, assume or permit to exist any Lien on or with respect to any property or asset of any kind (including any document or instrument in respect of goods or accounts receivable) of Company or any of its Subsidiaries, whether now owned or hereafter acquired, or any income or profits therefrom, except:           (a) Liens in favor of Collateral Agent for the benefit of Secured Parties granted pursuant to any Credit Document;           (b) Liens for Taxes if obligations with respect to such Taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted;           (c) statutory Liens of landlords, banks (and rights of set-off), of carriers, warehousemen, mechanics, repairmen, workmen and materialmen, and other Liens imposed by law (other than any such Lien imposed pursuant to Section 401 (a)(29) or 412(n) of the Internal Revenue Code or by ERISA), in each case incurred in the ordinary course of business (i) for amounts not yet overdue or (ii) for amounts that are overdue and that (in the case of any such amounts overdue for a period in excess of ten days) are being diligently contested in good faith by appropriate proceedings, so long as such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made for any such contested amounts;           (d) Liens incurred and deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety, performance, bid, payment and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money) so long as no foreclosure, sale or similar proceedings have been commenced with respect to any portion of the Collateral on account thereof and Liens securing, or arising in connection with the establishment of, required debt service reserve funds, provided that in the case of Liens securing debt service reserve funds, completion obligations and similar accounts 115 --------------------------------------------------------------------------------   and obligations (other than Indebtedness) of Subsidiaries of Company to Persons other than Company and its Subsidiaries and their respective Affiliates, so long as (a) each such obligation is associated with a Project, (b) such Lien is limited to (1) assets associated with such Project (which in any event shall not include assets held by Company or any of its Subsidiaries other than a Subsidiary whose sole business is the ownership and/or operation of such Project and substantially all of whose assets are associated with such Project) and/or (2) the equity interests in such Subsidiary, but in the case of clause (2) only if such Subsidiary’s sole business is the ownership and/or operation of such Project and substantially all of such Subsidiary’s assets are associated with such Project, and (c) such obligation is otherwise permitted under this Agreement;           (e) easements, rights-of-way, restrictions, encroachments, and other minor defects or irregularities in title, in each case which do not and will not interfere with the ordinary conduct of the business of Company or any of its Subsidiaries;           (f) any interest or title of a lessor or sublessor under any lease of real estate permitted hereunder;           (g) Liens solely on any cash earnest money deposits made by Company or any of its Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder;           (h) purported Liens evidenced by the filing of precautionary UCC financing statements relating solely to operating leases of personal property entered into in the ordinary course of business;           (i) Lien on Cash or Cash Equivalents to the extent used to secure principal and interest payments to the extent required pursuant to indentures otherwise permitted hereunder and funded with the proceeds of the issuance of notes thereunder;           (j) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;           (k) any zoning or similar law or right reserved to or vested in any governmental office or agency to control or regulate the use of any real property, in each case which do not and will not interfere with or affect in any material respect the use, value or operations of any Closing Date Mortgaged Property or Material Real Estate Asset or the ordinary conduct of the business of Company or any of its Subsidiaries;           (l) licenses of patents, trademarks and other intellectual property rights granted by Company or any of its Subsidiaries in the ordinary course of business and not interfering in any respect with the ordinary conduct of the business of Company or such Subsidiary;           (m) Liens described in Schedule 6.2 or on a Title Policy delivered pursuant to Section 3.1(h)(iv);           (n) Liens (i) arising under Capital Leases entered into after the Closing Date and (ii) securing purchase money Indebtedness in an aggregate amount in the case of (i) and (ii) 116 --------------------------------------------------------------------------------   together not to exceed at any time $15,000,000; provided, any such Lien shall encumber only the asset acquired with the proceeds of such Indebtedness;           (o) Liens on the Collateral securing obligations under the Second Lien Credit Agreement and/or Second Lien Notes and all collateral documents related to either of them including permitted refinancings, renewals, extensions, refundings and replacements thereof; provided that such Liens are subordinated to the Liens securing the Obligations in accordance with the terms of the Intercreditor Agreement;           (p) Liens on assets of any Subsidiary of Company and/or on the stock or other equity interests of such Subsidiary, in each case to the extent such Liens secure Limited Recourse Debt of such Subsidiary permitted by Section 6.1(p) and Liens on assets of any Foreign Subsidiary of Company constituting equity interests in a Joint Venture to the extent such Liens secure Indebtedness of such Joint Venture in respect of a Project;           (q) Liens created pursuant to Insurance Premium Financing Arrangements otherwise permitted under this Agreement, so long as such Liens attach only to gross unearned premiums for the insurance policies and related rights;           (r) Liens securing refinancing Indebtedness permitted by Section 6.1(l), provided that in each case the Liens securing such refinancing Indebtedness shall attach only to the assets that were subject to Liens securing the Indebtedness so refinanced;           (s) Liens securing Indebtedness permitted by Section 6.1(m)(i) and Section 6.1(m)(ii) and Liens secured only by the asset acquired in connection with the incurrence of such Indebtedness permitted by Section 6.1(y);           (t) rights and claims of creditors of Company and its Subsidiaries to the bankruptcy reserve funds established in connection with the plan of reorganization in the bankruptcy cases of Company and its Subsidiaries that became effective on March 10, 2004 (the “Plan of Reorganization”) and held in the designated account permitted under Section 5.17 and indicated on Schedule 5.15 and paid into such account prior to the Closing Date pursuant to such plan of reorganizations);           (u) Liens on cash collateral of Company and its Subsidiaries securing insurance deductibles or self-insurance retentions required by third party insurers in connection with (i) workers’ compensation insurance arrangements entered into by Company and its Subsidiaries with such insurers and (ii) other insurance arrangements entered into by Company and its Subsidiaries with such insurers in an amount not to exceed $2,000,000 in the aggregate;           (v) Liens on assets acquired (or on the assets of Persons acquired) in a Permitted Acquisition that existed at the time of such acquisition and that were not created in contemplation of such acquisition; and           (w) other Liens on assets other than the Collateral securing Indebtedness in an aggregate amount not to exceed $2,500,000 at any time outstanding.      6.3. [Intentionally left blank]. 117 --------------------------------------------------------------------------------        6.4. No Further Negative Pledges. Except with respect to (a) property encumbered to secure payment of particular Indebtedness or to be sold pursuant to an executed agreement with respect to an asset sale permitted hereunder, (b) restrictions contained in the MSW Indentures, (c) restrictions contained in leases and licenses that relate only to the property or rights leased or licensed thereunder, (d) restrictions contained in the MSW Refinancing Indenture or the New MSW Indentures and in any documents, instruments or agreements pursuant to which the MSW Refinancing Notes or New MSW Notes may be refinanced or replaced that are no more restrictive than those contained in the MSW Indentures or the New MSW Indentures, as applicable, (e) restrictions contained in the Second Lien Credit Agreement and all collateral documents related thereto as of the Closing Date and in Second Lien Notes Indenture, (f) restrictions contained in any documents, instruments or agreements pursuant to which the Second Lien Notes or Second Lien Term Loans may be refinanced or replaced that are no more restrictive than those contained in the Second Lien Credit Agreement or the Second Lien Notes Indenture as applicable, (g) restrictions contained in the ARC Indenture, (h) restrictions contained in any documents, instruments or agreements pursuant to which the ARC Notes or the New ARC Notes may be refinanced or replaced (including any ARC Refinancing Indenture) that are no more restrictive than those contained in the ARC Indenture, (i) restrictions contained in any instrument, document or agreement to which any Person acquired by Company or a Subsidiary in a Permitted Acquisition is a party, provided that such restrictions (A) were not created in contemplation of such acquisition and (B) are not applicable to any Person, property or assets other than the Persons so acquired (and its Subsidiaries), (j) restrictions by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses and similar agreements entered into in the ordinary course of business (provided that such restrictions are limited to the property or assets secured by such Liens or the property or assets subject to such leases, licenses or similar agreements, as the case may be) and (k) provisions in the principal lease, service and operating agreements pertaining to Projects or the partnership and financing agreements relating to Projects, or any extension, renewal or replacement thereof so long as in each case such lease, service, operating, partnership or financing agreement is in effect as of the Closing Date, is otherwise permitted to be entered into hereunder and, in the case of any extension, renewal or replacement, such agreement contains no more restrictive provisions relating to prohibiting the creation or assumption of any Lien upon the properties or assets of the relevant Subsidiary than the lease, service, operating, partnership or financing agreement so extended, renewed or replaced, Company and its Subsidiaries shall not, and shall not permit any of their Subsidiaries to, enter into any agreement prohibiting the creation or assumption of any Lien upon any of its properties or assets, whether now owned or hereafter acquired.      6.5. Restricted Junior Payments. Neither Company nor any Guarantor Subsidiary shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart any sum for any Restricted Junior Payment except that (a) MSW I, MSW II and ARC LLC may make regularly scheduled payments of interest in respect of the MSW Notes, any MSW Refinancing Notes, the ARC Notes, any ARC Refinancing Notes, the New MSW Notes, the New ARC Notes and any instrument or agreement in respect of any permitted refinancing thereof, and may make regularly scheduled payments of principal, mandatory prepayments and redemptions (including payment of premium) of, or repay at maturity, the MSW Notes, the ARC Notes, the New MSW Notes, the ARC Refinancing Notes, the New ARC Notes and any instrument or agreement in respect of any permitted refinancing thereof, all in accordance with 118 --------------------------------------------------------------------------------   the terms of, and only to the extent required by, and subject to the subordination provisions, if any, contained in the MSW Indentures, MSW Refinancing Indentures, the ARC Indentures, the ARC Refinancing Indentures, the New MSW Indentures, the New ARC Indenture and any instrument or agreement in respect of any permitted refinancing thereof; (b) Company may make required payments of principal and interest in respect of the Indebtedness incurred under the Second Lien Credit Agreement and Second Lien Notes Indenture and any refinancing thereof permitted hereunder and thereunder and pursuant to the Intercreditor Agreement and Company may make a voluntary prepayment of the Indebtedness incurred under the Second Lien Credit Agreement on the Delayed Draw Term Loan Credit Date in an amount not to exceed the amount of the Delayed Draw Term Loan Commitment; (c) so long as no Event of Default pursuant to Section 8.1(a) shall have occurred and be continuing, Company may make payments to Holding to the extent required under the Corporate Services Reimbursement Agreement and Company may reimburse Holding for the fees and reasonable costs and expenses paid or payable by Holding within 180 days of the Closing Date in connection with the Transactions and the Related Transactions; (d) Company and its Subsidiaries may make payments required under the Holding Tax Sharing Agreement; provided, that in no event shall the amount paid by Company and its Subsidiaries exceed the lesser of (i) the consolidated tax liabilities that would be payable if Company and its Subsidiaries filed a consolidated tax return with Company as the parent company and (ii) the consolidated tax liabilities of Holding and its Subsidiaries; (e) Company may make Restricted Junior Payments to Holding in order to allow Holding to fund regulatory capital or other requirements relating to the Insurance Subsidiaries of Holding in an aggregate amount not to exceed $3,000,000 in any Fiscal Year; provided that (i) no Default or Event of Default shall have occurred and be continuing or shall be caused thereby and (ii) Company and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 6.8 on a pro forma basis after giving effect to such payment as of the last day of the Fiscal Quarter most recently ended; (f) so long as no Default or Event of Default shall have occurred and be continuing or would be caused thereby, Company may make additional Restricted Junior Payments to Holding, the proceeds of which may be utilized by Holding to make additional Restricted Junior Payments, in an aggregate amount not to exceed $10,000,000; provided, that notwithstanding the foregoing, until (i) such time as the Company Leverage Ratio determined on a pro forma basis is less than 4.25:1.00 at any date of determination, (ii) no Default or Event of Default shall have occurred and be continuing or shall be caused thereby, (iii) Company and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 6.8 on a pro forma basis after giving effect to such payment as of the last day of the Fiscal Quarter most recently ended and (iv) at the time of such payment and after giving effect thereto, the sum of (y) the amount, if any, by which (i) the Revolving Commitment exceeds (ii) the sum of the Total Utilization of Revolving Commitments plus (z) the aggregate amount of unrestricted Cash and Cash Equivalents of Company at such time, shall not be less than $50,000,000; (g) so long as no Event of Default shall have occurred and be continuing, Subsidiaries of Company may and (with respect to Second Lien Credit Agreement, the Second Lien Notes Indenture and any refinancing thereof permitted thereunder) Company may, at the time Indebtedness is refinanced or replaced as permitted under Section 6.1 by other Indebtedness permitted under such section, pay principal, accrued interest and other amounts owing on the Indebtedness being refinanced at such time, provided, that such payments may be made with respect to Limited Recourse Debt during the continuance of an Event of Default so long as such payments are from the proceeds of Limited Recourse Debt permitted to be incurred hereunder and such proceeds are required to be applied 119 --------------------------------------------------------------------------------   to make such payments under a binding Contractual Obligation to a third party and ARC LLC may make regularly scheduled payments of interest in respect of the notes issued under the ARC Indenture and under any Indebtedness incurred to refinance the same and in respect of principal of such notes only mandatorily prepay or redeem (including payment of any premium) or repay at maturity, all in accordance with the terms of the ARC Indenture and any Indebtedness incurred to refinance the same, and only to the extent required by the ARC Indenture or terms of such refinancing Indebtedness; and (h) so long as no Event of Default shall have occurred and be continuing, Company or any of its Subsidiaries may repay the outstanding Covanta Warren Debt pursuant to a confirmed plan of reorganization up to an aggregate amount not to exceed $18,000,000; provided that each Covanta Warren Entity immediately thereafter ceases to be an Affected Entity, becomes a Guarantor hereunder and a Grantor under the Pledge and Security Agreement and complies with Section 5.10.      6.6. Restrictions on Subsidiary Distributions. Except as provided herein, in the Second Lien Credit Agreement, the Second Lien Notes Indenture, the ARC Indentures, the ARC Refinancing Indenture, the New ARC Indenture, the MSW Indentures, MSW Refinancing Indentures or the New MSW Indentures or any document, instrument or agreement entered into in connection with a replacement or refinancing of any of the foregoing permitted hereunder, neither Company nor any Guarantor Subsidiary shall, nor shall it permit any of its Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Subsidiary of Company to (a) pay dividends or make any other distributions on any of such Subsidiary’s Capital Stock owned by Company or any other Subsidiary of Company, (b) repay or prepay any Indebtedness owed by such Subsidiary to Company or any other Subsidiary of Company, (c) make loans or advances to Company or any other Subsidiary of Company, or (d) transfer any of its property or assets to Company or any other Subsidiary of Company other than restrictions (i) in agreements evidencing Indebtedness permitted by Sections 6.1(j) or (m) that impose restrictions on the property so acquired, (ii) by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses, joint venture agreements and similar agreements, (iii) by reason of provisions in the principal lease, service or operating agreements, partnership agreements and financing agreements pertaining to Projects, so long as such lease, service or operating agreements, partnership agreements and financing agreements are extensions, renewals or replacements of such agreements are in effect as of the Closing Date, are otherwise permitted to be entered into hereunder and, in each case of any extensions, renewals or replacements, contain no more restrictive provisions relating to the ability of the relevant Subsidiary to take the actions described in clauses (a) through (d) than the agreement so extended, renewed or replaced, (iv) that are or were created by virtue of any transfer of, agreement to transfer or option or right with respect to any property, assets or Capital Stock not otherwise prohibited under this Agreement (v) that are of the type set forth in clause (d) above contained in agreements relating to an asset sale permitted hereunder (or to which Requisite Lenders have consented) (provided that such restrictions only apply to the assets that are the subject of such a sale), (vi) that are of the type set forth in clauses (a) through (d) above contained in agreements relating the sale or disposition of all of the equity interests of a Subsidiary permitted hereunder (or to which the Requisite Lenders have consented) (provided that such restrictions only apply to the Subsidiary being sold or disposed of and its Subsidiaries), and (vii) by reason of provisions in any instrument, document or agreement to which any Person acquired by Company or a Subsidiary in a Permitted Acquisition is a party, provided that such restrictions (A) were not created in 120 --------------------------------------------------------------------------------   contemplation of such acquisition and (B) are not applicable to any Person, property or assets other than the Person (and such Person’s Subsidiaries) so acquired and their respective properties and assets. No Credit Party shall, nor shall it permit any of its Subsidiaries, to enter into any immaterial Contractual Obligation on or after the Closing Date which would prohibit a Subsidiary of Company becoming a Credit Party.      6.7. Investments. Neither Company nor any Guarantor Subsidiary shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, make or own any Investment in any Person, including without limitation any Joint Venture, except:           (a) Investments in Cash and Cash Equivalents and, to the extent made in connection therewith, Investments permitted or imposed under the terms of any cash collateral or debt service reserve agreement (including pursuant to the terms of any Project bond indenture and the MSW Indentures) permitted hereunder;           (b) equity Investments owned as of the Closing Date in any Subsidiary and Investments made after the Closing Date in any wholly-owned Guarantor Subsidiaries of Company;           (c) Investments (i) in any Securities or instruments received in satisfaction or partial satisfaction thereof from financially troubled account debtors, (ii) received in settlement of disputes or as consideration in any asset sale or other disposition permitted hereunder and (iii) constituting deposits, prepayments and other credits to suppliers made in the ordinary course of business consistent with the past practices of Company and its Subsidiaries;           (d) intercompany loans and advances to the extent permitted under Section 6.1(b), (c), (d), (e), (f) or (k);           (e) Investments by a Subsidiary of Company constituting Consolidated Capital Expenditures by such Subsidiary permitted by Section 6.8(d);           (f) Investments made in connection with Permitted Acquisitions permitted pursuant to Section 6.9;           (g) Investments described in Schedule 6.7;           (h) Company and its Subsidiaries may become and remain liable with respect to contingent obligations consisting of long-term or forward purchase contracts and option contracts to buy, sell or exchange commodities and similar agreements or arrangements, so long as such contracts, agreements or arrangements do not constitute Commodities Agreements;           (i) Foreign Subsidiaries may make equity Investments in other Foreign Subsidiaries (including without limitation, Investments made in connection with the Foreign Subsidiary restructuring as expressly set forth in Schedule 6.9-B) and Excluded Subsidiaries may make equity Investments in other Excluded Subsidiaries which are their direct or indirect Subsidiaries; 121 --------------------------------------------------------------------------------             (j) to the extent no Default or Event of Default shall have occurred and be continuing at the time the same are made or shall be caused thereby, (i) equity Investments in Foreign Subsidiaries and Excluded Subsidiaries by Company or any Guarantor Subsidiary to provide such Subsidiary with equity capitalization necessary or advisable in connection with an Expansion of a Project of such Subsidiary in an amount not to exceed 30% of the amount of Limited Recourse Debt that such Subsidiary is permitted to incur under (or has already incurred in reliance on) Section 6.1(p) and (ii) equity Investments in Subsidiaries by Company or any Subsidiary to provide such Subsidiary with equity capitalization necessary or advisable in connection with the making of Permitted Acquisitions substantially contemporaneously with such equity Investment;           (k) Investments of Persons acquired in a Permitted Acquisition that existed at the time of such acquisition;           (l) (i) for so long as the Covanta Warren Entities remain Affected Entities, loans and advances by Company to the Covanta Warren Entities in an aggregate principal amount not to exceed $3,000,000 pursuant to debtor-in-possession financing provided to the Covanta Warren Entities by Company and (ii) Investments made by Company in the Covanta Warren Entities, in an amount not exceed $18,000,000 when aggregated with payments permitted under Section 6.5(h), on or after the effective date of the confirmation of a plan of reorganization of the Covanta Warren Entities in connection with such reorganization;           (m) equity investments arising from or as a part of (i) the Foreign Subsidiary Restructuring as expressly set forth in Schedule 6.9-B and (ii) the cancellation of intercompany indebtedness described in clause (b) of the second proviso to Section 6.1(e)(v);           (n) equity Investments in MSW I and/or MSW II; provided that such Investments shall be made from      (i) the proceeds of the Put-Related Equity Offering (less the amount of any intercompany loans made pursuant to Section 6.1(e)(i)(B)),      (ii) Cash and Cash Equivalents from Company’s operations; provided that after giving effect to such Investment and any Indebtedness incurred pursuant to Section 6.1(e)(i)(C) unrestricted Cash and Cash Equivalents of Company and the Acquired Business shall not be less than $50,000,000 (provided further that for the purposes of calculating such amount, no more than $5,000,000 of Marketable Securities shall be included in such calculation), and      (iii) the proceeds of an equity contribution from Holding to Company to occur with 120 days of the Closing Date in an aggregate amount not to exceed $25,000,000 (less the amount of any intercompany loans made pursuant to Section 6.1(e)(i)(D)); provided further that Investments in MSW I and/or MSW II pursuant to clauses (i) through (iii) immediately above shall be used to solely pay MSW Put-Related Costs and when added to Indebtedness on-lent pursuant to Section 6.1(e)(i) shall not exceed in the aggregate the amount set forth on the certificate delivered pursuant to Section 5.1(k); 122 --------------------------------------------------------------------------------             (o) a one-time Investment in Covanta ARC Holdings Inc. in an aggregate amount not to exceed the difference between (x) $740,000,000 and (y) the amount paid in Cash by Company to purchase the Acquired Business; provided that such Investment will be used solely to pay transition costs of the type set out on Schedule 1.1(f) incurred in connection with integration of the Acquired Business; and           (p) other Investments in an aggregate amount not to exceed at any time $5,000,000.      Notwithstanding the foregoing, in no event shall any of Company or any of its Subsidiaries make any Investment which results in or facilitates in any manner any Restricted Junior Payment not otherwise permitted under the terms of Section 6.5.      To the extent that the making of any Investment could be deemed a use of more than one subsection of this Section 6.7, Company may select the subsection to which such Investment will be deemed a use and in no event shall the same portion of an Investment be deemed a use of more than one subsection.      6.8. Financial Covenants.           (a) Cash Flow Coverage Ratio. Company shall not permit the Cash Flow Coverage Ratio as of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending September 30, 2005, to be less than the correlative ratio indicated:               Cash Flow Fiscal Quarter   Coverage Ratio September 30, 2005     1.5:1.00     December 31, 2005     1.5:1.00     March 31, 2006     1.5:1.00     June 30, 2006     1.5:1.00     September 30, 2006     1.5:1.00     December 31, 2006     1.5:1.00   123 --------------------------------------------------------------------------------                 Cash Flow Fiscal Quarter   Coverage Ratio March 31, 2007     1.55:1.00     June 30, 2007     1.55:1.00     September 30, 2007     1.55:1.00     December 31, 2007     1.55:1.00     March 31, 2008     1.55:1.00     June 30, 2008     1.55:1.00     September 30, 2008     1.55:1.00     December 31, 2008     1.55:1.00     March 31, 2009     1.7:1.00     June 30, 2009     1.7:1.00     September 30, 2009     1.7:1.00     December 31, 2009     1.7:1.00     March 31, 2010     1.7:1.00     June 30, 2010     1.7:1.00   124 --------------------------------------------------------------------------------                 Cash Flow Fiscal Quarter   Coverage Ratio September 30, 2010     1.7:1.00     December 31, 2010     1.7:1.00     March 31, 2011     1.7:1.00     June 30, 2011     1.7:1.00     September 30, 2011     1.7:1.00     December 31, 2011     1.7:1.00     Thereafter     2.00:1.00             (b) Company Leverage Ratio. Company shall not permit the Company Leverage Ratio as of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending September 30, 2005, to exceed the correlative ratio indicated:               Company Leverage Fiscal Quarter   Ratio September 30, 2005     6.00:1.00     December 31, 2005     6.00:1.00     March 31, 2006     6.00:1.00     June 30, 2006     6.00:1.00   125 --------------------------------------------------------------------------------                 Company Leverage Fiscal Quarter   Ratio September 30, 2006     6.00:1.00     December 31, 2006     6.00:1.00     March 31, 2007     5.50:1.00     June 30, 2007     5.50:1.00     September 30, 2007     5.50:1.00     December 31, 2007     5.50:1.00     March 31, 2008     5.25:1.00     June 30, 2008     5.25:1.00     September 30, 2008     5.25:1.00     December 31, 2008     5.25:1.00     March 31, 2009     5.00:1.00     June 30, 2009     5.00:1.00     September 30, 2009     5.00:1.00     December 31, 2009     5.00:1.00   126 --------------------------------------------------------------------------------                 Company Leverage Fiscal Quarter   Ratio March 31, 2010     4.75:1.00     June 30, 2010     4.75:1.00     September 30, 2010     4.75:1.00     December 31, 2010     4.75:1.00     March 31, 2011     4.75:1.00     June 30, 2011     4.75:1.00     September 30, 2011     4.75:1.00     December 31, 2011     4.75:1.00     Thereafter     4.00:1.00             (c) Consolidated Adjusted EBITDA. Company shall not permit the Consolidated Adjusted EBITDA as at the end of any Fiscal Quarter, beginning with the Fiscal Quarter ending September 30, 2005, for the four Fiscal Quarter period then ended, taken as a single accounting period, to be less than the correlative amount indicated:               Consolidated Adjusted Fiscal Quarter   EBITDA September 30, 2005   $ 425,000,000     December 31, 2005   $ 425,000,000   127 --------------------------------------------------------------------------------                 Consolidated Adjusted Fiscal Quarter   EBITDA March 31, 2006   $ 425,000,000     June 30, 2006   $ 425,000,000     September 30, 2006   $ 425,000,000     December 31, 2006   $ 425,000,000     March 31, 2007   $ 425,000,000     June 30, 2007   $ 425,000,000     September 30, 2007   $ 425,000,000     December 31, 2007   $ 425,000,000     March 31, 2008   $ 425,000,000     June 30, 2008   $ 425,000,000     September 30, 2008   $ 425,000,000     December 31, 2008   $ 425,000,000     March 31, 2009   $ 425,000,000     June 30, 2009   $ 425,000,000   128 --------------------------------------------------------------------------------                 Consolidated Adjusted Fiscal Quarter   EBITDA September 30, 2009   $ 425,000,000     December 31, 2009   $ 425,000,000     March 31, 2010   $ 425,000,000     June 30, 2010   $ 425,000,000     September 30, 2010   $ 425,000,000     December 31, 2010   $ 425,000,000     March 31, 2011   $ 425,000,000     June 30, 2011   $ 425,000,000     September 30, 2011   $ 425,000,000     December 31, 2011   $ 425,000,000     Thereafter   $ 425,000,000             (d) Maximum Consolidated Capital Expenditures. Company shall not make or incur any Consolidated Capital Expenditures at all after the Closing Date, and shall not permit its Subsidiaries to, make or incur Consolidated Capital Expenditures, in any Fiscal Year indicated below, in an aggregate amount for Subsidiaries of Company in excess of the corresponding amount set forth below opposite such Fiscal Year; provided, such amount for any Fiscal Year shall be increased by an amount (up to a maximum amount of $65,000,000), equal to 50% of the excess, if any, of such amount for the previous Fiscal Year (after giving effect to any adjustment in accordance with this proviso) over the actual amount of Consolidated Capital Expenditures for such previous Fiscal Year: 129 --------------------------------------------------------------------------------                 Consolidated Capital Fiscal Year   Expenditures 2005   $ 65,000,000     2006   $ 65,000,000     2007   $ 65,000,000     2008   $ 65,000,000     2009   $ 65,000,000     2010   $ 65,000,000     2011   $ 65,000,000     Thereafter   $ 65,000,000        6.9. Fundamental Changes; Disposition of Assets; Acquisitions. Neither Company nor any Guarantor Subsidiary shall, nor shall it permit any of its Subsidiaries to, enter into any transaction of merger or consolidation, or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease or sub-lease (as lessor or sublessor), exchange, transfer or otherwise dispose of, in one transaction or a series of transactions, all or any part of its business, assets or property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, whether now owned or hereafter acquired, or acquire by purchase or otherwise (other than purchases or other acquisitions of inventory, materials and equipment and Consolidated Capital Expenditures in the ordinary course of business) the business, property or fixed assets of, or stock or other evidence of beneficial ownership of, any Person or any division or line of business or other business unit of any Person, except:      (a) any Subsidiary of Company may be merged with or into Company or any Guarantor Subsidiary, or be liquidated, wound up or dissolved, or all or any part of its business, property or assets may be conveyed, sold, leased, transferred or otherwise disposed of, in one transaction or a series of transactions, to Company or any Guarantor Subsidiary; provided, in the case of such a merger, Company or such Guarantor Subsidiary, as applicable shall be the continuing or surviving Person. In addition, any Subsidiary of Company that is not a Guarantor may be merged with or into any other Subsidiary of Company that is not a Guarantor which is its 130 --------------------------------------------------------------------------------   direct parent or Subsidiary, or all or any part of its business, property or assets may be conveyed, sold, leased, transferred or otherwise disposed of, in one transaction or a series of transactions, to any other Subsidiary of Company that is not a Guarantor and which is its direct parent or Subsidiary;           (b) sales or other dispositions of assets that do not constitute Asset Sales; and           (c) Asset Sales, the Net Asset Sale Proceeds of which when aggregated with the proceeds of all other Asset Sales made within the same Fiscal Year, do not exceed $7,500,000 and the sale or other dispositions of those assets identified on Schedule 6.9-A; provided (1) the consideration received for such assets shall be in an amount at least equal to the fair market value thereof (determined in good faith by the board of directors of Company or the relevant Subsidiary (or similar governing body)), (2) no less than 80% thereof shall be paid in Cash (which limitation shall not apply to the sale or offer disposition of assets identified on Schedule 6.9-A), and (3) the Net Asset Sale Proceeds thereof shall be applied as required by Section 2.14(a) to the extent required thereby;           (d) Excluded Asset Sales;           (e) (i) Permitted Acquisitions to the extent the consideration does not exceed $75,000,000 in the aggregate plus the amount of any Acquisition Holding Contributions from the Closing Date to the date of determination and (ii) acquisitions by Company of assets contributed to it by Holding as equity capital contributions;           (f) acquisitions of real property that is contiguous to real property owned by Company or its Subsidiaries at such time; so long as such acquisition is either (i) by Company or any Guarantor Subsidiary, or (ii) if not within clause (i) of this provision, is either (A) financed with the proceeds of Limited Recourse Debt and/or the proceeds of an Investment pursuant to Section 6.7(j) or (B) consummated for consideration in an aggregate amount (together with any other acquisitions made in reliance on this Section 6.9(f)(ii)(B) following the Closing Date) not to exceed $3,000,000;           (g) acquisitions and the Foreign Subsidiary restructuring in each case to the extent expressly identified on Schedule 6.9-B; and           (h) Investments permitted under Section 6.7.      6.10. Disposal of Subsidiary Interests. Except for any sale of all of its interests in the Capital Stock of any of its Subsidiaries in compliance with the provisions of Section 6.9, and except as provided in the Second Lien Credit Agreement or the Second Lien Notes Indenture and related documentation (including permitted refinancings thereof), neither Company nor any Guarantor Subsidiary shall, nor shall it permit any of its Subsidiaries to, (a) directly or indirectly sell, assign, pledge or otherwise encumber or dispose of any Capital Stock of any of its Guarantor Subsidiaries, except to qualify directors if required by applicable law; or (b) directly or indirectly to sell or otherwise dispose of any Capital Stock of any of its Subsidiaries, except to Company or Guarantor Subsidiary (subject to the restrictions on such disposition otherwise imposed hereunder), or to qualify directors if required by applicable law. Notwithstanding the foregoing, (a) Excluded Subsidiaries may transfer Capital Stock in any of its Subsidiaries to 131 --------------------------------------------------------------------------------   other wholly-owned Excluded Subsidiaries, (b) Foreign Subsidiaries may transfer Capital Stock in any of its Subsidiaries to other wholly-owned Foreign Subsidiaries and (c) Company and its Subsidiaries may consummate the Foreign Subsidiary restructuring identified on Schedule 6.9-B.      6.11. Prohibition on Sales and Lease-Backs. Neither Company nor any Guarantor Subsidiary shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, become or remain liable as lessee or as a guarantor or other surety with respect to any lease of any property (whether real, personal or mixed), whether now owned or hereafter acquired, which any of Company or its Subsidiaries has sold or transferred or is to sell or to transfer to any other Person (other than Company or any of its Subsidiaries).      6.12. Transactions with Shareholders and Affiliates. Neither Company nor any Guarantor Subsidiary shall, nor shall it permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate, on terms that are less favorable to Company or that Subsidiary, as the case may be, than those that might be obtained at the time from a Person who is not an Affiliate; provided, the foregoing restriction shall not apply to (a) any transaction between Company and any Guarantor Subsidiary; (b) reasonable and customary fees paid to members of the board of directors (or similar governing body) of Company and its Subsidiaries; (c) compensation arrangements for officers and other employees of Company and its Subsidiaries entered into in the ordinary course of business; (d) payments (and other transactions) made in accordance with the terms of the Holding Tax Sharing Agreement, and the Corporate Services Reimbursement Agreement; (e) the Rights Offering; (f) the Put-Related Equity Offering; (g) transactions described in Schedule 6.12; (h) the Foreign Subsidiary restructuring identified on Schedule 6.9-B and any Indebtedness, Investments, dispositions of assets and other transactions permitted hereunder among Company and its Subsidiaries or among Subsidiaries of Company and (i) reasonable and customary indemnifications and insurance arrangements for the benefit of Persons that are officers or members of the boards of directors (or similar governing bodies) of Company and its Subsidiaries, whether such Persons are current or former officers or members at the time such indemnifications or arrangements are entered into, provided that such indemnifications and arrangements are entered into at arms’ length and on terms that are no less favorable to Company or that Subsidiary, as the case may be, than those that would have been obtained at the relevant time from Persons who are not Affiliates.      6.13. Conduct of Business. From and after the Closing Date, neither Company nor any Guarantor Subsidiary shall, nor shall it permit any of its Subsidiaries to, engage in any business other than (i) the businesses engaged in by Company or such Subsidiary on the Closing Date and similar or related businesses (including the establishment, construction, acquisition and operation of Projects and ash recycling, scrap metal processing, waste haulings collection and landfills in connection therewith) and (ii) such other lines of business as may be consented to by Requisite Lenders.      6.14. Amendments or Waivers of Certain Related Agreements. Except as set forth in Section 6.15 and Section 6.16, neither Company nor any Guarantor Subsidiary shall, nor shall it permit any of its Subsidiaries to, agree to any material amendment, restatement, supplement or other modification to, or waiver of, any of its material rights under any (i) Related Agreement or 132 --------------------------------------------------------------------------------   (ii) the principal documents relating to Limited Recourse Debt with respect to a Project after the Closing Date if such amendment, restatement, modification or waiver under clauses (i) or (ii), together with all other amendments, restatements, modifications and waivers made, would reasonably be expected to have a Material Adverse Effect; without in each case obtaining the prior written consent of Requisite Lenders to such amendment, restatement, supplement or other modification or waiver.      6.15. Amendments or Waivers with respect to MSW Notes, MSW Refinancing Notes, ARC Notes, ARC Refinancing Notes, New MSW Notes and New ARC Notes. Company and its Subsidiaries shall not, and shall not permit any of their Subsidiaries to, amend or otherwise change the terms of any MSW Notes, MSW Refinancing Notes, ARC Notes, ARC Refinancing Notes, New MSW Notes or New ARC Notes, or make any payment consistent with an amendment thereof or change thereto, if the effect of such amendment or change is to increase the interest rate on such MSW Notes, MSW Refinancing Notes, ARC Notes, ARC Refinancing Notes, New MSW Notes or New ARC Notes, change (to earlier dates) any dates upon which payments of principal or interest are due thereon, change any event of default or condition to an event of default with respect thereto (other than to eliminate any such event of default or increase any grace period related thereto), change the redemption, prepayment or defeasance provisions thereof or otherwise make such event of default or condition less restrictive or burdensome on Company, or if the effect of such amendment or change, together with all other amendments or changes made, is to increase materially the obligations of the obligor thereunder or to confer any additional rights on the holders of such MSW Notes, MSW Refinancing Notes, ARC Notes, ARC Refinancing Notes, New MSW Notes or New ARC Notes (or a trustee or other representative on their behalf) which would be adverse to any Credit Party or Lenders; provided however, that for the avoidance of doubt this Section 6.15 shall not prohibit the initial issuance of any of the MSW Refinancing Notes, ARC Refinancing Notes, New MSW Notes or New ARC Notes, each in accordance with the terms and conditions of Section 6.1(n).      6.16. Amendments or Waivers of the Second Lien Credit Agreement and Second Lien Notes Indenture. Company and its Subsidiaries shall not, and shall not permit any of their Subsidiaries to, amend or otherwise change the terms of the Second Lien Credit Agreement or Second Lien Notes Indenture or make any payment consistent with an amendment thereof or change thereto, if the effect of such amendment or change is to increase the interest rate applicable thereto, change (to earlier dates) any dates upon which payments of principal or interest are due thereon, change any event of default or condition to an event of default with respect thereto (other than to eliminate any such event of default or increase any grace period related thereto or otherwise make such event of default or condition less restrictive or burdensome on Company), change the prepayment provisions thereof, or change any collateral therefor (other than to release such collateral), or if the effect of such amendment or change, together with all other amendments or changes made, is to increase materially the obligations of the obligor thereunder or to confer any additional rights on the lenders under the Second Lien Credit Agreement or Second Lien Notes Indenture, as applicable, (or a representative on their behalf) which would be adverse to any Credit Party or Lenders, in each case except as otherwise expressly permitted by the Intercreditor Agreement.      6.17. Fiscal Year. No Credit Party shall, nor shall it permit any of its Subsidiaries to change its Fiscal Year-end from December 31. 133 --------------------------------------------------------------------------------   SECTION 7. GUARANTY      7.1. Guaranty of the Obligations. Subject to the provisions of Section 7.2, Guarantors jointly and severally hereby irrevocably and unconditionally guaranty to Administrative Agent for the ratable benefit of the Beneficiaries the due and punctual payment in full of all Obligations when the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)) (collectively, the “Guaranteed Obligations”).      7.2. Contribution by Guarantors. All Guarantors desire to allocate among themselves (collectively, the “Contributing Guarantors”), in a fair and equitable manner, their obligations arising under this Guaranty. Accordingly, in the event any payment or distribution is made on any date by a Guarantor (a “Funding Guarantor”) under this Guaranty such that its Aggregate Payments exceeds its Fair Share as of such date, such Funding Guarantor shall be entitled to a contribution from each of the other Contributing Guarantors in an amount sufficient to cause each Contributing Guarantor’s Aggregate Payments to equal its Fair Share as of such date. “Fair Share” means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (a) the ratio of (i) the Fair Share Contribution Amount with respect to such Contributing Guarantor to (ii) the aggregate of the Fair Share Contribution Amounts with respect to all Contributing Guarantors multiplied by (b) the aggregate amount paid or distributed on or before such date by all Funding Guarantors under this Guaranty in respect of the obligations Guaranteed. “Fair Share Contribution Amount” means, with respect to a Contributing Guarantor as of any date of determination, the maximum aggregate amount of the obligations of such Contributing Guarantor under this Guaranty that would not render its obligations hereunder or thereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of Title 11 of the United States Code or any comparable applicable provisions of state law; provided, solely for purposes of calculating the “Fair Share Contribution Amount” with respect to any Contributing Guarantor for purposes of this Section 7.2, any assets or liabilities of such Contributing Guarantor arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to or obligations of contribution hereunder shall not be considered as assets or liabilities of such Contributing Guarantor. “Aggregate Payments” means, with respect to a Contributing Guarantor as of any date of determination, an amount equal to (1) the aggregate amount of all payments and distributions made on or before such date by such Contributing Guarantor in respect of this Guaranty (including, without limitation, in respect of this Section 7.2), minus (2) the aggregate amount of all payments received on or before such date by such Contributing Guarantor from the other Contributing Guarantors as contributions under this Section 7.2. The amounts payable as contributions hereunder shall be determined as of the date on which the related payment or distribution is made by the applicable Funding Guarantor. The allocation among Contributing Guarantors of their obligations as set forth in this Section 7.2 shall not be construed in any way to limit the liability of any Contributing Guarantor hereunder. Each Guarantor is a third party beneficiary to the contribution agreement set forth in this Section 7.2.      7.3. Payment by Guarantors. Subject to Section 7.2, Guarantors hereby jointly and severally agree, in furtherance of the foregoing and not in limitation of any other right which any Beneficiary may have at law or in equity against any Guarantor by virtue hereof, that upon the 134 --------------------------------------------------------------------------------   failure of Company to pay any of the Guaranteed Obligations when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)), Guarantors will upon demand pay, or cause to be paid, in Cash, to Administrative Agent for the ratable benefit of Beneficiaries, an amount equal to the sum of the unpaid principal amount of all Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on such Guaranteed Obligations (including interest which, but for Company’s becoming the subject of a case under the Bankruptcy Code, would have accrued on such Guaranteed Obligations, whether or not a claim is allowed against Company for such interest in the related bankruptcy case) and all other Guaranteed Obligations then owed to Beneficiaries as aforesaid.      7.4. Liability of Guarantors Absolute. Each Guarantor agrees that its obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than payment in full of the Guaranteed Obligations. In furtherance of the foregoing and without limiting the generality thereof, each Guarantor agrees as follows:           (a) this Guaranty is a guaranty of payment when due and not of collectibility. This Guaranty is a primary obligation of each Guarantor and not merely a contract of surety;           (b) Administrative Agent may enforce this Guaranty upon the occurrence and during the continuance of an Event of Default notwithstanding the existence of any dispute between Company and any Beneficiary with respect to the existence of such Event of Default;           (c) the obligations of each Guarantor hereunder are independent of the obligations of Company and the obligations of any other guarantor (including any other Guarantor) of the obligations of Company, and a separate action or actions may be brought and prosecuted against such Guarantor whether or not any action is brought against Company or any of such other guarantors and whether or not Company is joined in any such action or actions;           (d) payment by any Guarantor of a portion, but not all, of the Guaranteed Obligations shall in no way limit, affect, modify or abridge any Guarantor’s liability for any portion of the Guaranteed Obligations which has not been paid. Without limiting the generality of the foregoing, if Administrative Agent is awarded a judgment in any suit brought to enforce any Guarantor’s covenant to pay a portion of the Guaranteed Obligations, such judgment shall not be deemed to release such Guarantor from its covenant to pay the portion of the Guaranteed Obligations that is not the subject of such suit, and such judgment shall not, except to the extent satisfied by such Guarantor, limit, affect, modify or abridge any other Guarantor’s liability hereunder in respect of the Guaranteed Obligations;           (e) any Beneficiary, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability hereof or giving rise to any reduction, limitation, impairment, discharge or termination of any Guarantor’s liability hereunder, from time to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Guaranteed Obligations; (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with 135 --------------------------------------------------------------------------------   respect to, or substitutions for, the Guaranteed Obligations or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations; (iii) request and accept other guaranties of the Guaranteed Obligations and take and hold security for the payment hereof or the Guaranteed Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Guaranteed Obligations, any other guaranties of the Guaranteed Obligations, or any other obligation of any Person (including any other Guarantor) with respect to the Guaranteed Obligations; (v) enforce and apply any security now or hereafter held by or for the benefit of such Beneficiary in respect hereof or the Guaranteed Obligations and direct the order or manner of sale thereof, or exercise any other right or remedy that such Beneficiary may have against any such security, in each case as such Beneficiary in its discretion may determine consistent herewith or the applicable Hedge Agreement and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of any Guarantor against Company or any security for the Guaranteed Obligations; and (vi) exercise any other rights available to it under the Credit Documents or the Hedge Agreements; and           (f) this Guaranty and the obligations of Guarantors hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than payment in full of the Guaranteed Obligations), including the occurrence of any of the following, whether or not any Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Credit Documents or the Hedge Agreements, at law, in equity or otherwise) with respect to the Guaranteed Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Guaranteed Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to events of default) hereof, any of the other Credit Documents, any of the Hedge Agreements or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Guaranteed Obligations, in each case whether or not in accordance with the terms hereof or such Credit Document, such Hedge Agreement or any agreement relating to such other guaranty or security; (iii) the Guaranteed Obligations, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source (other than payments received pursuant to the Credit Documents or any of the Hedge Agreements or from the proceeds of any security for the Guaranteed Obligations, except to the extent such security also serves as collateral for Indebtedness other than the Guaranteed Obligations) to the payment of Indebtedness other than the Guaranteed Obligations, even though any Beneficiary might have elected to apply such payment to any part or all of the Guaranteed Obligations; (v) any Beneficiary’s consent to the change, reorganization or termination of the corporate structure or existence of Holding or any of its Subsidiaries and to any corresponding restructuring of the Guaranteed Obligations; (vi) any failure to perfect or continue perfection of a security interest in any collateral which secures any of the Guaranteed Obligations; (vii) any defenses, set-offs or counterclaims which Company may allege or assert against any Beneficiary 136 --------------------------------------------------------------------------------   in respect of the Guaranteed Obligations, including failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of any Guarantor as an obligor in respect of the Guaranteed Obligations.      7.5. Waivers by Guarantors. Each Guarantor hereby waives, for the benefit of Beneficiaries: (a) any right to require any Beneficiary, as a condition of payment or performance by such Guarantor, to (i) proceed against Company, any other guarantor (including any other Guarantor) of the Guaranteed Obligations or any other Person, (ii) proceed against or exhaust any security held from Company, any such other guarantor or any other Person, (iii) proceed against or have resort to any balance of any Deposit Account or credit on the books of any Beneficiary in favor of Company or any other Person, or (iv) pursue any other remedy in the power of any Beneficiary whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of Company or any other Guarantor including any defense based on or arising out of the lack of validity or the unenforceability of the Guaranteed Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of Company or any other Guarantor from any cause other than payment in full of the Guaranteed Obligations; (c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal; (d) any defense based upon any Beneficiary’s errors or omissions in the administration of the Guaranteed Obligations, except behavior which amounts to bad faith; (e) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms hereof and any legal or equitable discharge of such Guarantor’s obligations hereunder, (ii) the benefit of any statute of limitations affecting such Guarantor’s liability hereunder or the enforcement hereof, (iii) any rights to set-offs, recoupments and counterclaims, and (iv) promptness, diligence and any requirement that any Beneficiary protect, secure, perfect or insure any security interest or lien or any property subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance hereof, notices of default hereunder, the Hedge Agreements or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Guaranteed Obligations or any agreement related thereto, notices of any extension of credit to Company and notices of any of the matters referred to in Section 7.4 and any right to consent to any thereof; and (g) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms hereof.      7.6. Guarantors’ Rights of Subrogation, Contribution, etc. Until the Guaranteed Obligations shall have been indefeasibly paid in full and the Revolving Commitments and Delayed Draw Term Loan Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled, each Guarantor hereby waives any claim, right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against Company or any other Guarantor or any of its assets in connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in each case whether such claim, right or remedy arises in equity, under contract, by statute, under common law or otherwise and including without limitation (a) any right of subrogation, reimbursement or indemnification that such Guarantor now has or may hereafter have against Company with respect to the Guaranteed Obligations, (b) 137 --------------------------------------------------------------------------------   any right to enforce, or to participate in, any claim, right or remedy that any Beneficiary now has or may hereafter have against Company, and (c) any benefit of, and any right to participate in, any collateral or security now or hereafter held by any Beneficiary. In addition, until the Guaranteed Obligations shall have been indefeasibly paid in full and the Revolving Commitments and Delayed Draw Term Loan Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled, each Guarantor shall withhold exercise of any right of contribution such Guarantor may have against any other guarantor (including any other Guarantor) of the Guaranteed Obligations, including, without limitation, any such right of contribution as contemplated by Section 7.2. Each Guarantor further agrees that, to the extent the waiver or agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation, reimbursement or indemnification such Guarantor may have against Company or against any collateral or security, and any rights of contribution such Guarantor may have against any such other guarantor, shall be junior and subordinate to any rights any Beneficiary may have against Company, to all right, title and interest any Beneficiary may have in any such collateral or security, and to any right any Beneficiary may have against such other guarantor. If any amount shall be paid to any Guarantor on account of any such subrogation, reimbursement, indemnification or contribution rights at any time when all Guaranteed Obligations shall not have been finally and indefeasibly paid in full, such amount shall be held in trust for Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with the terms hereof.      7.7. Subordination of Other Obligations. Any Indebtedness of Company or any Guarantor now or hereafter held by any Guarantor (the “Obligee Guarantor”) is hereby subordinated in right of payment to the Guaranteed Obligations, and any such Indebtedness collected or received by the Obligee Guarantor after receipt of notice of an Event of Default (which has occurred and is continuing) by Administrative Agent shall be held in trust for Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to Administrative Agent for the benefit of Beneficiaries to be credited and applied against the Guaranteed Obligations but without affecting, impairing or limiting in any manner the liability of the Obligee Guarantor under any other provision hereof.      7.8. Continuing Guaranty. This Guaranty is a continuing guaranty and shall remain in effect until all of the Guaranteed Obligations shall have been paid in full and the Revolving Commitments and Delayed Draw Term Loan Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled. Each Guarantor hereby irrevocably waives any right to revoke this Guaranty as to future transactions giving rise to any Guaranteed Obligations.      7.9. Authority of Guarantors or Company. It is not necessary for any Beneficiary to inquire into the capacity or powers of any Guarantor or Company or the officers, directors or any agents acting or purporting to act on behalf of any of them.      7.10. Financial Condition of Company. Any Credit Extension may be made to Company or continued from time to time, and any Hedge Agreements may be entered into from time to time, in each case without notice to or authorization from any Guarantor regardless of the 138 --------------------------------------------------------------------------------   financial or other condition of Company at the time of any such grant or continuation or at the time such Hedge Agreement is entered into, as the case may be. No Beneficiary shall have any obligation to disclose or discuss with any Guarantor its assessment, or any Guarantor’s assessment, of the financial condition of Company. Each Guarantor has adequate means to obtain information from Company on a continuing basis concerning the financial condition of Company and its ability to perform its obligations under the Credit Documents and the Hedge Agreements, and each Guarantor assumes the responsibility for being and keeping informed of the financial condition of Company and of all circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations. Each Guarantor hereby waives and relinquishes any duty on the part of any Beneficiary to disclose any matter, fact or thing relating to the business, operations or conditions of Company now known or hereafter known by any Beneficiary.      7.11. Bankruptcy, etc. (a) So long as any Guaranteed Obligations remain outstanding, no Guarantor shall, without the prior written consent of Administrative Agent acting pursuant to the instructions of Requisite Lenders, commence or join with any other Person in commencing any involuntary bankruptcy, reorganization or insolvency case or proceeding of or against Company or any other Guarantor. The obligations of Guarantors hereunder shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any case or proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of Company or any other Guarantor or by any defense which Company or any other Guarantor may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding.           (b) Each Guarantor acknowledges and agrees that any interest on any portion of the Guaranteed Obligations which accrues after the commencement of any case or proceeding referred to in clause (a) above against Company (or, if interest on any portion of the Guaranteed Obligations ceases to accrue by operation of law by reason of the commencement of such case or proceeding, such interest as would have accrued on such portion of the Guaranteed Obligations if such case or proceeding had not been commenced) shall be included in the Guaranteed Obligations because it is the intention of Guarantors and Beneficiaries that the Guaranteed Obligations which are guaranteed by Guarantors pursuant hereto should be determined without regard to any rule of law or order which may relieve Company of any portion of such Guaranteed Obligations. Guarantors will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person to pay Administrative Agent, or allow the claim of Administrative Agent in respect of, any such interest accruing after the date on which such case or proceeding is commenced.           (c) In the event that all or any portion of the Guaranteed Obligations are paid by Company, the obligations of Guarantors hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from any Beneficiary as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Guaranteed Obligations for all purposes hereunder.      7.12. Discharge of Guaranty Upon Sale of Guarantor. If all of the Capital Stock of any Guarantor or any of its successors in interest hereunder shall be sold or otherwise disposed of (including by merger or consolidation) in accordance with the terms and conditions hereof, the 139 --------------------------------------------------------------------------------   Guaranty of such Guarantor or such successor in interest, as the case may be, hereunder shall automatically be discharged and released without any further action by any Beneficiary or any other Person effective as of the time of such sale or disposition. SECTION 8. EVENTS OF DEFAULT      8.1. Events of Default. If any one or more of the following conditions or events shall occur:           (a) Failure to Make Payments When Due. Failure by Company to pay (i) when due any installment of principal of any Loan, whether at stated maturity, by acceleration, by notice of voluntary prepayment, by mandatory prepayment or otherwise; (ii) when due any amount payable to an Issuing Bank in reimbursement of any drawing under a Letter of Credit; or (iii) any interest on any Loan or any fee or any other amount due hereunder within five days after the date due; or           (b) Default in Other Agreements. (i) Failure of any of Company or its Subsidiaries or Holding to pay when due any principal of or interest on or any other amount payable in respect of one or more items of Indebtedness (other than Indebtedness referred to in Section 8.1(a) and other than Limited Recourse Debt permitted to be incurred hereunder and incurred in connection with one or more Projects to which less than $5,000,000 in the aggregate of the operating income of Company and its Subsidiaries (on a consolidated basis) is attributable for the 12-month period immediately preceding the failure to pay such interest, principal or other amounts) in an individual principal amount of $10,000,000 or more or with an aggregate principal amount of $10,000,000 or more, in each case beyond the grace period, if any, provided therefor; or (ii) breach or default by any of Company or its Subsidiaries or Holding with respect to any other material term of (1) one or more items of Indebtedness in the individual or aggregate principal amounts referred to in clause (i) above or (2) any loan agreement, mortgage, indenture or other agreement relating to such item(s) of Indebtedness, in each case beyond the grace period, if any, provided therefor, if the effect of such breach or default is to cause, or to permit the holder or holders of that Indebtedness (or a trustee on behalf of such holder or holders), to cause, that Indebtedness to become or be declared due and payable (or redeemable), or to require the prepayment, redemption, repurchase or defeasance of, or to cause Company or any of its Subsidiaries or Holding to make any offer to prepay, redeem, repurchase or defease that Indebtedness (other than an offer under the MSW Notes, MSW Refinancing Notes or the New MSW Notes or as required under the ARC Indenture, the ARC Refinancing Indenture or the New ARC Indenture with the proceeds of asset sales, debt and equity insurances and insurance casualty and condemnation and to the extent required in connection with changes in control directly resulting from the Acquisition), prior to its stated maturity or the stated maturity of any underlying obligation, as the case may be; or (iii) any Event of Default (under and as defined in the MSW I Indenture, MSW II Indenture, MSW Refinancing Indentures, New MSW I Indenture, New MSW II Indenture, ARC Indenture, ARC Refinancing Indenture or the New ARC Indenture), shall occur; or (iv) any Event of Default (as defined in the Second Lien Credit Agreement and the Second Lien Notes) shall occur; or 140 --------------------------------------------------------------------------------             (c) Breach of Certain Covenants. Failure of any Credit Party to perform or comply with any term or condition contained in Section 2.6, Section 5.2, Section 5.15, Section 5.16 or Section 6; or           (d) Breach of Representations, etc. Any representation, warranty, certification or other statement made or deemed made by any Credit Party in any Credit Document or in any statement or certificate at any time given by any Credit Party or any of its Subsidiaries in writing pursuant hereto or thereto or in connection herewith or therewith shall be false in any material respect as of the date made or deemed made; or           (e) Other Defaults Under Credit Documents. Any Credit Party shall default in the performance of or compliance with any term contained herein or any of the other Credit Documents, other than any such term referred to in any other provision of this Section 8.1, and such default shall not have been remedied or waived within thirty days after the earlier of (i) an Authorized Officer becoming aware of such default or (ii) receipt by Company of notice from Administrative Agent or any Lender of such default; or           (f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A court of competent jurisdiction shall enter a decree or order for relief in respect of Holding, Company or any of its Material Subsidiaries in an involuntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, which decree or order is not stayed; or any other similar relief shall be granted under any applicable federal or state law; or (ii) an involuntary case shall be commenced against Holding, Company or any of its Material Subsidiaries under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over Holding, Company or any of its Material Subsidiaries, or over all or a substantial part of its property, shall have been entered; or there shall have occurred the involuntary appointment of an interim receiver, trustee or other custodian of Holding, Company or any of its Material Subsidiaries for all or a substantial part of its property; or a warrant of attachment, execution or similar process shall have been issued against any substantial part of the property of Holding, Company or any of its Material Subsidiaries, and any such event described in this clause (ii) shall continue for sixty days without having been dismissed, bonded or discharged; or           (g) Voluntary Bankruptcy; Appointment of Receiver, etc.. (i) Holding, any Company or any of its Material Subsidiaries shall have an order for relief entered with respect to it or shall commence a voluntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property; or Holding, Company or any of its Material Subsidiaries shall make any assignment for the benefit of creditors; or (ii) Holding, Company or any of its Material Subsidiaries shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due; or the board of directors (or similar governing body of Holding, Company or any of its Material 141 --------------------------------------------------------------------------------   Subsidiaries (or any committee thereof) shall adopt any resolution or otherwise authorize any action to approve any of the actions referred to herein or in Section 8.1(f); or           (h) Judgments and Attachments. Any money judgment, writ or warrant of attachment or similar process involving (i) in any individual case an amount in excess of $5,000,000 or (ii) in the aggregate at any time an amount in excess of $10,000,000 (in either case to the extent not adequately covered by insurance as to which a solvent and unaffiliated insurance company has not denied coverage) shall be entered or filed against Company or any of its Subsidiaries or any of their respective assets and shall remain undischarged, unvacated, unbonded or unstayed for a period of sixty days (or in any event later than five days prior to the date of any proposed sale thereunder); or           (i) Dissolution. Any order, judgment or decree shall be entered against any Material Subsidiary of Company decreeing the dissolution or split up of such Material Subsidiary and such order shall remain undischarged or unstayed for a period in excess of thirty days; or           (j) Employee Benefit Plans. (i) There shall occur one or more ERISA Events which individually or in the aggregate results in or might reasonably be expected to result in liability of Company, any of its Subsidiaries or any of their respective ERISA Affiliates in excess of $10,000,000 during the term hereof; or           (k) Change of Control. A Change of Control shall occur; or           (l) Net Operating Losses. If, based on (A) a final, non-appealable determination by a court, (B) a closing agreement between Holding and/or any of its Subsidiaries and the Internal Revenue Service or (C) a transaction or event occurring after the Closing Date (e.g., ownership change or deconsolidation), the net operating losses available to Holding or Company to offset taxable income are less than $315,000,000 (which amount shall be reduced by net operating losses used by Holding to reduce taxable income of Holding or Company after December 31, 2004); provided, that in determining the amount of net operating losses available or used for purposes of this default, the principles applied in any final determination or closing agreement shall be applied to any similar items in other open tax years that were not the subject of such determination or closing agreement solely as a result of not being included in the tax years at issue; or           (m) Guaranties, Collateral Documents and other Credit Documents. At any time after the execution and delivery thereof, (i) the Guaranty for any reason, other than the satisfaction in full of all Obligations, shall cease to be in full force and effect (other than in accordance with its terms) or shall be declared to be null and void or any Guarantor shall repudiate its obligations thereunder, (ii) this Agreement or any Collateral Document ceases to be in full force and effect (other than by reason of a release of Collateral in accordance with the terms hereof or thereof or the satisfaction in full of the Obligations in accordance with the terms hereof) or shall be declared null and void, or Collateral Agent shall not have or shall cease to have a valid and perfected Lien in any de minimis portion of the Collateral purported to be covered by the Collateral Documents with the priority required by the relevant Collateral Document, in each case for any reason other than the failure of Collateral Agent or any Secured 142 --------------------------------------------------------------------------------   Party to take any action within its control, or (iii) any Credit Party shall contest the validity or enforceability of any Credit Document in writing or deny in writing that it has any further liability, including with respect to future advances by Lenders, under any Credit Document to which it is a party, or (iv) the Loans shall cease to constitute First Priority secured Indebtedness under the intercreditor provisions of the Second Lien Term Loans or Second Lien Notes or the Intercreditor Agreement or, in any case, such intercreditor provisions shall be invalidated or otherwise cease to be legal, valid and binding obligations of the parties thereto, enforceable in accordance with their terms. THEN, (1) upon the occurrence of any Event of Default described in Section 8.1(f) or 8.1(g), automatically, and (2) upon the occurrence and continuance of any other Event of Default, at the request of (or with the consent of) Requisite Lenders, upon notice to Company by Administrative Agent, (A) the Revolving Commitments, if any, of each Lender having such Revolving Commitments, the obligation of an Issuing Bank to issue any Revolving Letter of Credit or Funded Letter of Credit and the Delayed Draw Term Loan Commitments, if any, of each Lender having such Delayed Draw Term Loan Commitments shall immediately terminate; (B) each of the following shall immediately become due and payable, in each case without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by each Credit Party: (I) the unpaid principal amount of and accrued interest on the Loans, (II) an amount equal to the maximum amount that may at any time be drawn under all Letters of Credit then outstanding (regardless of whether any beneficiary under any such Letter of Credit shall have presented, or shall be entitled at such time to present, the drafts or other documents or certificates required to draw under such Letters of Credit), and (III) all other Obligations; provided, the foregoing shall not affect in any way the obligations of Lenders under Section 2.3(b)(iv) or Section 2.4(e); (C) Administrative Agent may cause Collateral Agent to enforce any and all Liens and security interests created pursuant to Collateral Documents; and (D) Administrative Agent shall direct Company to pay (and Company hereby agrees upon receipt of such notice, or upon the occurrence and continuance of any Event of Default specified in Section 8.1(f) and (g)(i) to pay) to Administrative Agent such additional amounts of cash, to be held as security for Company’s reimbursement Obligations in respect of Revolving Letters of Credit then outstanding, equal to the Revolving Letter of Credit Usage at such time. SECTION 9. AGENTS      9.1. Appointment of Agents. GSCP is hereby appointed Syndication Agent on the Effective Date and at all times thereafter, and each Lender hereby authorizes Syndication Agent to act as its agent in accordance with the terms hereof and the other Credit Documents. GSCP is hereby appointed Administrative Agent hereunder and under the other Credit Documents and each Lender hereby authorizes Administrative Agent to act as its agent in accordance with the terms hereof and the other Credit Documents. GSCP is hereby appointed Collateral Agent hereunder and under the other Credit Documents and each Lender hereby authorizes Collateral Agent to act as its agent in accordance with the terms hereof and the other Credit Documents. Each of JPMC, UBS and Calyon is hereby appointed Co-Documentation Agent hereunder, and each Lender hereby authorizes Co-Documentation Agent to act as its agent in accordance with the terms hereof and the other Credit Documents. Each Agent hereby agrees to act upon the 143 --------------------------------------------------------------------------------   express conditions contained herein and the other Credit Documents, as applicable. The provisions of this Section 9 are solely for the benefit of Agents and Lenders and no Credit Party shall have any rights as a third party beneficiary of any of the provisions thereof. In performing its functions and duties hereunder, each Agent shall act solely as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for the Credit Parties. Syndication Agent, without consent of or notice to any party hereto, may assign any and all of its rights or obligations hereunder to any of its Affiliates. As of the Effective Date, GSCP, in its capacity as a Syndication Agent, shall not have any obligations but shall be entitled to all benefits of this Section 9.      9.2. Powers and Duties. Each Lender irrevocably authorizes each Agent to take such action on such Lender’s behalf and to exercise such powers, rights and remedies hereunder and under the other Credit Documents as are specifically delegated or granted to such Agent by the terms hereof and thereof, together with such powers, rights and remedies as are reasonably incidental thereto. Each Agent shall have only those duties and responsibilities that are expressly specified herein and the other Credit Documents. Each Agent may exercise such powers, rights and remedies and perform such duties by or through its agents or employees. No Agent shall have, by reason hereof or any of the other Credit Documents, a fiduciary relationship in respect of any Lender; and nothing herein or any of the other Credit Documents, expressed or implied, is intended to or shall be so construed as to impose upon any Agent any obligations in respect hereof or any of the other Credit Documents except as expressly set forth herein or therein.      9.3. General Immunity.           (a) No Responsibility for Certain Matters. No Agent shall be responsible to any Lender for the execution, effectiveness, genuineness, validity, enforceability, collectibility or sufficiency hereof or any other Credit Document or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by any Agent to Lenders or by or on behalf of any Credit Party, to any Agent or any Lender in connection with the Credit Documents and the transactions contemplated thereby or for the financial condition or business affairs of any Credit Party or any other Person liable for the payment of any Obligations, nor shall any Agent be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Credit Documents or as to the use of the proceeds of the Loans or as to the existence or possible existence of any Event of Default or Default or to make any disclosures with respect to the foregoing. Anything contained herein to the contrary notwithstanding, Administrative Agent shall not have any liability arising from confirmations of the amount of outstanding Loans or Letters of Credit or the component amounts thereof.           (b) Exculpatory Provisions. No Agent nor any of its officers, partners, directors, employees or agents shall be liable to Lenders for any action taken or omitted by any Agent under or in connection with any of the Credit Documents except to the extent caused by such Agent’s gross negligence or willful misconduct. Each Agent shall be entitled to refrain from any act or the taking of any action (including the failure to take an action) in connection herewith or any of the other Credit Documents or from the exercise of any power, discretion or authority vested in it hereunder or thereunder unless and until such Agent, in the case of any Agent other 144 --------------------------------------------------------------------------------   than Collateral Agent, shall have received instructions in respect thereof from Requisite Lenders (or such other Lenders as may be required to give such instructions under Section 10.5) or, in the case of Collateral Agent, in accordance with the Pledge and Security Agreement, Intercreditor Agreement or other applicable Collateral Document, and, upon receipt of such instructions from Requisite Lenders (or such other Lenders, as the case may be), or in accordance with the Pledge and Security Agreement, Intercreditor Agreement or other applicable Collateral Document, as the case may be, such Agent shall be entitled to act or (where so instructed) refrain from acting, or to exercise such power, discretion or authority, in accordance with such instructions. Without prejudice to the generality of the foregoing, (i) each Agent shall be entitled to rely, and shall be fully protected in relying, upon any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper Person or Persons, and shall be entitled to rely and shall be protected in relying on opinions and judgments of attorneys (who may be attorneys for the Credit Parties), accountants, experts and other professional advisors selected by it; and (ii) no Lender shall have any right of action whatsoever against any Agent as a result of such Agent acting or (where so instructed) refraining from acting hereunder or any of the other Credit Documents, in the case of any Agent other than Collateral Agent, in accordance with the instructions of Requisite Lenders (or such other Lenders as may be required to give such instructions under Section 10.5) or, in the case of the Collateral Agent, in accordance with the Pledge and Security Agreement, Intercreditor Agreement or other applicable Collateral Document.           (c) Delegation of Duties. Administrative Agent may perform any and all of its duties and exercise its rights and powers under this Agreement or under any other Credit Document by or through any one or more sub-agents appointed by Administrative Agent. Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Affiliates. The exculpatory, indemnification and other provisions of this Section 9.3 and of Section 9.6 shall apply to any the Affiliates of Administrative Agent and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. All of the rights, benefits, and privileges (including the exculpatory and indemnification provisions) of this Section 9.3 and of Section 9.6 shall apply to any such sub-agent and to the Affiliates of any such sub-agent, and shall apply to their respective activities as sub-agent as if such sub-agent and Affiliates were named herein. Notwithstanding anything herein to the contrary, with respect to each sub-agent appointed by Administrative Agent, (i) such sub-agent shall be a third party beneficiary under this Agreement with respect to all such rights, benefits and privileges (including exculpatory rights and rights to indemnification) and shall have all of the rights and benefits of a third party beneficiary, including an independent right of action to enforce such rights, benefits and privileges (including exculpatory rights and rights to indemnification) directly, without the consent or joinder of any other Person, against any or all of the Credit Parties and the Lenders, (ii) such rights, benefits and privileges (including exculpatory rights and rights to indemnification) shall not be modified or amended without the consent of such sub-agent, and (iii) such sub-agent shall only have obligations to Administrative Agent and not to any Credit Party, Lender or any other Person and no Credit Party, Lender or any other Person shall have any rights, directly or indirectly, as a third party beneficiary or otherwise, against such sub-agent. 145 --------------------------------------------------------------------------------        9.4. Agents Entitled to Act as Lender. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, any Agent in its individual capacity as a Lender hereunder. With respect to its participation in the Loans and the Letters of Credit, each Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same as if it were not performing the duties and functions delegated to it hereunder, and the term “Lender” shall, unless the context clearly otherwise indicates, include each Agent in its individual capacity. Any Agent and its Affiliates may accept deposits from, lend money to, own securities of, and generally engage in any kind of banking, trust, financial advisory or other business with the Credit Parties or any of their Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from Company for services in connection herewith and otherwise without having to account for the same to Lenders.      9.5. Lenders’ Representations, Warranties and Acknowledgment.           (a) Each Lender represents and warrants that it has made its own independent investigation of the financial condition and affairs of the Credit Parties in connection with Credit Extensions hereunder and that it has made and shall continue to make its own appraisal of the creditworthiness of the Credit Parties. No Agent shall have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Lenders or to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans or at any time or times thereafter, and no Agent shall have any responsibility with respect to the accuracy of or the completeness of any information provided to Lenders.           (b) Each Lender, by delivering its signature page to this Agreement or a Lender Consent Letter (and funding (or having been deemed to have funded) its Tranche C Term Loan or New Credit Linked Deposit on the Effective Date) shall be deemed to have acknowledged receipt of, and consented to and approved, each Credit Document and each other document required to be approved by any Agent, Requisite Lenders or Lenders, as applicable on the Effective Date.      9.6. Right to Indemnity. Each Lender, in proportion to its Pro Rata Share, severally agrees to indemnify each Agent, to the extent that such Agent shall not have been reimbursed by any Credit Party, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against such Agent in exercising its powers, rights and remedies or performing its duties hereunder or under the other Credit Documents or otherwise in its capacity as such Agent in any way relating to or arising out of this Agreement or the other Credit Documents; provided, no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent’s gross negligence or willful misconduct. If any indemnity furnished to any Agent for any purpose shall, in the opinion of such Agent, be insufficient or become impaired, such Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished; provided, in no event shall this sentence require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, 146 --------------------------------------------------------------------------------   suit, cost, expense or disbursement in excess of such Lender’s Pro Rata Share thereof; and provided further, this sentence shall not be deemed to require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement described in the proviso in the immediately preceding sentence.      9.7. Successor Administrative Agent and Swing Line Lender Administrative Agent may resign at any time by giving thirty days’ prior written notice thereof to Lenders and Company, and Administrative Agent may be removed at any time with or without cause by an instrument or concurrent instruments in writing delivered to Company and Administrative Agent and signed by Requisite Lenders. Upon any such notice of resignation or any such removal, Requisite Lenders shall have the right, upon five Business Days’ notice to Company; provided that Company shall have the right to approve (such approval not to be unreasonably withheld) any such successor Administrative Agent unless an Event of Default then exists, to appoint a successor Administrative Agent. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, that successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Administrative Agent and the retiring or removed Administrative Agent shall promptly (i) transfer to such successor Administrative Agent all sums, Securities and other items of Collateral held under the Collateral Documents, together with all records and other documents necessary or appropriate in connection with the performance of the duties of the successor Administrative Agent under the Credit Documents, and (ii) execute and deliver to such successor Administrative Agent such amendments to financing statements, and take such other actions, as may be necessary or appropriate in connection with the assignment to such successor Administrative Agent of the security interests created under the Collateral Documents, whereupon such retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder. After any retiring or removed Administrative Agent’s resignation or removal hereunder as Administrative Agent, the provisions of this Section 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent hereunder. Any resignation or removal of GSCP or its successor as Administrative Agent pursuant to this Section shall also constitute the resignation or removal of GSCP or its successor as Swing Line Lender, and any successor Administrative Agent appointed pursuant to this Section shall, upon its acceptance of such appointment, become the successor Swing Line Lender for all purposes hereunder. In such event (a) Company shall prepay any outstanding Swing Line Loans made by the retiring or removed Administrative Agent in its capacity as Swing Line Lender, (b) upon such prepayment, the retiring or removed Administrative Agent and Swing Line Lender shall surrender any Swing Line Note held by it to Company for cancellation, and (c) Company shall issue, if so requested by successor Administrative Agent and Swing Line Loan Lender, a new Swing Line Note to the successor Administrative Agent and Swing Line Lender, in the principal amount of the Swing Line Sublimit then in effect and with other appropriate insertions.      9.8. Collateral Documents and Guaranty.           (a) Agents under Collateral Documents and Guaranty. Each Lender hereby further authorizes Administrative Agent or Collateral Agent, as applicable, on behalf of and for the benefit of Lenders, to (i) be the agent for and representative of Lenders with respect to the Guaranty, the Collateral and the Collateral Documents and (ii) enter into the Intercreditor 147 --------------------------------------------------------------------------------   Agreement, and each Lender agrees to be bound by the terms of the Intercreditor Agreement. Subject to Section 10.5, without further written consent or authorization from Lenders, Administrative Agent or Collateral Agent, as applicable may execute any documents or instruments necessary to (i) release any Lien encumbering any item of Collateral that is the subject of a sale or other disposition of assets permitted hereby or to which Requisite Lenders (or such other Lenders as may be required to give such consent under Section 10.5) have otherwise consented or (ii) release any Guarantor from the Guaranty pursuant to Section 7.12 or with respect to which Requisite Lenders (or such other Lenders as may be required to give such consent under Section 10.5) have otherwise consented.           (b) Right to Realize on Collateral and Enforce Guaranty. Anything contained in any of the Credit Documents to the contrary notwithstanding, Company, Administrative Agent, Collateral Agent and each Lender hereby agree that (i) no Lender shall have any right individually to realize upon any of the Collateral or to enforce the Guaranty, it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by Administrative Agent, on behalf of Lenders in accordance with the terms hereof and all powers, rights and remedies under the Collateral Documents may be exercised solely by Collateral Agent, and (ii) in the event of a foreclosure by Collateral Agent on any of the Collateral pursuant to a public or private sale, Collateral Agent or any Lender may be the purchaser of any or all of such Collateral at any such sale and Collateral Agent, as agent for and representative of Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless Requisite Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by Collateral Agent at such sale. SECTION 10. MISCELLANEOUS      10.1. Notices.           (a) Generally. Unless otherwise specifically provided herein, any notice or other communication herein required or permitted to be given to a Credit Party, the Syndication Agent, Collateral Agent, Administrative Agent, Swing Line Lender, or an Issuing Bank, shall be sent to such Person’s address as set forth on Appendix B or in the other relevant Credit Document, and in the case of any Lender, the address as indicated on Appendix B or otherwise indicated to Administrative Agent in writing. Each notice hereunder shall be in writing (which, in the case of any Notice, shall include notice by electronic mail or other electronic means agreed to between Company and Administrative Agent) and may be personally served, telexed or sent by telefacsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of telefacsimile or telex, or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed; provided, no notice to any Agent shall be effective until received by such Agent; provided further, any such notice or other communication shall at the request of Administrative Agent be provided to any sub-agent appointed pursuant to Section 9.3(c) hereto as designated by Administrative Agent from time to time. 148 --------------------------------------------------------------------------------             (b) Electronic Communications. Notices and other communications to the Lenders and the Issuing Banks hereunder may be delivered or furnished by electronic communication (including e mail and Internet or intranet websites) pursuant to procedures approved by Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or the Issuing Banks pursuant to Section 2 if such Lender or the Issuing Banks, as applicable, has notified Administrative Agent that it is incapable of receiving notices under such Section by electronic communication. Administrative Agent or Company may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. Unless Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor.      10.2. Expenses. Whether or not the transactions contemplated hereby shall be consummated, Company agrees to pay promptly (a) all the actual and reasonable costs and expenses incurred by each Agent of preparation of the Credit Documents and any consents, amendments, waivers or other modifications thereto; (b) all the costs of furnishing all opinions by counsel for Company and the other Credit Parties; (c) the reasonable fees, expenses and disbursements of counsel to Administrative Agent and Collateral Agent, and JPMC in its capacity as a Funded LC Issuing Bank and a Lender, in connection with the negotiation, preparation, execution and administration of the Credit Documents and any consents, amendments, waivers or other modifications thereto and any other documents or matters requested by Company; (d) all the actual costs and reasonable expenses of creating and perfecting Liens in favor of Collateral Agent, for the benefit of Secured Parties, including filing and recording fees, expenses and taxes, stamp or documentary taxes, search fees, title insurance premiums and reasonable fees, expenses and disbursements of counsel to each Agent and of counsel providing any opinions required hereunder; (e) all the actual costs and reasonable fees, expenses and disbursements of any auditors, accountants, consultants or appraisers (prior to any Default or Event of Default subject to the consent of Company); (f) all the actual costs and reasonable expenses (including the reasonable fees, expenses and disbursements of any appraisers, consultants, advisors and agents employed or retained by Collateral Agent and its counsel) in connection with the custody or preservation of any of the Collateral; (g) all other actual and reasonable costs and expenses incurred by each Agent in connection with the syndication of the Loans and Commitments; and (h) after the occurrence of an Event of Default and during its continuance, all costs and expenses, including reasonable attorneys’ fees costs of settlement, incurred by any Agent and Lenders in enforcing any Obligations of or in collecting any payments due from any Credit Party hereunder or under the other Credit Documents by reason of such Event of Default (including in connection with the sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Guaranty) or in connection with any refinancing or restructuring of the credit arrangements provided hereunder in the nature of a “work-out” or pursuant to any insolvency or 149 --------------------------------------------------------------------------------   bankruptcy cases or proceedings. The agreements in this Section 10.2 shall survive repayment of the Loans and all other amounts payable hereunder and the return of the New Credit Linked Deposits to the applicable Lenders.      10.3. Indemnity.           (a) In addition to the payment of expenses pursuant to Section 10.2, whether or not the transactions contemplated hereby shall be consummated, each Credit Party agrees to defend (subject to Indemnitees’ selection of counsel), indemnify, pay and hold harmless, each Agent, Lender and Issuing Bank and the officers, partners, directors, trustees, employees, agents, sub-agents and Affiliates of each Agent, each Lender and each Issuing Bank (each, an “Indemnitee”), from and against any and all Indemnified Liabilities; provided, no Credit Party shall have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise from the gross negligence, bad faith or willful misconduct of that Indemnitee and, provided further, that neither Credit Suisse nor any of its officers, partners, directors, trustees, employees, agents, sub-Agents or Affiliates shall be entitled to any indemnification or contribution hereunder except to the extent of losses, claims, damages or liabilities suffered as a result of Credit Suisse acting as a Lender hereunder. To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this Section 10.3 may be unenforceable in whole or in part because they are violative of any law or public policy, the applicable Credit Party shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of them.           (b) To the extent permitted by applicable law, no Credit Party shall assert, and each Credit Party hereby waives, any claim against Lenders, Agents, Issuing Banks and their respective Affiliates, directors, employees, attorneys, agents or sub-agents, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, arising out of, as a result of, or in any way related to, this Agreement or any Credit Document or any agreement or instrument contemplated hereby or thereby or referred to herein or therein, the transactions contemplated hereby or thereby, any Loan or the use of the proceeds thereof or any act or omission or event occurring in connection therewith, and each Credit Party hereby waives, releases and agrees not to sue upon any such claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor provided, that Credit Suisse and it officers, partners, directors, trustees, employees, agents, sub-agents and Affiliates shall be entitled to the benefits of this paragraph for claims arising out of the Credit Documents or its acting as a Lender hereunder.      The agreements in this Section 10.3 shall survive repayment of the Loans and all other amounts payable hereunder and the return of the New Credit Linked Deposits to the applicable Lenders.      10.4. Set-Off. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence and during the continuance of any Event of Default each Lender and each Funded LC Issuing Bank is hereby authorized by each Credit Party at any time or from time to time subject to the consent of Administrative Agent 150 --------------------------------------------------------------------------------   (such consent not to be unreasonably withheld or delayed), without notice to any Credit Party or to any other Person (other than Administrative Agent), any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including Indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts) and any other Indebtedness at any time held or owing by such Lender or Funded LC Issuing Bank to or for the credit or the account of any Credit Party (other than Holding) against and on account of the obligations and liabilities of any Credit Party to such Lender or Funded LC Issuing Bank hereunder, the Letters of Credit and participations therein and under the other Credit Documents, including all claims of any nature or description arising out of or connected hereto, the Letters of Credit and participations therein or with any other Credit Document, irrespective of whether or not (a) such Lender or Funded LC Issuing Bank shall have made any demand hereunder or (b) the principal of or the interest on the Loans or any amounts in respect of the Letters of Credit or any other amounts due hereunder shall have become due and payable pursuant to Section 2 and although such obligations and liabilities, or any of them, may be contingent or unmatured. The Funded LC Issuing Banks agree that payments from the New Credit Linked Deposits shall be made only to the extent expressly provided for under this Agreement.      10.5. Amendments and Waivers.           (a) Requisite Lenders’ Consent. Subject to Section 10.5(b) and 10.5(c), no amendment, modification, termination or waiver of any provision of the Credit Documents, or consent to any departure by any Credit Party therefrom, shall in any event be effective without the written concurrence of the Requisite Lenders.           (b) Affected Lenders’ Consent. Without the written consent of each Lender (other than a Defaulting Lender) that would be directly affected thereby, no amendment, modification, termination, or consent shall be effective if the effect thereof would:           (i) extend the scheduled final maturity of any Loan or Note of such Lender;           (ii) extend the date on which the Funded LC Participation Interests must be repurchased in full from such Lender or any Lender’s Pro Rate Share of the New Credit Linked Deposits is required to be paid to such Lender in full (it being acknowledged that any such repurchase or payment is subject to the express provisions of Section 2.4);           (iii) waive, reduce or postpone any scheduled repayment of principal on the Term Loans under Section 2.12 due such Lender (but not prepayment);           (iv) extend the stated expiration date of any Revolving Letter of Credit beyond the Revolving Commitment Termination Date;           (v) extend the stated expiration date of any Funded Letter of Credit beyond the Funded Letter of Credit Termination Date;           (vi) reduce the rate of interest on any Loan of such Lender (other than any waiver of any increase in the interest rate applicable to any Loan pursuant to Section 2.10) or 151 --------------------------------------------------------------------------------   any fee or other payment obligations (including without limitation with respect to Funded LC Participation Interests) payable hereunder to such Lender;           (vii) extend the time for payment of any such interest or fees to such Lender;           (viii) reduce the principal amount of any Loan or any reimbursement obligation in respect of any Letter of Credit due to such Lender or (except as expressly provided for herein) any New Credit Linked Deposit funded by such Lender;           (ix) amend, modify, terminate or waive any provision of this Section 10.5(b) or Section 10.5(c);           (x) amend the definition of “Requisite Lenders” or “Pro Rata Share”; provided, with the consent of Requisite Lenders additional extensions of credit pursuant hereto may be included in the determination of “Requisite Lenders” or “Pro Rata Share” on substantially the same basis as the Tranche C Term Loan Commitments, the Tranche C Term Loan, the Revolving Commitments, the Revolving Loans, the Funded Letter of Credit Commitments, the Funded Letters of Credit, the Delayed Draw Term Loans and the Delayed Draw Term Loan Commitments are included on the Effective Date;           (xi) release all or substantially all of the Collateral or all or substantially all of the Guarantors from the Guaranty except as expressly provided in the Credit Documents; or           (xii) consent to the assignment or transfer by any Credit Party of any of its rights and obligations under any Credit Document.           (c) Other Consents. No amendment, modification, termination or waiver of any provision of the Credit Documents, or consent to any departure by any Credit Party therefrom, shall:           (i) increase any Revolving Commitment or Delayed Draw Term Loan Commitment of any Lender over the amount thereof then in effect without the consent of such Lender; provided, no amendment, modification or waiver of any condition precedent, covenant, Default or Event of Default shall constitute an increase in any Revolving Commitment or Delayed Draw Term Loan Commitment of any Lender;           (ii) amend, modify, terminate or waive any provision hereof relating to the Swing Line Sublimit or the Swing Line Loans without the consent of Swing Line Lender;           (iii) amend the definition of “Requisite Class Lenders” without the consent of Requisite Class Lenders of each Class; provided, with the consent of the Requisite Lenders, additional extensions of credit pursuant hereto may be included in the determination of such “Requisite Class Lenders” on substantially the same basis as the Tranche C Term Loan Commitments, the Tranche C Term Loans, the Revolving Commitments, the Revolving Loans, the Funded Letter of Credit Commitments, the Funded Letters of Credit, the Delayed Draw Term Loans and the Delayed Draw Term Loan Commitments are included on the Effective Date; 152 --------------------------------------------------------------------------------             (iv) alter the required application of any repayments or prepayments as between Classes pursuant to Section 2.15 without the consent of Requisite Class Lenders of each Class which is being allocated a lesser repayment or prepayment as a result thereof; provided, Requisite Lenders may waive, in whole or in part, any prepayment so long as the application, as between Classes, of any portion of such prepayment which is still required to be made is not altered;           (v) amend, modify, terminate or waive any obligation of Lenders or Company (as the same applies to its obligation to any Funded LC Issuing Bank) or any Funded LC Issuing Bank as provided in Section 2.4 directly relating to Funded Letters of Credit and the New Credit Linked Deposits (and definitions used in Section 2.4 that relate specifically to Funded Letters of Credit and New Credit Linked Deposits) without the written consent of Company, Administrative Agent and each Funded LC Issuing Bank;           (vi) amend, modify, terminate or waive any provision of Section 9 as the same applies to any Agent, or any other provision hereof as the same applies to the rights or obligations of any Agent, in each case without the consent of such Agent;           (vii) amend, modify or waive any condition precedent in Section 3.2 to the making of any Revolving Loan without the consent of Requisite Class Lenders having Revolving Credit Exposure (it being understood that no waiver of any Default or Event of Default by Requisite Lenders, nor any waiver or amendment of any covenant, representation, or other provision not in Section 3.2 shall constitute an amendment, modification or waiver); or           (viii) amend, modify or waive any condition precedent in Section 3.2 to the making of any Delayed Draw Term Loan without the consent of Requisite Class Lenders having Delayed Draw Term Loan Exposure (it being understood that no waiver of any Default or Event of Default by Requisite Lenders, nor any waiver or amendment of any covenant, representation, or other provision not in Section 3.2 shall constitute an amendment, modification or waiver).           (d) Execution of Amendments, etc. Administrative Agent may, but shall have no obligation to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on any Credit Party in any case shall entitle any Credit Party to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 10.5 shall be binding upon each Lender at the time outstanding, each future Lender and, if signed by a Credit Party, on such Credit Party.      10.6. Successors and Assigns; Participations.           (a) Generally. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of Lenders. No Credit Party’s rights or obligations hereunder nor any interest therein may be assigned or delegated by any Credit Party without the prior written 153 --------------------------------------------------------------------------------   consent of all Lenders. No Lender may assign, sell, participate or otherwise transfer any of its rights under the Credit Documents except as set forth in this Section 10.6 and the penultimate sentence of Section 2.23. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, Affiliates of each of the Agents and Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.           (b) Register. Company, Administrative Agent and Lenders shall deem and treat the Persons listed as Lenders in the Register as the holders and owners of the corresponding Commitments, Loans and Funded Letter of Credit Participations listed therein for all purposes hereof, and no assignment or transfer of any such Commitment or Loan shall be effective, in each case, unless and until recorded in the Register following receipt of an Assignment Agreement effecting the assignment or transfer thereof, in each case, as provided in Section 10.6(d). Each assignment shall be recorded in the Register on the Business Day the Assignment Agreement is received by Administrative Agent, if received by 12:00 p.m. (New York City time), and on the following Business Day if received after such time, prompt notice thereof shall be provided to Company and a copy of such Assignment Agreement shall be maintained, as applicable. The date of such recordation of a transfer shall be referred to herein as the “Assignment Effective Date.” Any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Commitments or Loans.           (c) Right to Assign. Each Lender shall have the right at any time to sell, assign or transfer all or a portion of its rights and obligations under this Agreement, including, without limitation, all or a portion of its Commitment, Funded Letter of Credit Participations or Loans owing to it or other Obligation (provided, however, that each such assignment shall be of a uniform, and not varying, percentage of all rights and obligations under and in respect of any Funded Letter of Credit Participations, Loan and any related Commitments):           (i) to any Person meeting the criteria of clause (i) of the definition of the term of “Eligible Assignee” upon the giving of notice to Company and Administrative Agent; and           (ii) to any Person meeting the criteria of clause (ii) of the definition of the term of “Eligible Assignee”, consented to by each of Company and Administrative Agent (such consent not to be (x) unreasonably withheld or delayed or, (y) in the case of Company, required at any time an Event of Default shall have occurred and then be continuing); provided, further each such assignment pursuant to this Section 10.6(c)(ii) shall be in an aggregate amount of not less than (A) $5,000,000 (or such lesser amount as may be agreed to by Company and Administrative Agent (it being agreed that Company shall not unreasonably withhold its consent to assignments in an amount of not less than $2,500,000) or as shall constitute the aggregate amount of the Revolving Commitments and Revolving Loans of the assigning Lender) with respect to the assignment of the Revolving Commitments and Revolving Loans, (B) $1,000,000 (or such lesser amount as may be agreed to by Company and Administrative Agent or as shall constitute the aggregate amount of the Funded Letter of 154 --------------------------------------------------------------------------------   Credit Commitments and Funded Letter of Credit Participations of the assigning Lender) with respect to the assignment of the Funded Letter of Credit Commitments and Funded Letter of Credit Participations, and (C) $1,000,000 (or such lesser amount as may be agreed to by Company and Administrative Agent or as shall constitute the aggregate amount of the Term Loan of the assigning Lender) with respect to the assignment of Term Loans. Anything in the foregoing to the contrary notwithstanding, no assignment of any Revolving Commitment (except in the case of an assignment to a Revolving Lender or an Affiliate thereof) shall be effective unless and until consented to in writing by the Revolving Issuing Bank (such consent not to be unreasonably withheld)           (d) Mechanics. Assignments and assumptions of Loans, Commitments and New Credit Linked Deposits shall only be effected by manual execution and delivery to Administrative Agent of an Assignment Agreement. Assignments made pursuant to the foregoing provision shall be effective as of the Assignment Effective Date. In connection with all assignments there shall be delivered to Administrative Agent and Company such forms, certificates or other evidence, if any, with respect to United States federal income tax withholding matters as the assignee under such Assignment Agreement may be required to deliver pursuant to Section 2.20(c). Without the consent of Company (which consent shall not be unreasonably withheld), each Funded LC Issuing Bank and Administrative Agent, no New Credit Linked Deposit shall be released in connection with any assignment by a Funded Letter of Credit Participant, but the Funded LC Participation Interests shall instead be purchased by the relevant assignee and the New Credit Linked Deposits continue to be held by the Funded LC Issuing Banks for application (to the extent not already applied) in accordance with Sections 2.4(f) and (h).           (e) Representations and Warranties of Assignee. Each Lender, upon execution and delivery hereof or upon succeeding to an interest in the Commitments and Loans, as the case may be, represents and warrants as of the Effective Date or as of the Assignment Effective Date that (i) it is an Eligible Assignee; (ii) it has experience and expertise in the making of or investing in commitments or loans such as the applicable Commitments, New Credit Linked Deposits or Loans, as the case may be; and (iii) it will make or invest in, as the case may be, its Commitments, Funded Letter of Credit Participations or Loans for its own account in the ordinary course of its business and without a view to distribution of such Commitments, Funded Letter of Credit Participations or Loans within the meaning of the Securities Act or the Exchange Act or other federal securities laws (it being understood that, subject to the provisions of this Section 10.6, the disposition of such Revolving Commitments, Delayed Draw Term Loan Commitments, Funded Letter of Credit Participations or Loans or any interests therein shall at all times remain within its exclusive control).           (f) Effect of Assignment. Subject to the terms and conditions of this Section 10.6, as of the “Assignment Effective Date” (i) the assignee thereunder shall have the rights and obligations of a “Lender” hereunder to the extent of its interest in the Loans and Commitments as reflected in the Register and shall thereafter be a party hereto and a “Lender” for all purposes hereof; (ii) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned to the assignee, relinquish its rights (other than any rights which survive the termination hereof under Section 10.8) and be released from its obligations hereunder 155 --------------------------------------------------------------------------------   (and, in the case of an assignment covering all or the remaining portion of an assigning Lender’s rights and obligations hereunder, such Lender shall cease to be a party hereto on the Assignment Effective Date; provided, anything contained in any of the Credit Documents to the contrary notwithstanding, (y) an assigning Issuing Bank shall continue to have all rights and obligations thereof with respect to such Letters of Credit until the cancellation or expiration of such Letters of Credit and the reimbursement of any amounts drawn thereunder and (z) such assigning Lender shall continue to be entitled to the benefit of all indemnities hereunder as specified herein with respect to matters arising out of the prior involvement of such assigning Lender as a Lender hereunder to the extent provided hereunder); (iii) the Commitments shall be modified to reflect the Commitment of such assignee and any Revolving Commitment or Delayed Draw Term Loan Commitment of such assigning Lender, if any; and (iv) if any such assignment occurs after the issuance of any Note hereunder, the assigning Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable, surrender its applicable Notes to Administrative Agent for cancellation, and thereupon Company, at its expense, shall issue and deliver new Notes, if so requested by the assignee and/or assigning Lender, to such assignee and/or to such assigning Lender, with appropriate insertions, to reflect the new Revolving Commitments, Delayed Draw Term Loan Commitments and/or outstanding Loans of the assignee and/or the assigning Lender.           (g) Participations. Each Lender shall have the right at any time to sell one or more participations to any Person (other than Holding, any of its Subsidiaries or any of its Affiliates) in all or any part of its Commitments, Funded Letter of Credit Participations, Loans or in any other Obligation. The holder of any such participation, other than an Affiliate of the Lender granting such participation, shall not be entitled to require such Lender to take or omit to take any action hereunder except with respect to any amendment, modification or waiver that would (i) extend the final scheduled maturity of any Loan, Note or Letter of Credit (unless such Letter of Credit is not extended beyond the Revolving Commitment Termination Date, Delayed Draw Term Loan Commitment Termination Date or the Funded Letter of Credit Termination Date, as applicable) in which such participant is participating, or reduce the rate or extend the time of payment of interest or fees thereon (except in connection with a waiver of applicability of any post-default increase in interest rates) or reduce the principal amount thereof, or increase the amount of the participant’s participation over the amount thereof then in effect (it being understood that a waiver of any Default or Event of Default or of a mandatory reduction in the Commitment shall not constitute a change in the terms of such participation, and that an increase in any Commitment, Funded Letter of Credit Participations or Loan shall be permitted without the consent of any participant if the participant’s participation is not increased as a result thereof), (ii) consent to the assignment or transfer by any Credit Party of any of its rights and obligations under this Agreement or (iii) release all or substantially all of the Collateral under the Collateral Documents (except as expressly provided in the Credit Documents) supporting the Loans and Funded Letter of Credit Participations hereunder in which such participant is participating. Company agrees that each participant shall be entitled to the benefits of Sections 2.18(c), 2.19 and 2.20 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (c) of this Section; provided, (i) a participant shall not be entitled to receive any greater payment under Sections 2.18(c), 2.19 or 2.20 than the applicable Lender would have been entitled to receive with respect to the participation sold to such participant, unless the sale of the participation to such participant is made with Company’s prior written consent and (ii) a participant that would be a Non-US Lender (or that would otherwise be 156 --------------------------------------------------------------------------------   required to deliver a form referred to in Section 2.20(c) to avoid deduction or withholding of United States federal income tax with respect to payments made by a Credit Party under any of the Credit Documents) if it were a Lender shall not be entitled to the benefits of Section 2.20 unless Company is notified of the participation sold to such participant and such participant agrees, for the benefit of Company, to be subject to Section 2.20 as though it were a Lender. To the extent permitted by law, each participant also shall be entitled to the benefits of Section 10.4 as though it were a Lender, provided such Participant agrees to be subject to Section 2.17 as though it were a Lender.           (h) Certain Other Assignments. In addition to any other assignment permitted pursuant to this Section 10.6, any Lender may assign and/or pledge all or any portion of its Loans, Funded Letter of Credit Participations, the other Obligations owed by or to such Lender, and its Notes (excluding in all instances the New Credit Linked Deposits, which shall be held as the property of the Funded LC Issuing Banks as provided for in Section 2.4), if any, to secure obligations of such Lender including, without limitation, any Federal Reserve Bank or any pledge or assignment to any holders of obligations owed, or securities issued, by such Lender as collateral security for such obligations or securities, or to any trustee for, or any other representative of, such holders as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any operating circular issued by such Federal Reserve Bank; provided, no Lender, as between Company and such Lender, shall be relieved of any of its obligations hereunder as a result of any such assignment and pledge, and provided further, in no event shall the applicable Federal Reserve Bank, pledgee or trustee be considered to be a “Lender” or be entitled to require the assigning Lender to take or omit to take any action hereunder.      10.7. Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken or condition exists.      10.8. Survival of Representations, Warranties and Agreements. All representations, warranties and agreements made herein shall survive the execution and delivery hereof and the making of any Credit Extension. Notwithstanding anything herein or implied by law to the contrary, the agreements of each Credit Party set forth in Sections 2.18(c), 2.19, 2.20, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in Sections 2.17, 9.3(b) and 9.6 shall survive the payment of the Loans, the cancellation or expiration of the Letters of Credit, the reimbursement of any amounts drawn thereunder, the final payment made to Lenders pursuant to Section 2.4(j)(iv), and the termination hereof.      10.9. No Waiver; Remedies Cumulative. No failure or delay on the part of any Agent or any Lender in the exercise of any power, right or privilege hereunder or under any other Credit Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. The rights, powers and remedies given to each Agent and each Lender hereby are cumulative and shall be in addition to and independent of all rights, powers and remedies existing by virtue of 157 --------------------------------------------------------------------------------   any statute or rule of law or in any of the other Credit Documents. Any forbearance or failure to exercise, and any delay in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy.      10.10. Marshalling; Payments Set Aside. Neither any Agent nor any Lender shall be under any obligation to marshal any assets in favor of any Credit Party or any other Person or against or in payment of any or all of the Obligations. To the extent that any Credit Party makes a payment or payments to Administrative Agent or Lenders (or to Administrative Agent, on behalf of Lenders), or Administrative Agent or Lenders enforce any security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, any other state or federal law, common law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or setoff had not occurred.      10.11. Severability. In case any provision in or obligation hereunder or any Note shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.      10.12. Obligations Several; Independent Nature of Lenders’ Rights. The obligations of Lenders hereunder are several and no Lender shall be responsible for the obligations or Commitment of any other Lender hereunder. Nothing contained herein or in any other Credit Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt, and, subject to Section 9.8(b), each Lender shall be entitled to protect and enforce its rights arising out hereof and it shall not be necessary for any other Lender to be joined as an additional party in any proceeding for such purpose.      10.13. Headings. Section headings herein are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose or be given any substantive effect.      10.14. APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.      10.15. CONSENT TO JURISDICTION. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY CREDIT PARTY ARISING OUT OF OR RELATING HERETO OR ANY OTHER CREDIT DOCUMENT, OR ANY OF THE OBLIGATIONS, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT 158 --------------------------------------------------------------------------------   JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH CREDIT PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (a) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (b) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (c) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE CREDIT PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 10.1; (d) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (c) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE CREDIT PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (e) AGREES AGENTS AND LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION.      10.16. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER CREDIT DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/COMPANY RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 10.16 AND EXECUTED BY THE PARTY AGAINST WHICH ENFORCEMENT IS SOUGHT), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER CREDIT DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 159 --------------------------------------------------------------------------------        10.17. Confidentiality. Each Lender shall hold all non-public information regarding Company and its Subsidiaries and their businesses identified as such by Company and obtained by such Lender pursuant to the requirements hereof in accordance with such Lender’s customary procedures for handling confidential information of such nature and in accordance with sound industry practice, it being understood and agreed by Company that, in any event, a Lender may make (i) disclosures of such information to Affiliates of such Lender and to their agents, employees, officers, directors, trustees, attorneys, accountants and advisors (and to other persons authorized by a Lender or Agent to organize, present or disseminate such information in connection with disclosures otherwise made in accordance with this Section 10.17), (ii) disclosures of such information reasonably required by any bona fide or potential assignee, transferee or participant in connection with the contemplated assignment, transfer or participation by such Lender of any Loans or any participations therein or by any direct or indirect contractual counterparties (or the professional advisors thereto) in Hedge Agreements (provided, such bona fide or potential assignee, transferee or Participant and counterparties and advisors are advised of and agree to be bound by the provisions of this Section 10.17), (iii) disclosure to any rating agency when required by it, provided that, prior to any disclosure, such rating agency shall undertake in writing to preserve the confidentiality of any confidential information relating to the Credit Parties received by it from any of the Agents or any Lender, and (iv) disclosures required or requested by any governmental agency or representative thereof or by the NAIC or pursuant to legal or judicial process; provided, unless specifically prohibited by applicable law or court order, each Lender shall make reasonable efforts to notify Company of any request by any governmental agency or representative thereof (other than any such request in connection with any examination of the financial condition or other routine examination of such Lender by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information. Notwithstanding anything to the contrary set forth herein, each party (and each of their respective employees, representatives or other agents) may disclose to any and all persons, without limitations of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement and all materials of any kind (including opinions and other tax analyses) that are provided to any such party relating to such tax treatment and tax structure. However, any information relating to the tax treatment or tax structure shall remain subject to the confidentiality provisions hereof (and the foregoing sentence shall not apply) to the extent reasonably necessary to enable the parties hereto, their respective Affiliates, and their and their respective Affiliates’ directors and employees to comply with applicable securities laws. For this purpose, “tax structure” means any facts relevant to the federal income tax treatment of the transactions contemplated by this Agreement but does not include information relating to the identity of any of the parties hereto or any of their respective Affiliates.      10.18. Usury Savings Clause. Notwithstanding any other provision herein, the aggregate interest rate charged with respect to any of the Obligations, including all charges or fees in connection therewith deemed in the nature of interest under applicable law shall not exceed the Highest Lawful Rate. If the rate of interest (determined without regard to the preceding sentence) under this Agreement at any time exceeds the Highest Lawful Rate, the outstanding amount of the Loans made hereunder shall bear interest at the Highest Lawful Rate until the total amount of interest due hereunder equals the amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect. In addition, if when the Loans made hereunder are repaid in full the total interest due 160 --------------------------------------------------------------------------------   hereunder (taking into account the increase provided for above) is less than the total amount of interest which would have been due hereunder if the stated rates of interest set forth in this Agreement had at all times been in effect, then to the extent permitted by law, Company shall pay to Administrative Agent an amount equal to the difference between the amount of interest paid and the amount of interest which would have been paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding the foregoing, it is the intention of Lenders and Company to conform strictly to any applicable usury laws. Accordingly, if any Lender contracts for, charges, or receives any consideration which constitutes interest in excess of the Highest Lawful Rate, then any such excess shall be cancelled automatically and, if previously paid, shall at such Lender’s option be applied to the outstanding amount of the Loans made hereunder or be refunded to Company.      10.19. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.      10.20. Effectiveness. This Agreement shall become effective upon the execution of a counterpart hereof by each of the parties hereto and receipt by Company and Administrative Agent of written, electronic or telephonic notification of such execution and authorization of delivery thereof.      10.21. Patriot Act. Each Lender and Administrative Agent (for itself and not on behalf of any Lender) hereby notifies Company that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies Company, which information includes the name and address of Company and other information that will allow such Lender or Administrative Agent, as applicable, to identify Company in accordance with the Act.      10.22. Electronic Execution of Assignments. The words “execution,” “signed,” “signature,” and words of like import in any Assignment Agreement shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.      10.23. Amendment and Restatement. It is the intention of each of the parties hereto that the Existing Credit Agreement be amended and restated so as to preserve the perfection and priority of all security interests securing indebtedness and obligations under the Existing Credit Agreement and that all Indebtedness and Obligations of Company and its Subsidiaries hereunder and thereunder shall be secured by the Collateral Documents and that this Agreement does not constitute a novation of the obligations and liabilities existing under the Existing Credit Agreement. The parties hereto further acknowledge and agree that this Agreement constitutes an amendment of the Existing Credit Agreement made under and in accordance with the terms of Section 10.5 of the Existing Credit Agreement. In addition, unless specifically amended hereby, each of the Credit Documents, the Exhibits and Schedules to the Existing Credit Agreement shall 161 --------------------------------------------------------------------------------   continue in full force and effect and that, from and after the Effective Date, all references to the “Credit Agreement” contained therein shall be deemed to refer to this Agreement.      10.24. Reaffirmation and Grant of Security Interests. Each (i) Guarantor has guarantied the Obligations and (ii) Credit Party has created Liens in favor of Lenders on certain Collateral to secure its obligations hereunder, under Article Seven hereof and the Pledge and Security Agreement, respectively. Each Credit Party hereby acknowledges that it has reviewed the terms and provisions of this Agreement and consents to the amendment and restatement of the Existing Credit Agreement effected pursuant to this Agreement. Each Credit Party hereby (i) confirms that each Credit Document to which it is a party or is otherwise bound and all Collateral encumbered thereby will continue to guarantee or secure, as the case may be, to the fullest extent possible in accordance with the Credit Documents, the payment and performance of the Obligations, as the case may be, including without limitation the payment and performance of all such Obligations which are joint and several obligations of each grantor now or hereafter existing, and (ii) grants to the Collateral Agent for the benefit of the Lenders a continuing lien on and security interest in and to such Credit Party’s right, title and interest in, to and under all Collateral (as defined in the Pledge and Security Agreement) and all other Collateral as collateral security for the prompt payment and performance in full when due of the Obligations (whether at stated maturity, by acceleration or otherwise).           Each Credit Party acknowledges and agrees that any of the Credit Documents to which it is a party or otherwise bound shall continue in full force and effect and that all of its obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of the amendment and restatement of the Existing Credit Agreement. Each Credit Party represents and warrants that all representations and warranties contained in the Credit Documents to which it is a party or otherwise bound are true, correct and complete in all material respects on and as of the Effective Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date. [Remainder of page intentionally left blank] 162 --------------------------------------------------------------------------------        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.             COVANTA ENERGY CORPORATION, A DELAWARE CORPORATION, AND EACH OF ITS SUBSIDIARIES LISTED ON EXHIBIT A HERETO       By:   /s/ Anthony Orlando        Name:   Anthony Orlando        Title: President       COVANTA HOLDING CORPORATION, A DELAWARE CORPORATION       By:   /s/ Anthony Orlando        Name:   Anthony Orlando        Title: Chief Executive Officer and President     APPENDIX A-1 --------------------------------------------------------------------------------               GOLDMAN SACHS CREDIT PARTNERS L.P., as Sole Lead Arranger, Sole Book Runner, Sole Syndication Agent, Administrative Agent, Collateral Agent, and a Lender       By:   /s/ Bruce H. Mendelsohn                         Authorized Signatory      S-2 --------------------------------------------------------------------------------               JPMORGAN CHASE BANK, N.A. as Co-Documentation Agent, Revolving Issuing Bank and a Funded LC Issuing Bank       By:   /s/ Curtis Reed        Name:   Curtis Reed        Title:   Vice President      S-3 --------------------------------------------------------------------------------               UBS AG, STAMFORD BRANCH, as a Funded LC Issuing Bank       By:   /s/ Richard L. Tavrow        Name:   Richard L. Tavrow        Title:   Director, Banking Products Services, US              By:   /s/ Irja R. Otsa        Name:   Irja R. Otsa        Title:   Associate Director Banking Products Services, US      S-4 --------------------------------------------------------------------------------               CALYON NEW YORK BRANCH, as Co-Documentation Agent       By:   /s/ Alexander Averbukh        Name:   Alexander Averbukh        Title:   Director              By:   /s/ Arme Le Goulven        Name:   Arme Le Goulven        Title:   Director      S-5 --------------------------------------------------------------------------------   EXHIBIT A Subsidiaries           Name 2.   8309 Tujunga Avenue Corp., a California corporation       3.   Amor 14 Corporation, a Delaware corporation       4.   Burney Mountain Power, a California corporation       5.   Covanta Acquisition, Inc., a Delaware corporation       6.   Covanta Bessemer, Inc., a Delaware corporation       7.   Covanta Cunningham Environmental Support, Inc., a New York corporation       8.   Covanta Energy Americas, Inc., a Delaware corporation       9.   Covanta Energy Construction, Inc.,a Delaware corporation       10.   Covanta Energy Group, Inc., a Delaware corporation       11.   Covanta Energy International, Inc.,a Delaware corporation       12.   Covanta Energy Resource Corp., a Delaware corporation       13.   Covanta Energy Services, Inc., a Delaware corporation       14.   Covanta Energy West, Inc., a Delaware corporation       15.   Covanta Engineering Services, Inc., a New Jersey corporation       16.   Covanta Geothermal Operations Holdings, Inc., a Delaware corporation       17.   Covanta Geothermal Operations, Inc., a Delaware corporation       18.   Covanta Haverhill Properties, Inc., a Massachusetts corporation       19.   Covanta Heber Field Energy, Inc., a Delaware corporation       20.   Covanta Hennepin Energy Resource Co., Limited Partnership, a Delaware limited partnership      By: Covanta Energy Resource Corp., its General Partner APPENDIX A-6 --------------------------------------------------------------------------------             Name 21.   Covanta Hillsborough, Inc., a Florida corporation       22.   Covanta Honolulu Resource Recovery Venture, a Hawaii General Partnership      By: Covanta Oahu Waste Energy Recovery, Inc.,             its General Partner      By: Covanta Projects of Hawaii, Inc., its General Partner       23.   Covanta Huntsville, Inc., an Alabama corporation       24.   Covanta Hydro Energy, Inc., a Delaware corporation       25.   Covanta Hydro Operations West, Inc., Delaware corporation       26.   Covanta Hydro Operations, Inc., a Tennessee corporation       27.   Covanta Imperial Power Services, Inc., a California corporation       28.   Covanta Kent, Inc.,a Michigan corporation       29.   Covanta Lancaster, Inc., a Pennsylvania corporation       30.   Covanta Lee, Inc., a Florida corporation       31.   Covanta Long Island, Inc., a Delaware corporation       32.   Covanta Marion Land Corp., an Oregon corporation       33.   Covanta Marion, Inc., an Oregon corporation       34.   Covanta Mid-Conn, Inc., a Connecticut corporation       35.   Covanta Montgomery, Inc., Maryland corporation       36.   Covanta New Martinsville Hydroelectric Corporation, a Delaware corporation       37.   Covanta New Martinsville Hydro-Operations Corporation, a West Virginia corporation       38.   Covanta Oahu Waste Energy Recovery, Inc., a California corporation       39.   Covanta Onondaga Operations, Inc., a Delaware corporation       40.   Covanta Operations of Union, LLC, a New Jersey limited liability company       41.   Covanta OPW Associates, Inc., a Connecticut corporation APPENDIX A-7 --------------------------------------------------------------------------------             Name 42.   Covanta OPWH, Inc., a Delaware corporation       43.   Covanta Otay 3 Company, a California corporation       44.   Covanta Pasco, Inc., a Florida corporation       45.   Covanta Plant Services of New Jersey, Inc., a New Jersey corporation       46.   Covanta Power Equity Corporation, a Delaware corporation       47.   Covanta Power International Holdings, Inc., a Delaware corporation       48.   Covanta Power Pacific, Inc., a California corporation       49.   Covanta Power Plant Operations, a California corporation       50.   Covanta Projects of Hawaii, Inc., a Hawaii corporation       51.   Covanta Projects, Inc., a Delaware corporation       52.   Covanta RRS Holdings, Inc., a Delaware corporation       53.   Covanta Secure Services, LLC, a Delaware limited liability company       54.   Covanta SIGC Energy II, Inc., a California corporation       55.   Covanta SIGC Energy, Inc., a Delaware corporation       56.   Covanta SIGC Geothermal Operations, Inc., a California corporation       57.   Covanta Systems, LLC, a Delaware limited liability company       58.   Covanta Tampa Bay, Inc., a Florida corporation       59.   Covanta Tampa Construction, Inc., a Delaware corporation       60.   Covanta Wallingford Associates, Inc., a Connecticut corporation       61.   Covanta Warren Energy Resources Co. Limited Partnership, a Delaware limited partnership (DE)       62.   Covanta Warren Holdings I, Inc., a Virginia corporation       63.   Covanta Warren Holdings II, Inc., a California corporation       64.   Covanta Waste to Energy, LLC, a Delaware limited liability company APPENDIX A-8 --------------------------------------------------------------------------------             Name 65.   Covanta Water Holdings, Inc., a Delaware corporation       66.   Covanta Water Systems, Inc., a Delaware corporation       67.   Covanta Water Treatment Services, Inc., a Delaware corporation       68.   DSS Environmental, Inc., a New York corporation       69.   ERC Energy II, Inc., a Delaware corporation       70.   ERC Energy, Inc., a Delaware corporation       71.   Generating Resources Recovery Partners, L.P., a California limited partnership       72.   Heber Field Energy II, Inc., a Delaware corporation       73.   Heber Loan Partners, a California general partnership By: ERC Energy, Inc., its General Partner By: ERC Energy II, Inc., its General Partner       74.   LMI, Inc., a Massachusetts corporation       75.   Mammoth Geothermal Company, a California corporation       76.   Mammoth Power Company, a California corporation       77.   Michigan Waste Energy, Inc., a Delaware corporation       78.   Mt. Lassen Power, a California corporation       79.   Pacific Energy Operating Group, L.P., a California limited partnership       80.   Pacific Geothermal Company, a California corporation       81.   Pacific Oroville Power, Inc., a California corporation       82.   Pacific Recovery Corporation, a California corporation       83.   Pacific Wood Fuels Company, a California corporation       84.   Three Mountain Operations, Inc., a Delaware corporation       85.   Three Mountain Power, LLC, a Delaware corporation       86.   Covanta ARC Holdings Inc., a Delaware corporation APPENDIX A-9 --------------------------------------------------------------------------------             Name 87.   Covanta Ref-Fuel Corp. (f/k/a Ref-Fuel Corp.), a Delaware corporation       88.   Covanta Ref-Fuel LLC (f/k/a Ref-Fuel LLC), a Delaware limited liability company       89.   UAH Management Corp., a New York corporation APPENDIX A-10 --------------------------------------------------------------------------------   APPENDIX A-1 TO CREDIT AND GUARANTY AGREEMENT Tranche C Term Loan Commitments                       Tranche C Term Loan   Pro Lender   Commitment   Rata Share Goldman Sachs Credit Partners L.P.   $ [_____]             Total   $ 229,312,500.00       100.0 % APPENDIX A-2 TO CREDIT AND GUARANTY AGREEMENT Delayed Draw Term Loan Commitments                       Delayed Draw Term Loan   Pro Lender   Commitment   Rata Share Goldman Sachs Credit Partners L.P.   $ 140,000,000.00           Total   $ 140,000,000.00       100.0 % APPENDIX A-11 --------------------------------------------------------------------------------   APPENDIX B TO CREDIT AND GUARANTY AGREEMENT Notice Addresses       COVANTA ENERGY CORPORATION     40 Lane Road     Fairfield, New Jersey 07004     Attention: Chief Financial Officer     CC: General Counsel     Telecopier: (973) 882-7357       COVANTA HOLDING CORPORATION     40 Lane Road     Fairfield, New Jersey 07004     Attention: Chief Financial Officer     CC: General Counsel     Telecopier: (973) 882-7357       CERTAIN SUBSIDIARIES OF COVANTA ENERGY CORPORATION, AS GUARANTORS:     Care of: Covanta Energy Corporation     40 Lane Road     Fairfield, New Jersey 07004     Attention: Chief Financial Officer     CC: General Counsel     Telecopier: (973) 882-7357       GOLDMAN SACHS CREDIT PARTNERS L.P., as Sole Lead Arranger, Sole Book Runner, Sole Syndication Agent Administrative Agent, Collateral Agent and a Lender     Goldman Sachs Credit Partners L.P.     85 Broad Street     New York, New York 10004     Attention: Pedro Ramirez     Telecopier: (917) 343-8319       Administrative Agent’s Principal Office:     Goldman Sachs Credit Partners L.P.     85 Broad Street     New York, New York 10004     Attention: Lawrence Writer Appendix B-1 --------------------------------------------------------------------------------             Telecopier: (212) 902-7862   Swing Line Lender’s Principal Office:     Goldman Sachs Credit Partners L.P.     85 Broad Street     New York, New York 10004     Attention: Pedro Ramirez     Telecopier: (917) 343-8319       Administrative Agent’s Principal Office:     Goldman Sachs Credit Partners L.P.     85 Broad Street     New York, New York 10004     Attention: Lawrence Writer     Telecopier: (212) 902-7862       JPMORGAN CHASE BANK, as Revolving Issuing Bank and a Funded LC Issuing Bank     JPMorgan Chase Bank     120 S. LaSalle     Chicago, IL 60603     Attention: Douglas P. Boersma     Telecopier: (312) 661-3566       with a copy to:     JPMorgan Chase Bank     120 S. LaSalle     Chicago, IL 60603     Attention: Brady B. Bird     Telecopier: (312) 661-3566           JPMorgan Chase Bank     120 S. LaSalle     Chicago, IL 60603     Attention: Christina M. Lowe     Telecopier: (312) 661-1862       UBS AG, STAMFORD BRANCH, as Funded LC Issuing Bank     UBS AG, Stamford Branch     677 Washington Boulevard     Stamford, CT 06901     Attention: Marie Haddad     Telecopier: (203) 719-3888 Appendix B-2

EXHIBIT 10.1 Separation and Release Agreement August 21, 2006 Bart J. Doedens, M.D. Re: Separation and Release Agreement Dear Bart: This Separation and Release agreement ("Agreement") will serve as formal confirmation of your resignation from employment as Vice President, Biomet, Inc. and President, EBI, L.P. (collectively "Biomet") and any positions you may hold with any Affiliates (as defined below) of Biomet effective at close of business on Friday, July 14, 2006 (the "Effective Date"). To ease your transition, Biomet offers you the following separation package. If you accept the terms of this Agreement, Biomet will provide the following consideration to you, in gross, less all applicable payroll tax withholdings and authorized or required deductions: a.         Payment of your present base-salary of $425,000 for a period of twelve (12) months from the Effective Date payable on a bi-weekly basis consistent with EBI's regular salary paymentschedule.  In the event of your incapacity or death, Biomet shall pay any amount remaining due hereunder to your estate, heirs, designee(s), successors, or assigns according to the same bi-weekly schedule. b.         Payment of your current car allowance of $12,350 for a period of twelve (12) months from the Effective Date payable on a bi-weekly basis in the amount of $475 consistent with EBI's regular salary payment schedule.   c.         Should you elect COBRA continuation coverage, Biomet shall pay COBRA premiums for you, your wife and children for a period of eighteen (18) months from the Effective Date.  Thereafter, you shall be financially responsible for all continuation payments. d.         Through July 14, 2007, Biomet shall, at its sole expense, reimburse you for the cost (not to exceed $20,000 in the aggregate), as incurred, for attorney's fees and costs incurred by you in connection with the negotiation and execution of this Agreement and/or outplacement services, the scope and provider of which shall be selected by you in your sole discretion. e.         As additional consideration to you for your acceptance of the terms of this Agreement, the Stock Option Committee of Biomet, Inc. has agreed to accelerate the vesting periods of those stock option agreements that have been awarded to you through the course of your employment with Biomet. As a result, upon execution of this Agreement, you shall have the right, but not the obligation, to exercise all outstanding options in full notwithstanding the terms and conditions set forth in the plan governing the option or in any notice of option. However, all options granted to you, including any accelerated options, will expire and will no longer be exercisable after close of business Friday, July 14, 2006. f.          Biomet shall purchase (or cause to be purchased) your New Jersey house at 102 Carriage House Road, Bernardsville, New Jersey 07924, for $2,200,000 cash.  The closing shall occur within forty (40) days from the Effective Date hereof (August 23, 2006).  Biomet shall pay all of your closing costs, including the New Jersey real estate transfer fee.  It is understood and agreed by you and Biomet that no commission is owed by you to any real estate broker in connection with your sale of the New Jersey house to Biomet and that Biomet will not be responsible for any such commission. g.         Biomet shall reimburse your closing costs of $91,713.00 incurred in connection with the sale of your home in Sewall's Point, Florida and your closing costs of $54,844.46 incurred in connection with the purchase of the New Jersey house.         In addition, Biomet agrees that you shall continue to be entitled to any rights to indemnification under Biomet's or its affiliates' directors and officers liability insurance, Articles of Incorporation or Bylaws until July 14, 2007 as if you had continued to be an actively employed executive officer of Biomet for that purpose, and thereafter with respect to claims relating to the period prior to July 14, 2007. Except as specifically addressed in this Agreement, other post-separation benefits will be governed by the terms of the applicable Biomet, Inc. benefits plans and applicable law. In exchange for this separation package, part of which you would not otherwise be entitled to, you agree to the following:             aa.        You agree that your relocation bonus of $720,000 (gross) ($500,760 net) shall be reduced to $232,000 (gross) (approximately $100,000 net).  You shall refund to Biomet $400,000 in cash or by wire transfer immediately upon your receipt of the net proceeds derived from the sale of the New Jersey house to Biomet.  Your agreement to refund $400,000 of the relocation bonus reflects the recognition by you and Biomet that the bonus was not fully earned in light of the unanticipated early termination of your employment.  The W-2 Biomet provides to you for 2006 shall reflect a gross relocation bonus of $232,000, consisting of approximately $100,000 net and $132,000 of tax withholdings.             bb.       By countersigning and returning this Separation and Release Agreement you unconditionally release and forever discharge any and all claims and causes of action which you may now have, whether known or unknown, against Biomet, its Affiliates, and their respective current and former boards of directors, officers, agents and employees. This release includes, but is not limited to, any claims that might arise in tort or in contract and any claim based on allegations of wrongful discharge and/or breach of contract, and those alleging any violation or discrimination on the basis of race, color, sex, religion, national origin, age, disability, or any other basis under Title VII of the Civil Rights Act, Americans With Disabilities Act, Family and Medical Leave Act, the Age Discrimination in Employment Act ("ADEA"), the New Jersey Law Against Discrimination; New Jersey's Conscientious Employee Protection Act; and New Jersey's Family Leave Act; all as amended, or any claim alleged to arise under any other federal, state, or local law, rule, or regulation. You also agree that your rights under the aforementioned statutes or any other federal, state, or local law, rule or regulation are effectively waived by this Agreement. In accepting terms of this Agreement, you do not waive any rights or claims that may arise out of events that may occur after you countersign below. For purposes of this Agreement, the term "Affiliates" means any other entity that, directly or indirectly, controls, is controlled by, or is under common control with, Biomet and all employee benefit plans (and fiduciaries of such plans) sponsored by any of such entities.             cc.        In signing this Agreement, you warrant that, to the extent that you are aware of any potential or suspected violations of Biomet's Code of Business Conduct and Ethics, Fraud and Abuse Compliance Policies and EBI's Standard of Conduct for the Prevention of Health Care Fraud and Abuse (collectively Biomet's "Business Ethics Policies") and other applicable laws, including the Federal Anti-Kickback Statute, the False Claims Act, and the Stark laws, you have reported such potential or suspected violations to the appropriate Biomet personnel.             dd.       In signing this Agreement, you also agree that the terms of this Agreement shall remain strictly confidential; however, you may disclose the terms of this Agreement to your spouse and legal or tax advisor(s) only provided they agree to maintain the confidentiality of this Agreement. Any breach by you of the terms of this Agreement, including the confidentiality commitment, shall entitle Biomet to recover any separation compensation paid to you or on your behalf, plus legal interest.             ee.        As part of the consideration being provided to you under this Agreement, Biomet expects you to make yourself reasonably available to Biomet and/or its legal counsel and other designated representatives or agents through the period in which you are receiving payments from Biomet, i.e. July 14, 2007. As a result, you agree to the following:                   1.   Respond to the best of your ability to reasonable inquiries from Biomet concerning ongoing matters within your knowledge and/or former area of responsibility and to assist Biomet in transitioning those matters to other Biomet personnel;                   2.         To fully cooperate with Biomet and/or its legal counsel and other designated representatives or agents in providing information in connection with threatened, pending or future investigations or litigation, including giving depositions and appearing for live interviews and proceedings. Biomet shall be responsible to pay you, outside of the payment set forth above, (after the submission of a written expense report) for all out-of- pocket expenses for travel, lodging, meals and related expenses incurred by you in providing services to cooperate in providing information in connection with threatened, pending or future investigations or litigation related to your employment duties with Biomet to and including July 14, 2006. Such travel and services must be specifically requested by Biomet; and                   3.         The foregoing services shall not exceed twenty (20) hours per week, an aggregate of not more than forty (40) hours per month, and an aggregate of not more than two-hundred and fifty (250) hours per year.  Absent your agreement to the contrary, your consulting services are to be performed during regular business hours and during Biomet's customary work week, Monday through Friday, excluding holidays. Biomet shall provide you with reasonable notice (a minimum of ten business days is presumed to be reasonable) of when your consulting services will be needed.  Your consulting obligations to Biomet hereunder shall not preclude you from accepting or fulfilling the obligations associated with full time employment with a new employer.  If you become employed during the term of this agreement, Biomet will make reasonable efforts to minimize your consulting obligations hereunder and to schedule said obligations at times that do not interfere with your obligations to your new employer.                      ff.         You acknowledge that you have knowledge of certain trade secrets of Biomet and its Affiliates, including information concerning the businesses, products, research and development activities, operations, future plans, methodologies and customers of Biomet and its Affiliates. You shall forever hold in fiduciary capacity for the benefit of Biomet and its Affiliates and their respective businesses all secret or confidential information, knowledge or data relating to Biomet and its Affiliates and their respective businesses, which you have obtained during your employment. You shall not, without Biomet's prior written consent, or as may otherwise be required by law or legal process (provided Biomet has been given notice of any opportunity to challenge or limit the scope of disclosure purportedly so required) allow others to use to their personal advantage or communicate or divulge any such information, knowledge or data to anyone other than Biomet and its Affiliates and those specifically designated by Biomet or to an attorney retained by you to provide legal advice with respect to this provision of the Agreement, provided such attorney has agreed to keep such information confidential.  The restrictions imposed upon you by this paragraph shall automatically terminate with respect to any trade secret or other confidential information once said information is made public by Biomet or its Affiliates or otherwise becomes generally known, due to the actions of persons other than you, to well informed persons working in the field to which the information pertains.                 gg.        You acknowledge that if you were to become employed by a Competing Organization ("Competing Organization" means an organization which creates, develops, manufactures, or distributes appliances or devices currently distributed by Biomet or any of its Affiliates), your new job duties and the products, services and technology of the competing organization would be so similar or related to those contemplated by this Agreement that it would be very difficult for you not to rely on or use the Company's or its Affiliate's trade secrets. You further acknowledge that you, and any Competing Organization, cannot avoid using the trade secret information, due to the fact that even in the best good faith, you cannot as a practical matter avoid using the knowledge of the Company's or its Affiliates' confidential methods and trade secrets in your work with a Competing Organization. Accordingly, through January 14, 2007, you will not (without the written consent of Biomet); directly or indirectly, own, manage, operate, control or participate in the ownership, management, operation or control of, or be connected as an officer, employee, partner, director, member, consultant or otherwise with, or have any financial interest in, any Competing Organization; provided that ownership, for personal investment purposes only, of less than 5% of the voting stock of any publicly held corporation shall not constitute a violation hereof.  If you become employed by a Competing Organization after January 14, 2007 and before July 14, 2007, you agree that Biomet will not be obligated to continue the payments required by paragraphs "a," "b," and "c" above, after the date upon which your employment with the Competing Organization starts.                  hh.        Through July 14, 2007, you shall not, directly or indirectly, on behalf of yourself or any other person solicit for employment (other than for Biomet or any of its Affiliates) any person known by you to be employed at the time by Biomet or any of its Affiliates.             ii.          You acknowledge and agree that any breach of the restrictive covenants contained in this Agreement (collectively referred to as the "Restrictive Covenants") will result in irreparable injury to Biomet. Biomet would not have agreed to the terms and the provisions of this Agreement but for the Restrictive Covenants. You agree that, in the event of such a violation or threatened violation, in addition to any remedies at law, Biomet shall be entitled to seek equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy that may then be available and that the prevailing party in any such proceeding shall also be entitled to recover attorneys' fees and costs from the non-prevailing party.  If any court determines that any of the covenants contained in this Agreement, including, without limitation, any of the Restrictive Covenants, or any part thereof, is unenforceable because of the duration, geographical scope of such provision, or such other reason as determined by a court, as the case may be, then said covenant or covenants shall be reduced/modified so that such unenforceable provision becomes enforceable and, in its reduced/modified form, such provision shall be enforced.             jj.         You agree not to make any statement, which a reasonable person would consider disparaging to Biomet or its Affiliates and their officers, directors or employees. The provisions of this paragraph shall remain in full force and effect until July 14, 2007.             kk.       You acknowledge that you were first presented with a draft of this Agreement on July 12, 2006 and have had an opportunity to fully consider its terms, to consult with an attorney of your own choosing, and to propose revisions to the Agreement (some of which were agreed to by Biomet) prior to countersigning this Agreement.  Once you have countersigned this Agreement, you will have seven (7) days to reconsider. During that seven-day period you may revoke your acceptance of the offer by delivering written notice of revocation to Darlene Whaley, Senior Vice President, Human Resources for Biomet, Inc., 56 E. Bell Drive, P0 Box 587, Warsaw, IN 46581-0587 via overnight courier or fax sent to (574) 372-1783. Should you revoke within the seven-day period, this Agreement and your release of claims will automatically become null and void and Biomet will make no separation payments. If you do not revoke, this Agreement and its release of claims will become binding and irrevocable as of the eighth day after you countersign this letter. Biomet will not make any separation payment until after you have returned this countersigned offer and the seven-day revocation period has expired.  If you revoke this Agreement within the seven-day revocation period, then you shall be obligated to pay to Biomet any gain realized from the exercise of stock options that have been accelerated pursuant to the terms of this Agreement. "Gain realized" shall be calculated based on the market price of Biomet Common Shares as of close of business on the date of exercise. Also, in the event this Agreement is ever held to be invalid or unenforceable (in whole or in part) as to any particular type of claim or charge or as to any particular circumstances, you agree that it shall remain fully valid and enforceable s to all other claims, charges, and circumstances. As to any actions, claims, or charges, excepting any claim challenging this Agreement under the ADEA, that would not be released because of the revocation, invalidity, or unenforceability of this Agreement, you understand and agree that the return of the above-described separation compensation made to you by Biomet, with legal interest, is a prerequisite to asserting or bringing any such claims, charges, or actions. If you accept terms of this Agreement, please countersign both copies of this letter and return one fully executed original to Darlene Whaley, Senior Vice President, Human Resources for Biomet, Inc., 56 E. Bell Drive, PO Box 587, Warsaw, IN 46581-0587. Regardless of whether you choose to execute this Agreement, no later than close of business on Friday, July 14, 2006, you must return to Biomet all company property in your possession or control, including, but not limited to, Biomet documents, keys, keycards, credit cards, computer equipment, cellular phones (you may keep your cell phone through the end of July 2006), PDAs, computers, computer disks, and all other items or records. Any unpaid expense reports must be submitted for reimbursement by Friday, July 14, 2006.  Biomet acknowledges that all such items have been returned as of the date this Agreement was signed. This Agreement shall in all respects be binding upon and inure to the benefit of each party's successors and assigns. This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey. The provisions of this Agreement are severable. If any provision of the Agreement is declared invalid or unenforceable, the ruling will not affect the validity and enforceability of any other provisions of the Agreement. Thank you for your service to Biomet. We wish you only the best in your future endeavors. Very truly yours, /s/ Garry L. England Garry L. England Chief Operating Officer — Domestic Operations Biomet, Inc. WITH MY SIGNATURE BELOW, I ACKNOWLEDGE THAT I HAVE CAREFULLY READ THIS AGREEMENT. I UNDERSTAND AND VOLUNTARILY ACCEPT ALL OF ITS TERMS INCLUDING THE FULL AND FINAL RELEASE OF CLAIMS SET FORTH ABOVE. /s/ Bart J. Doedens_____________                                         Date:  ___8/21/06__________ Bart J. Doedens, M.D.

SEPARATION AGREEMENT   This Separation Agreement (“Agreement”) is an agreement between John F. Clifford, for himself, his administrators, executors, spouse, heirs, or assigns, and anyone acting for him, (“Clifford”) and PhotoMedex, Inc., a Delaware corporation (“PhotoMedex” or the “Company”), made as of the 30th of April 2006, to be effective on the Effective Date as defined in Section 5(b) below.   1.   Separation from Employment and Consulting Arrangement.         (a)    PhotoMedex and Clifford have agreed that Clifford will voluntarily resign from the employ of PhotoMedex on or before June 30, 2006 (the “Resignation Date”), at a date mutually acceptable to them, and Clifford and PhotoMedex agree to cancel that Employment Agreement dated March 18, 2005, between Clifford and PhotoMedex (the “Employment Agreement”), to the end that Clifford may pursue other business interests. Until the Resignation Date, Clifford will continue on a full-time basis as Executive Vice President, Dermatology, devoting the majority of his time out of the office and in the field so as to prepare the sales force for the transition occasioned by his departure. Clifford will continue to report to Jeffrey O’Donnell and have use of his office. During the period to the Resignation Date, PhotoMedex shall be free to seek a person to replace Clifford or to realign Clifford’s duties to other employees.            (b)    From the Resignation Date to the second anniversary thereof, Clifford shall be available, at PhotoMedex’s request, to act as a consultant and independent contractor for PhotoMedex, and as of the second anniversary of the Resignation Date, the consulting arrangement shall expire automatically. Clifford shall be available for reasonable telephone consultation regarding current and future customers of PhotoMedex and on Company and competitors’ personnel. Compensation for consultation shall be subsumed within the severance to be paid to Clifford under Section 2(d) and within COBRA premiums described in Section 2(e). If PhotoMedex desires to engage Clifford for consultation on business development projects, then such consultation shall be on terms to be negotiated by, and mutually acceptable to, Clifford and PhotoMedex, it being understood that Clifford shall be free to decline such consultation for any reason or no reason. Clifford will not have use of an office at PhotoMedex during that period. Clifford, as an independent consultant, shall be responsible for his own expenses; PhotoMedex shall reimburse only for those expenses which it specifically has approved in advance and in accordance with Company policy.   --------------------------------------------------------------------------------         2.   Compensation Arrangements.           (a)    Until the Resignation Date, Clifford shall continue to receive his full base salary of $300,000 annual in biweekly installments, according to the Company’s normal payroll procedures.           (b)    Until the Resignation Date, Clifford shall continue to enjoy health coverage from the Company plan and to participate in the Company 401K plan and shall continue to earn vacation days and be paid a car allowance, prorated to the date of Resignation.           (c)    PhotoMedex shall make a final payroll and accounting with Clifford in the payroll period following the Resignation Date, including salary, auto allowance, vacation pay, and expense reimbursement. This accounting will also include three payments of $17,500 each, payable on the first day of each of the first, second and third months in the second twelve months of consulting that Clifford will render to PhotoMedex from the first anniversary of the Resignation Date to the second anniversary thereof, as described in Section 1(b), where such payments shall be payable for Clifford’s consulting without income or other tax withholdings over the second twelve months. As part of this accounting, Clifford will return to PhotoMedex any property which PhotoMedex had provided to Clifford for his use in pursuance of Company business.   2 --------------------------------------------------------------------------------     (d)    From the Resignation Date until the first anniversary thereof, Clifford shall receive, as severance compensation, a fee, payable bi-weekly, equal to his gross base salary in effect at the Resignation Date, viz. $300,000, less withholding taxes applicable to severance payments. From the Resignation Date, Clifford will cease to have a car allowance or to earn vacation days and will not be able to contribute to the 401K plan and will cease to participate in any Company benefit programs, except as set forth in subparagraph (e) below.           (e)    As of the Resignation Date, PhotoMedex shall make available to Clifford, in accordance with COBRA, coverage under the Company’s health plan; PhotoMedex will pay the premiums for such coverage to the sooner of the following dates: the date that Clifford attains age 65 (namely, September 30, 2007) or the date that Clifford secures comparable, full-time employment from another employer. In either case, after September 30, 2007, Clifford shall be responsible for such premiums equal on a monthly basis to the premiums due under the COBRA coverage, for which PhotoMedex will reimburse him through the second anniversary of the Resignation Date in further consideration of Clifford’s continuing service as consultant. As of the Resignation Date, Clifford will cease to be covered by PhotoMedex’s workers’ compensation policy or to enjoy Company-paid disability and life insurance coverage; it shall be at Clifford’s election whether to convert his group life and group disability coverage into coverage for himself alone, for the premiums of which he would be solely responsible.       3.   Stock Options.   3 --------------------------------------------------------------------------------             (a)    Stock options granted by PhotoMedex to Clifford shall continue to vest up to the Resignation Date as an officer and employee, and as of the Resignation Date. Half of any options remaining unvested as of the Resignation Date will become fully vested, and the other half will then be canceled. After the Resignation Date, Clifford will continue as a consultant of the Company until the second anniversary of the Resignation Date, and during such period and for three months thereafter, the vested options will continue to be exercisable by Clifford, unless an option by its own terms (e.g. 2/18/08) has expired sooner. Set forth on Exhibit A is a listing of options granted to Clifford, the expected status quo of such options as of a hypothetical Resignation Date of June 30, 2006, after vesting 50% of the then-unvested options, and the expiration dates of the options. The provisions of this Section 3 shall supersede the vesting and exercisability provisions of the option agreements covering the discrete grants and shall supersede the provisions of the stock option plans under which such options were granted.           (b)    Any options not exercised or otherwise expired by 90 days past the second anniversary of the Resignation Date shall be canceled.       4.   Confidentiality, competition.           (a)    Clifford will not communicate, prior to the date on which the Company may be obliged to make public disclosure of Clifford’s intended resignation, about his resignation to any person, including those in the industry or employees of PhotoMedex, other than Messrs. O’Donnell, Stewart, McGrath, Woodward and Jaffe and Mss. Carmichael, Dailey and Gensel, it being noted that PHMD may inform members of the Sales management and its professional advisors before the public disclosure of Clifford’s intended resignation.           (b)    Until the Resignation Date, Clifford will remain subject to the provisions of Sections 6.1 to 6.4 of the Employment Agreement concerning property rights and obligations, it being understood that among the trade secrets of PhotoMedex are any matters of confidential information of PhotoMedex not in the public domain, confidentiality and will remain subject to the non-solicitation obligations described in Sections 6.5.1 and 6.5.2 of the Employment Agreement. These obligations will continue unchanged through the second anniversary of the Resignation Date, and during the period that Clifford remains subject to such obligations, he will not disparage PhotoMedex, nor will PhotoMedex disparage Clifford.   4 --------------------------------------------------------------------------------       (c)    Until the Resignation Date, Clifford will likewise remain subject to the non-competition obligations described in Section 6.5.3 of the Employment Agreement. In consideration of the severance payment to be made under Section 2(d), Clifford shall likewise remain subject, for the twelve months following the Resignation Date, to such non-competition obligations, except that the second sentence of Section 6.5.3 of the Employment Agreement is amended to read as follows: “Employee, therefore, agrees that, for a period of two (2) years after the Resignation Date, he will not, as an employee, sole proprietor, partner, or joint venturer, in the same or similar capacity in which he worked for Employer Group, compete with Employer Group in the manufacture, marketing or sales of excimer laser technology in connection with interventional cardiology, psoriasis, or any other field in which Employee has actual knowledge of Employer’s use of excimer laser technology.” Furthermore, Clifford shall be permitted, with PhotoMedex’s consent (such consent not to be unreasonably withheld or delayed), to work as employee or consultant for other companies in the skin care market, provided that such companies do not market products that are, in PhotoMedex’s sole discretion, competitive with those of PhotoMedex as of the Resignation Date. Before embarking on such work, Clifford shall give PhotoMedex at least 15 days’ prior written notice, and if PhotoMedex does not consent to such work, it shall advise Clifford of its reasons therefor. If PhotoMedex does not reply to Clifford’s notice within such 15-day period, then PhotoMedex shall be deemed to have consented.   5 --------------------------------------------------------------------------------         5.   Waiver and Release.           (a)    In exchange for the promises made to him under this Separation Agreement, Clifford completely waives, releases and forever discharges PhotoMedex, its past, present and future successors and assigns, officers, directors, partners, agents, associates and employees, from all claims, damages (including but not limited to general, special, punitive, liquidated and compensatory damages) and causes of action of every kind, nature and character, known or unknown, in law or equity, fixed or contingent, which he may now have, or he ever had arising from or in any way connected with his employment relationship or the termination of his employment with PhotoMedex or any other matter occurring at any time in the past up to and including the date of this Agreement or involving any continuing effects of any acts or practices which may have arisen or occurred prior to the date of this Agreement. This release includes but is not limited to: any claims of unpaid compensation; all "wrongful discharge" claims; all claims relating to any contracts of employment express or implied; any covenant of good faith and fair dealing express or implied; any tort of any nature; any federal, state, or municipal statute or ordinance; any claims for employment discrimination, including sexual harassment, Pennsylvania Human Relations Act, 43 P.S. Section 951 et seq., Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act ("ADEA"), the Older Workers Benefit Protection Act, 42 U.S.C. Section 1981, the Worker Adjustment and Retraining Notification Act, and any other federal, state, or municipal laws, ordinances and regulations relating to employment, and any and all claims for attorney's fees and costs. Clifford understands that this release does not apply to any claims arising under the ADEA after the Effective Date of this Agreement.   6 --------------------------------------------------------------------------------             (b)    Clifford acknowledges hereby that he understands that, since he is aged 40 or older, he has no fewer than 21 days from the date he has received this Agreement to consider and sign this Agreement. Clifford also understands that, as he is aged 40 or older, he has seven days to revoke this Agreement after he signs it. Clifford understands that any such revocation must be in writing and must be received by PhotoMedex's Corporate Counsel at 147 Keystone Drive, Montgomeryville, PA 18936 no later than 5 p.m. on the last day of the applicable revocation period. The Effective Date of this Agreement is the day after the seven-day revocation period ends. Clifford understands that he will not receive the benefits and privileges of this Agreement sooner than the Effective Date and then only if he has not revoked this Agreement pursuant to this Section 5.           (c)    Except as to rights provided under this Agreement, Clifford acknowledges that the benefits inuring to him under this Separation Agreement are provided to him in full and complete satisfaction and discharge of any and all obligations that PhotoMedex has or may have to him as an employee and that he has been paid all the salary, bonuses, benefits and other compensation that are due to him.       6.   Agreement Not to Sue and Damages.           (a)    Clifford further agrees not to sue PhotoMedex for any claims covered by this Separation Agreement or the Employment Agreement. If Clifford should sue in violation of this Agreement and not be the prevailing party in the suit, he agrees to pay all costs and expenses incurred by PhotoMedex in defending against a suit or enforcing this Agreement, including court costs, expenses and reasonable attorneys’ fees.   7 --------------------------------------------------------------------------------       (b)    PhotoMedex agrees not to sue Clifford for any claims covered by this Agreement or the Employment Agreement. If PhotoMedex should sue in violation of this Agreement and not be the prevailing party in the suit, it agrees to pay all costs and expenses incurred by Clifford in defending against a suit or enforcing this Agreement, including court costs, expenses and reasonable attorneys’ fees.           (c)    Excluded from the release and the covenant not to sue are any claims which cannot be waived by law, including without limitation an ADEA claim to the extent such an exception is required by law, and the filing of a charge with the Equal Employment Opportunity Commission. But Clifford agrees to waive any right to any monetary recovery, should any government agency pursue any claims on his behalf. Clifford also acknowledges that he has not suffered any on-the-job injury for which he has not already filed a claim.           (d)    Clifford further acknowledges and agrees that in the event he may breach the provisions of this Agreement, PhotoMedex shall: (i) be entitled to apply for and receive an injunction to restrain any violation of this Agreement, and (ii) Clifford shall be obligated to pay to PhotoMedex its costs and expenses in obtaining such injunction and/or enforcing this Agreement and defending against such lawsuit (including court costs, expenses and reasonable legal fees), and the foregoing shall not affect the validity of this Agreement and such relief does not constitute in any way a penalty or a forfeiture.       7.   Miscellaneous.           (a)    This Agreement is deemed made and entered into in the Commonwealth of Pennsylvania, and in all respects shall be interpreted, enforced and governed under the internal laws of the Commonwealth of Pennsylvania. Any dispute under this Agreement shall be adjudicated by a court of competent jurisdiction in the Commonwealth of Pennsylvania.   8 --------------------------------------------------------------------------------     (b)    Clifford represents and warrants that he will not seek, and waives any right or claim to, employment now or in the future by PhotoMedex.         (c)    This Agreement resolves all matters between Clifford and PhotoMedex and supersedes any other written or oral agreement between Clifford and PhotoMedex. The Employment Agreement of March 18, 2005, is canceled as of the Effective Date of this Agreement, except as specifically set forth herein.           (d)    Clifford agrees that he is signing this Agreement knowingly and voluntarily, that he has not been coerced or threatened into signing this Agreement and that he has not been promised anything not set forth in this Agreement in exchange for signing this Agreement. If any part of this Agreement is found to be illegal or invalid, the rest of this Agreement will still be enforceable.           (e)    This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. Faxed copies will be effective and binding.           (f)    By this Agreement, Clifford understands further that he has been advised to consult with an attorney of his own choice at his own expense before signing below. He has done so. PhotoMedex agrees to pay Clifford’s attorney fees incurred in the review and negotiation of this Agreement in an amount not to exceed $3,000. Any rule of law or decision that would require interpretation of any claimed ambiguities in this Agreement against the party that drafted it has no application and is expressly waived.           (g)    This Agreement has been individually negotiated and is not part of a group exit incentive or other termination program.   9 --------------------------------------------------------------------------------       (h)    No modification of any provision of this Agreement shall be effective unless made in writing and signed by both PhotoMedex and Clifford.         IN WITNESS WHEREOF, this Agreement has been executed and agreed to as of the date first above written.         JOHN F. CLIFFORD PHOTOMEDEX, INC.     Date:  April 30, 2006 Date:      May 1, 2006     Signature:   /s/John F. Clifford By:      /s/ Jeffrey F. O’Donnell        Name:          Jeffrey F. O’Donnell     Title:         President, CEO   10 --------------------------------------------------------------------------------   Exhibit A         Exercise Grant   Expiry   Vested at   Vested at   Number    Price   Date   Date   05/31/06    06/30/06                           33,110   $2.17   02/18/98   02/18/08*   33,110      33,110                           99,330   $1.16   08/25/99   08/25/09   99,330   99,330                           66,220   $1.07   12/13/00   12/13/10   66,220   66,220                           66,220   $1.96   11/28/01   11/28/11   66,220   66,220                           99,330   $2.76   05/20/02   05/20/12   99,330   99,330                         33,110   $1.65   12/15/03   12/15/13   22,073 27,592**                         250,000   $2.78   04/04/05   04/04/10   85,000 167,500***                                                                                   * Natural expiry date is earlier than 9/30/08.   **27,592 = 22,073 + 50% (33,110 - 22,073).   *** 167,500 = 85,000 + 50% (250,000 - 85,000). 11 --------------------------------------------------------------------------------

  Exhibit 10.4 PEERLESS SYSTEMS CORPORATION STOCK OPTION GRANT NOTICE AND STOCK OPTION AGREEMENT      Peerless Systems Corporation, a Delaware corporation (the “Company”) hereby grants to the holder listed below (“Participant”), an option to purchase the number of shares of the Company’s common stock, par value $0.001 (“Stock”), set forth below (the “Option”). This Option is subject to all of the terms and conditions set forth herein and in the Stock Option Agreement attached hereto as Exhibit A (the “Stock Option Agreement”) which is incorporated herein by reference. Unless otherwise defined herein, the terms used shall have the same defined meanings as ascribed to them in the Company’s 2005 Incentive Award Plan (the “Plan”) and the Stock Option Agreement.       Participant:   Richard L. Roll       Grant Date:   December 15, 2006       Exercise Price per Share:   $2.84       Total Exercise Price:   $1,704,000       Total Number of Shares Subject to the Option:   600,000 shares       Expiration Date:   December 15, 2016       Type of Option:   o Incentive Stock Option            þ Non-Qualified Stock Option       Vesting Schedule:   The Time-Vested Option will vest over a four-year period, subject to your continued employment with Peerless. In particular, 25% will vest on the first anniversary of your first day of employment and, thereafter, the remaining portion shall vest monthly in equal installments over the subsequent 36 months.      By his or her signature, Participant agrees to be bound by the terms and conditions of the Stock Option Agreement and this Grant Notice. Participant has reviewed the Stock Option Agreement and this Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, and the Stock Option Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board of Directors of the Company upon any questions relating to the Option.               PEERLESS SYSTEMS CORPORATION   PARTICIPANT               By:   /s/ John Rigali   By:   Richard L. Roll               Print Name:   John Rigali   Print Name:   Richard L. Roll Title:   Vice President and CFO         Address:   2381 Rosecrans Avenue   Address:   15 Cellano     El Segundo, CA 90245       Laguna Niguel, CA 92677 -1- --------------------------------------------------------------------------------   EXHIBIT A TO STOCK OPTION GRANT NOTICE STOCK OPTION AGREEMENT      Pursuant to the Stock Option Grant Notice (the “Grant Notice”) to which this Stock Option Agreement (this “Agreement”) is attached, Peerless Systems Corporation, a Delaware corporation (the “Company”), has granted to Participant an option to purchase the number of shares of Stock indicated in the Grant Notice. ARTICLE I GENERAL      1.1 Defined Terms. Capitalized terms not specifically defined herein shall have the meanings specified in the Grant Notice and the Company’s 2005 Incentive Award Plan (the “Plan”). ARTICLE II GRANT OF OPTION      2.1 Grant of Option. In consideration of Participant’s past and/or continued employment with or service to the Company or a Parent or Subsidiary and for other good and valuable consideration, effective as of the Grant Date set forth in the Grant Notice (the “Grant Date”), the Company irrevocably grants to Participant the Option to purchase any part or all of an aggregate of the number of shares of Stock set forth in the Grant Notice, upon the terms and conditions set forth in this Agreement. Unless designated as a Non-Qualified Stock Option in the Grant Notice, the Option shall be an Incentive Stock Option to the maximum extent permitted by law.      2.2 Exercise Price. The exercise price of the shares of Stock subject to the Option shall be as set forth in the Grant Notice, without commission or other charge; provided, however, that the exercise price per share of Stock subject to the Option shall not be less than 100% of the Fair Market Value of a share of Stock on the Grant Date. Notwithstanding the foregoing, if this Option is designated as an Incentive Stock Option and Participant owns (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or any “subsidiary corporation” of the Company or any “parent corporation” of the Company (each within the meaning of Section 424 of the Code), the exercise price per share of Stock subject to the Option shall not be less than 110% of the Fair Market Value of a share of Stock on the Grant Date.      2.3 Consideration to the Company; No Employment Rights. In consideration of the grant of the Option by the Company, Participant agrees to render faithful and efficient services to the Company or any Parent or Subsidiary. Nothing in the Plan or this Agreement shall confer upon Participant any right to continue in the employ or service of the Company or any Parent or Subsidiary or shall interfere with or restrict in any way the rights of the Company and its Parents and Subsidiaries, which rights are hereby expressly reserved, to discharge or terminate the services of Participant at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a written agreement between the Company, a Parent or a Subsidiary and Participant. -1- --------------------------------------------------------------------------------   ARTICLE III PERIOD OF EXERCISABILITY      3.1 Commencement of Exercisability.           (a) Subject to Sections 3.3, 5.8 and 5.10, the Option shall become vested and exercisable in such amounts and at such times as are set forth in the Grant Notice.           (b) No portion of the Option which has not become vested and exercisable at the date of Participant’s Termination of Employment, Termination of Directorship or Termination of Consultancy shall thereafter become vested and exercisable, except as may be otherwise provided by the Board of Directors or as set forth in a written agreement between the Company and Participant.      3.2 Duration of Exercisability. The installments provided for in the vesting schedule set forth in the Grant Notice are cumulative. Each such installment which becomes vested and exercisable pursuant to the vesting schedule set forth in the Grant Notice shall remain vested and exercisable until it becomes unexercisable under Section 3.3, except as may be otherwise provided by the Board of Directors or as set forth in a written agreement between the Company and the Participant.      3.3 Expiration of Option. The Option may not be exercised to any extent by anyone after the first to occur of the following events:           (a) The expiration of ten years from the Grant Date;           (b) If this Option is designated as an Incentive Stock Option and Participant owned (within the meaning of Section 424(d) of the Code), at the time the Option was granted, more than 10% of the total combined voting power of all classes of stock of the Company or any “subsidiary corporation” of the Company or any “parent corporation” of the Company (each within the meaning of Section 424 of the Code), the expiration of five years from the Grant Date;           (c) The expiration of three months following the date of Participant’s Termination of Employment, Termination of Directorship or Termination of Consultancy, unless such termination occurs by reason of Participant’s death or Disability or Participant’s discharge for Cause;           (d) The expiration of one year following the date of Participant’s Termination of Employment, Termination of Directorship or Termination of Consultancy by reason of Participant’s death or Disability; or           (e) The expiration of three months following the date of Participant’s Termination of Employment, Termination of Directorship or Termination of Consultancy by the Company or any Parent or Subsidiary by reason of Participant’s discharge for Cause.      Participant acknowledges that an Incentive Stock Option exercised more than three months after Participant’s Termination of Employment, other than by reason of death or Disability, will be taxed as a Non-Qualified Stock Option.      3.4 Special Tax Consequences. Participant acknowledges that, to the extent that the aggregate Fair Market Value (determined as of the time the Option is granted) of all shares of Stock with respect to which Incentive Stock Options, including the Option, are exercisable for the first time by Participant in any calendar year exceeds $100,000, the Option and such other options shall be Non- -2- --------------------------------------------------------------------------------   Qualified Stock Options to the extent necessary to comply with the limitations imposed by Section 422(d) of the Code. Participant further acknowledges that the rule set forth in the preceding sentence shall be applied by taking the Option and other “incentive stock options” into account in the order in which they were granted, as determined under Section 422(d) of the Code and the Treasury Regulations thereunder. ARTICLE IV EXERCISE OF OPTION      4.1 Person Eligible to Exercise. Except as provided in Sections 5.2(b) and 5.2(c), during the lifetime of Participant, only Participant may exercise the Option or any portion thereof. After the death of Participant, any exercisable portion of the Option may, prior to the time when the Option becomes unexercisable under Section 3.3, be exercised by Participant’s personal representative or by any person empowered to do so under the deceased Participant’s will or under the then applicable laws of descent and distribution.      4.2 Partial Exercise. Any exercisable portion of the Option or the entire Option, if then wholly exercisable, may be exercised in whole or in part at any time prior to the time when the Option or portion thereof becomes unexercisable under Section 3.3.      4.3 Manner of Exercise. The Option, or any exercisable portion thereof, may be exercised solely by delivery to the Secretary of the Company or the Secretary’s office of all of the following prior to the time when the Option or such portion thereof becomes unexercisable under Section 3.3:           (a) An Exercise Notice in writing signed by Participant or any other person then entitled to exercise the Option or portion thereof, stating that the Option or portion thereof is thereby exercised, such notice complying with all applicable rules established by the Board of Directors. Such notice shall be substantially in the form attached as Exhibit B to the Grant Notice (or such other form as is prescribed by the Board of Directors);           (b) The receipt by the Company of full payment for the shares with respect to which the Option or portion thereof is exercised, including payment of any applicable withholding tax, which may be in one or more of the forms of consideration permitted under Section 4.4;           (c) A bona fide written representation and agreement, in such form as is prescribed by the Board of Directors, signed by Participant or the other person then entitled to exercise such Option or portion thereof, stating that the shares of Stock are being acquired for Participant’s own account, for investment and without any present intention of distributing or reselling said shares or any of them except as may be permitted under the Securities Act and then applicable rules and regulations thereunder and any other applicable law, and that Participant or other person then entitled to exercise such Option or portion thereof will indemnify the company against and hold it free and harmless from any loss, damage, expense or liability resulting to the Company if any sale or distribution of the shares by such person is contrary to the representation and agreement referred to above. The Board of Directors may, in its absolute discretion, take whatever additional actions it deems appropriate to ensure the observance and performance of such representation and agreement and to effect compliance with the Securities Act and any other federal or state securities laws or regulations and any other applicable law. Without limiting the generality of the foregoing, the Board of Directors may require an opinion of counsel acceptable to it to the effect that any subsequent transfer of shares acquired on an Option exercise does not violate the Securities Act, and may issue stop-transfer orders covering such shares. Share certificates evidencing Stock issued on exercise of the Option shall bear an appropriate legend referring to the provisions of this subsection (c) and the agreements herein. The written representation and agreement referred to in the first -3- --------------------------------------------------------------------------------   sentence of this subsection (c) shall, however, not be required if the shares to be issued pursuant to such exercise have been registered under the Securities Act, and such registration is then effective in respect of such shares; and           (d) In the event the Option or portion thereof shall be exercised pursuant to Section 4.1 by any person or persons other than Participant, appropriate proof of the right of such person or persons to exercise the Option.      4.4 Method of Payment. Payment of the exercise price shall be by any of the following, or a combination thereof, at the election of the Participant:           (a) cash;           (b) check;           (c) To the extent permitted under applicable laws, delivery of a notice that the Participant has placed a market sell order with a broker with respect to shares of Stock then issuable upon exercise of the Option, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate exercise price; provided, that payment of such proceeds is then made to the Company upon settlement of such sale;           (d) With the consent of the Board of Directors, such payment may be made, in whole or in part, through the surrender of shares of Stock then issuable upon exercise of the Option having a Fair Market Value on the date of Option exercise equal to the aggregate exercise price of the Option or exercised portion thereof;           (e) With the consent of the Board of Directors, such payment may be made, in whole or in part, through the delivery of shares of Stock which have been owned by Participant for at least six (6) months, duly endorsed for transfer to the Company with a Fair Market Value on the date of Option exercise equal to the aggregate exercise price of the Option or exercised portion thereof; or           (f) With the consent of the Board of Directors, any combination of the consideration provided in the foregoing paragraphs (a), (b), (c), (d) and (e).      4.5 Conditions to Issuance of Stock Certificates. The shares of Stock deliverable upon the exercise of the Option, or any portion thereof, may be either previously authorized but unissued shares or issued shares which have then been reacquired by the Company. Such shares shall be fully paid and nonassessable. The Company shall not be required to issue or deliver any shares of Stock purchased upon the exercise of the Option or portion thereof prior to fulfillment of all of the following conditions:           (a) The admission of such shares to listing on all stock exchanges on which such Stock is then listed;           (b) The completion of any registration or other qualification of such shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which the Board of Directors shall, in its absolute discretion, deem necessary or advisable;           (c) The obtaining of any approval or other clearance from any state or federal governmental agency which the Board of Directors shall, in its absolute discretion, determine to be necessary or advisable; -4- --------------------------------------------------------------------------------             (d) The receipt by the Company of full payment for such shares, including payment of any applicable withholding tax, which may be in one or more of the forms of consideration permitted under Section 4.4; and           (e) The lapse of such reasonable period of time following the exercise of the Option as the Board of Directors may from time to time establish for reasons of administrative convenience.      4.6 Rights as Stockholder. The holder of the Option shall not be, nor have any of the rights or privileges of, a stockholder of the Company in respect of any shares purchasable upon the exercise of any part of the Option unless and until such shares shall have been issued by the Company to such holder (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment will be made for a dividend or other right for which the record date is prior to the date the shares are issued, except as provided in Section 12.3 of the Plan, which are incorporated herein by reference. ARTICLE V OTHER PROVISIONS      5.1 Administration. The Board of Directors shall have the power to interpret this Agreement and to adopt such rules for the administration, interpretation and application of this Agreement as are consistent therewith and to interpret, amend or revoke any such rules. All actions taken and all interpretations and determinations made by the Board of Directors in good faith shall be final and binding upon Participant, the Company and all other interested persons. No member of the Board of Directors shall be personally liable for any action, determination or interpretation made in good faith with respect to this Agreement or the Option.      5.2 Option Not Transferable.           (a) Subject to Section 5.2(b), the Option may not be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution, unless and until the shares underlying the Option have been issued, and all restrictions applicable to such shares have lapsed. Neither the Option nor any interest or right therein shall be liable for the debts, contracts or engagements of Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence.           (b) Notwithstanding any other provision in this Agreement, with the consent of the Board of Directors and to the extent the Option is not intended to qualify as an Incentive Stock Option, the Option may be transferred to one or more Permitted Transferees, subject to the terms and conditions set forth in Section 12.1(b) of the Plan, which are incorporated herein by reference.           (c) Unless transferred to a Permitted Transferee in accordance with Section 5.2(b), during the lifetime of Participant, only Participant may exercise the Option or any portion thereof. Subject to such conditions and procedures as the Board of Directors may require, a Permitted Transferee may exercise the Option or any portion thereof during Participant’s lifetime. After the death of Participant, any exercisable portion of the Option may, prior to the time when the Option becomes unexercisable under Section 3.3, be exercised by Participant’s personal representative or by any person empowered to do so under the deceased Participant’s will or under the then applicable laws of descent and distribution. -5- --------------------------------------------------------------------------------        5.3 Restrictive Legends and Stop-Transfer Orders.           (a) The share certificate or certificates evidencing the shares of Stock purchased hereunder shall be endorsed with any legends that may be required by state or federal securities laws.           (b) Participant agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.           (c) The Company shall not be required: (i) to transfer on its books any shares of Stock that have been sold or otherwise transferred in violation of any of the provisions of this Agreement, or (ii) to treat as owner of such shares of Stock or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such shares shall have been so transferred.      5.4 Shares to Be Reserved. The Company shall at all times during the term of the Option reserve and keep available such number of shares of Stock as will be sufficient to satisfy the requirements of this Agreement.      5.5 Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of the Secretary of the Company at the address given beneath the signature of the Company’s authorized officer on the Grant Notice, and any notice to be given to Participant shall be addressed to Participant at the address given beneath Participant’s signature on the Grant Notice. By a notice given pursuant to this Section 5.5, either party may hereafter designate a different address for notices to be given to that party. Any notice which is required to be given to Participant shall, if Participant is then deceased, be given to the person entitled to exercise his or her Option pursuant to Section 4.1 by written notice under this Section 5.5. Any notice shall be deemed duly given when sent via email or when sent by certified mail (return receipt requested) and deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service.      5.6 Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.      5.7 Governing Law; Severability. This Agreement shall be administered, interpreted and enforced under the laws of the State of Delaware, without regard to the conflicts of law principles thereof. Should any provision of this Agreement be determined by a court of law to be illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain enforceable.      5.8 Conformity to Securities Laws. Participant acknowledges that the Option is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, and state securities laws and regulations. Notwithstanding anything herein to the contrary, the Option shall be administered, and is granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations. -6- --------------------------------------------------------------------------------        5.9 Amendments. This Agreement may not be modified, amended or terminated except by an instrument in writing, signed by Participant or such other person as may be permitted to exercise the Option pursuant to Section 4.1 and by a duly authorized representative of the Company.      5.10 Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth in Section 5.2, this Agreement shall be binding upon Participant and his or her heirs, executors, administrators, successors and assigns.      5.11 Notification of Disposition. If this Option is designated as an Incentive Stock Option, Participant shall give prompt notice to the Company of any disposition or other transfer of any shares of Stock acquired under this Agreement if such disposition or transfer is made (a) within two years from the Grant Date with respect to such shares or (b) within one year after the transfer of such shares to him. Such notice shall specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by Participant in such disposition or other transfer.      5.12 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Option and this Agreement shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, this Agreement shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.      5.13 Entire Agreement. This Agreement (including all Exhibits hereto), and the Plan (to the extent incorporated herein by reference), constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof. -7- --------------------------------------------------------------------------------   EXHIBIT B TO STOCK OPTION GRANT NOTICE FORM OF EXERCISE NOTICE      Effective as of today,                      ___, 20___, the undersigned (“Participant”) hereby elects to exercise Participant’s option to purchase the number of shares of common stock specified below (the “Shares”) of Peerless Systems Corporation, a Delaware corporation (the “Company”), under and pursuant to the Stock Option Grant Notice and Stock Option Agreement dated as of ________ (the “Option Agreement”). Capitalized terms used herein without definition shall have the meanings given in the Company’s 2005 Incentive Award Plan (the “Plan”) and, if not defined in the Plan, the Option Agreement.       Grant Date:                                                                                                Number of Shares as to which Option is Exercised:                                                                                                Exercise Price per Share:   $                           Total Exercise Price:   $                            Certificate to be issued in name of:                                                                                                Payment delivered herewith:   $                     (Representing the full exercise price for the Shares, as well as any applicable withholding tax)     Form of Payment:                                                         (Please specify) Type of Option:       o Incentive Stock Option            o Non-Qualified Stock Option      Participant acknowledges that Participant has received, read and understood the Option Agreement. Participant agrees to abide by and be bound by their terms and conditions. Participant understands that Participant may suffer adverse tax consequences as a result of Participant’s purchase or disposition of the Shares. Participant represents that Participant has consulted with any tax consultants Participant deems advisable in connection with the purchase or disposition of the Shares and that Participant is not relying on the Company for any tax advice. The Option Agreement is incorporated herein by reference. This Agreement and the Option Agreement constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof.               ACCEPTED BY:         PEERLESS SYSTEMS CORPORATION   SUBMITTED BY:               By:       By:                   Print Name:       Print Name:                   Title:                                   Address:                                               -1-

Exhibit 10.30 Catcher, Inc. SEPARATION AND RELEASE AGREEMENT This Separation and Release Agreement (“Agreement”) is entered into by and between Catcher, Inc. (“Catcher”), and John Sutton (“Employee”) with respect to the following facts: A. Employee’s employment with Catcher was severed effective August 31, 2006 (“Severance Date”). B. Catcher and Employee desire to resolve any and all differences regarding Employee’s employment and the termination of Employee’s employment. The parties mutually agree as follows: 1. Separation Pay. In consideration of Employee signing this Agreement, and the covenants and releases given herein, Catcher will pay Employee the gross sum of $55,000 (which represents approximately four months salary) less federal and state withholdings (“Separation Pay”). Provided the Agreement has become effective as set forth in Sections 4 and 5 below, Catcher will pay Employee the Separation Pay over fours months in eight equal installments beginning on September 15, 2006 and continuing thereafter on regular schedule payrolls of approximately the 15th and last business day of each month until fully paid (“Separation Pay Term”). Employee acknowledges that Employee would not be entitled to receive any portion of the Separation Pay absent this Agreement. 2. Continuation of Health Insurance Coverage. In further consideration of Employee signing this Agreement, and the covenants and releases given herein, Catcher will pay for four months of health insurance coverage pursuant to COBRA under Administaff’s health insurance plan, provided Employee timely completes all necessary documentation following the Effective Date of this Agreement (“Health Insurance Pay”). Catcher shall have no further or additional obligation or liability for continuation of any benefits, including but not limited to medical, dental, disability, death, travel/accident, and/or life insurance. Employee acknowledges that Employee would not be entitled to receive any portion of the Health Insurance Pay absent this Agreement. 3. Confidential Information. Employee has executed Catcher’s Proprietary Rights and Information Agreement (“Catcher Non-Disclosure Agreement”) attached hereto, and hereby agrees to comply with all duties and obligations under the Catcher Non-Disclosure Agreement hereinafter. Employee also agrees to return any and all Catcher property and/or information in Employee’s possession to Catcher on or before the Severance Date, with the exception of Employee’s laptop computer which shall be transferred to Employee upon Termination at no additional cost. All Catcher property and information, including but not limited to a contact data base in a form reasonably acceptable to Catcher, files, and documents, should be returned to Catcher to the attention of Gary Rogers, Director of Product Management -------------------------------------------------------------------------------- at 1 Chisholm Trail Suite 4250 Round Rock, TX 7868. Employee shall cooperate with Catcher in the transition of information reasonably requested with time being of the essence. 4. General Release. Employee, individually and on behalf of Employee’s spouse, heirs, assigns, executors, successors and each of them, hereby unconditionally, irrevocably and absolutely releases and discharges Catcher, Catcher Holdings, Inc., Administaff Companies II, L.P., and their respective parents, subsidiaries, related corporations and entities, directors, officers, employees, agents, successors and assigns (“Releasees”) from any and all known or unknown losses, liabilities, claims, demands, causes of action or suits of any type, including but not limited to those related directly or indirectly to Employee’s employment with any of the Releasees and the severance of Employee’s employment with any of the Releasees, including claims for age discrimination in violation of the Age Discrimination and Employment Act, 29 U.S.C. §§ 621 et seq. and any applicable state law, as well as all claims for wrongful termination, constructive wrongful termination, employment discrimination, harassment, retaliation, defamation, fraud, misrepresentation, infliction of emotional distress, violation of privacy rights, and any other claims under state or federal law. This release also includes any claims for any and all wages, severance, bonus, commission, vacation, paid time off, other compensation, unpaid expenses, penalties or any other benefits pursuant to any agreement, policy, and/or procedure. This release does not in any way affect Employee’s rights in any retirement plan, which rights are governed by the terms of the plan(s) and by applicable law. Employee represents that Employee has not prosecuted or maintained on Employee’s behalf, before any administrative agency, court or tribunal, any demand or claim of any type related to the matters released herein. Employee further represents that Employee has not assigned any of the claims released herein. Employee expressly waives all of the benefits and rights granted to Employee pursuant to California Civil Code section 1542 (“Section 1542”) or any other applicable state law. Section 1542 reads as follows: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OF OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR. Employee and Catcher certify that they have read all of this Agreement, including the release provisions contained herein and the quoted Civil Code section, and that they fully understand all of the same. 5. Time For Consideration Of This Agreement/Revocation. Employee acknowledges that: (a) Employee received this Agreement on or before August 31, 2006 (“Receipt Date”); (b) Employee is hereby given a period of twenty-one (21) days from the Receipt Date to consider signing this Agreement (“Expiration Date”); (c) Employee is advised to -------------------------------------------------------------------------------- consult with an attorney before signing this Agreement; and (d) Employee has the right to revoke this Agreement for a period of seven (7) days after it is executed by Employee. In the event Employee chooses not to sign this Agreement on or before the Expiration Date, or chooses to revoke the Agreement once signed before the Effective Date defined below in Section 5, Employee will not receive the Separation Pay, Health Insurance Pay or any other consideration Employee would not be entitled to in the absence of this Agreement. 6. Effective Date. The “Effective Date” of this Agreement shall be the eighth (8th) day after Employee executes the Agreement, provided that Employee does not revoke the Agreement prior to the Effective Date. 7. Confidentiality. Employee hereby agrees that the terms of this Agreement and sums paid pursuant to this Agreement shall remain confidential and that Employee shall not make any disclosure to any third person of the terms of this Agreement without written authorization from Catcher, other than to Employee’s spouse, attorneys, and/or tax advisors. 8. General Provisions. a. Employee and Catcher acknowledge that they have been given the opportunity to consult with their own legal counsel with respect to the matters referenced in this Agreement, and that they have obtained and considered the advice of such legal counsel as they deem necessary or appropriate, such that they have voluntarily and freely entered into this Agreement. b. During the Separation Pay Term, Employee shall cooperate with Catcher in the winding up of pending work on behalf of Catcher and the orderly transfer of work to other employees. Employee also agrees to cooperate with Catcher’s reasonable requests for assistance, information, and/or advice. b. Employee promises and represents that Employee will not make or cause to be made any derogatory, negative or disparaging statements, verbally, electronically, or in writing, about Catcher, its business, or its employees. c. This Agreement contains the entire agreement between Employee and Catcher and there have been no promises, inducements or agreements not expressed in this Agreement. d. The provisions of this Agreement are contractual, not merely recitals, and shall be considered severable, such that if any provision or part thereof shall at any time be held invalid under any law or ruling, any and all such other provision(s) or part(s) thereof shall remain in full force and effect and continue to be enforceable. e. This Agreement may be pled as a full and complete defense and may be used as the basis for an injunction against any action, suit, or proceeding that may be prosecuted, instituted, or attempted by Employee in breach thereof. -------------------------------------------------------------------------------- f. This Agreement shall be interpreted, construed, governed and enforced in accordance with the laws of the State of California. g. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns. h. Nothing in this Agreement shall be construed as an admission or any liability or any wrongdoing by any party to this Agreement. i. This Agreement shall not be construed against any party on the grounds that such party drafted the Agreement. The undersigned have executed this Agreement on the dates shown below.   Dated:   August 31, 2006     /S/ JOHN SUTTON       John Sutton       Catcher, Inc. Dated:   August 31, 2006     By:   /S/ CHARLES SANDER       Title: Chief Executive Officer       Print Name: Charles Sander

Exhibit 10.6   -------------------------------------------------------------------------------- EXECUTION COPY $1,500,000,000 CREDIT AGREEMENT among THE WESTERN UNION COMPANY, as the Company, THE BANKS, ISSUING LENDERS AND SWING LINE BANK PARTIES HERETO, WELLS FARGO BANK, NATIONAL ASSOCIATION, as Syndication Agent and BARCLAYS BANK PLC JPMORGAN CHASE BANK, N.A. MORGAN STANLEY BANK and WACHOVIA BANK, NATIONAL ASSOCIATION, as Documentation Agents and CITIBANK, N.A., as Administrative Agent Dated as of September 27, 2006 CITIGROUP GLOBAL MARKETS INC. and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Joint Lead Arrangers and Joint Book Runners   -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- TABLE OF CONTENTS   SECTION 1 DEFINITIONS    1 1.1    Defined Terms    1 1.2    Other Definitional Provisions    18 1.3    Accounting Terms    18 1.4    Exchange Rates; Currency Equivalents    18 1.5    Computation of Dollar Amounts    19 SECTION 2 AMOUNT AND TERMS OF COMMITMENTS    19 2.1    Commitments    19 2.2    Revolving Credit Notes    19 2.3    Procedure for Borrowing    20 2.4    Fees    21 2.5    Termination or Reduction of Commitments    22 2.6    Prepayments    22 2.7    Conversion and Continuation Options    22 2.8    Minimum Amounts of Tranches    23 2.9    Interest Rates and Payment Dates    24 2.10    Computation of Interest and Fees    24 2.11    Inability to Determine Interest Rate    24 2.12    Pro Rata Treatment and Payments    25 2.13    Illegality    28 2.14    Requirements of Law    28 2.15    Taxes    30 2.16    Indemnity    31 2.17    Action of Affected Banks    31 2.18    Bid Loans    32 2.19    Swing Line Commitments    35 2.20    Increase of Commitments    38 2.21    Payment in Full at Maturity    38 2.22    Letter of Credit Subfacility    38 2.23    Indemnification; Nature of Issuing Lender’s Duties    42 2.24    Defaulting Banks    44 SECTION 3 REPRESENTATIONS AND WARRANTIES    45 3.1    Financial Condition    45 3.2    No Change    46 3.3    Corporate Existence; Compliance with Law    46 3.4    Corporate Power; Authorization; Enforceable Obligations    46 3.5    No Legal Bar    46 3.6    No Material Litigation    47 3.7    No Default    47 3.8    Taxes    47 3.9    Federal Regulations    47 3.10    ERISA    47 3.11    Investment Company Act    48 3.12    Purpose of Loans    48   i -------------------------------------------------------------------------------- 3.13    Disclosure    48 3.14    Ranking    48 3.15    Compliance with OFAC, FCPA    48 3.16    Closing Date Representations and Warranties    48 SECTION 4 CONDITIONS PRECEDENT    49 4.1    Conditions to Effectiveness    49 4.2    Conditions to Each Loan    50 SECTION 5 AFFIRMATIVE COVENANTS    51 5.1    Financial Statements    51 5.2    Certificates; Other Information    52 5.3    Conduct of Business and Maintenance of Existence    52 5.4    Inspection of Property; Books, Records and Discussions    52 5.5    Notices    53 5.6    Covenant to Deliver Guaranty    53 SECTION 6 NEGATIVE COVENANTS    54 6.1    Limitation on Significant Subsidiary Indebtedness    54 6.2    Limitation on Liens    55 6.3    Limitation on Sales and Leasebacks    57 6.4    Limitations on Fundamental Changes    57 6.5    Limitations on Restrictions on Dividends    57 6.6    Financial Covenant    57 SECTION 7 EVENTS OF DEFAULT    58 SECTION 8 THE ADMINISTRATIVE AGENT    60 8.1    Appointment    60 8.2    Delegation of Duties    61 8.3    Exculpatory Provisions    61 8.4    Reliance by Administrative Agent    61 8.5    Notice of Default    62 8.6    Non-Reliance on Administrative Agent and Other Banks    62 8.7    Indemnification    63 8.8    Administrative Agent in Its Individual Capacity    63 8.9    Successor Administrative Agent    63 8.10    Syndication Agent, etc.    64 SECTION 9 MISCELLANEOUS    64 9.1    Amendments and Waivers    64 9.2    Notices    65 9.3    No Waiver; Cumulative Remedies    67 9.4    Survival of Representations and Warranties    67 9.5    Payment of Expenses and Taxes    67 9.6    Successors and Assigns; Participations; Purchasing Banks    68 9.7    Adjustments; Set-off    71 9.8    Table of Contents and Section Headings    72 9.9    Confidentiality    72 9.10    Patriot Act Notice    73 9.11    Counterparts    73 9.12    Severability    73   ii -------------------------------------------------------------------------------- 9.13    Integration    73 9.14    GOVERNING LAW    73 9.15    Submission To Jurisdiction; Waivers    73 9.16    Acknowledgements    74 9.17    WAIVERS OF JURY TRIAL    74 9.18    Effectiveness    74 9.19    Judgment Currency    75   iii -------------------------------------------------------------------------------- Schedules    Schedule 1.1    Banks and Commitments Schedule 3.6    Material Litigation Exhibits    Exhibit A    Revolving Credit Note Exhibit B    Borrowing Certificate Exhibit C    Opinion of Counsel Exhibit D    Commitment Transfer Supplement Exhibit E    Bid Note Exhibit F    Bid Quote Exhibit G    Bid Loan Confirmation Exhibit H    Bid Loan Request Exhibit I    Form of Swing Line Note Exhibit J    Form of Commitment Increase Supplement -------------------------------------------------------------------------------- CREDIT AGREEMENT, dated as of September 27, 2006, among THE WESTERN UNION COMPANY, a Delaware corporation (the “Company”), the several banks and other financial institutions from time to time parties to this Agreement (the “Banks”), CITIBANK, N.A., in its capacity as the Swing Line Bank (in such capacity, together with its successors in such capacity, the “Swing Line Bank”), CITIBANK, N.A. AND WELLS FARGO BANK, NATIONAL ASSOCIATION, in their capacity as Issuing Lenders (in such capacity, together with their successors in such capacity, the “Issuing Lenders”), WELLS FARGO BANK, NATIONAL ASSOCIATION, as syndication agent (in such capacity, the “Syndication Agent”), BARCLAYS BANK PLC, JPMORGAN CHASE BANK, N.A., MORGAN STANLEY BANK and WACHOVIA BANK, NATIONAL ASSOCIATION, as Documentation Agents, and CITIBANK, N.A., as administrative agent for the Banks hereunder (in such capacity, the “Administrative Agent”). WITNESSETH: WHEREAS, the Company has requested the Banks to make Loans and issue Letters of Credit to the Company, and the Banks are willing to make Loans and issue Letters of Credit to the Company, subject to the terms and conditions hereof; NOW, THEREFORE, in consideration of the premises, and of the mutual covenants and agreements herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1 DEFINITIONS 1.1 Defined Terms. As used in this Agreement, the following terms shall have the following meanings: “ABR”: for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof: “Prime Rate” shall mean, at any time, the rate of interest per annum publicly announced from time to time by Citibank at its principal office in New York, New York as its base rate. Each change in the Prime Rate shall be effective as of the opening of business on the day such change in the Prime Rate occurs. The parties hereto acknowledge that the rate announced publicly by Citibank as its Prime Rate is an index or base rate and shall not necessarily be its lowest or best rate charged to its customers or other banks; and “Federal Funds Effective Rate” shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published on the next succeeding Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive in the absence of manifest error) that it is unable to ascertain the Federal Funds Effective Rate, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms above, the ABR shall be determined without regard to clause (b) of the first sentence of this definition until the circumstances giving rise to such inability no longer -------------------------------------------------------------------------------- exist. Any change in the ABR due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the opening of business on the date of such change. “ABR Loans”: Loans the rate of interest applicable to which is based upon the ABR. “Affiliate”: as to any Person, any other Person (other than a Subsidiary) which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10% or more of the securities having ordinary voting power for the election of directors (or persons per forming similar functions) of such Person or (b) direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. “Agreement”: this Credit Agreement, as amended, supplemented or otherwise modified from time to time. “Applicable Margin”: with respect to each day for each Type of Loan and for the Letter of Credit Fee, the rate per annum based on the Ratings in effect on such day, as set forth under the relevant column heading below:   Rating    Eurodollar Loans and Letter of Credit Fee   Rating I    0.150 % Rating II    0.190 % Rating III    0.270 % Rating IV    0.350 % Rating V    0.525 % “Applicable Time”: with respect to any borrowings and payments in Foreign Currencies, the local times in the place of settlement for such Foreign Currencies as may be determined by the Administrative Agent to be necessary for timely settlement on the relevant date in accordance with normal banking procedures in the place of payment. “Available Commitment”: as to any Bank at any time, an amount equal to the excess, if any, of (a) the amount of such Bank’s Commitment over (b) the aggregate principal Dollar Amount (determined as of the most recent Revaluation Date) of all Loans made by such Bank then outstanding plus the Bank’s Commitment Percentage of outstanding Swing Line Loans and LOC Obligations at such time. “Bankruptcy Code”: the Bankruptcy Code in Title 11 of the United States Code, as amended, modified, succeeded or replaced from time to time. “Bid Loan”: each advance made to the Company pursuant to subsection 2.18.   2 -------------------------------------------------------------------------------- “Bid Loan Confirmation”: a bid loan confirmation, substantially in the form of Exhibit G, to be delivered by the Company to the Administrative Agent in accordance with subsection 2.18(b)(iv). “Bid Loan Request”: a bid loan request, substantially in the form of Exhibit H, to be delivered by the Company to the Administrative Agent in accordance with subsection 2.18(b)(i) in writing, by facsimile transmission, or by telephone immediately confirmed by facsimile transmission. “Bid Note”: as defined in subsection 2.18. “Bid Quote”: a bid quote substantially in the form of Exhibit F, to be delivered by a Bank to the Administrative Agent in accordance with subsection 2.18(b) in writing, by facsimile transmission, or by telephone immediately confirmed by facsimile transmission. “Borrowing Certificate”: a notice of borrowing and certificate of the Company substantially in the form of Exhibit B. “Borrowing Date”: any Business Day specified in a notice furnished pursuant to subsection 2.3, 2.18 or 2.19 as a date on which the Company requests the Banks or the Swing Line Bank, as the case may be, to make Loans hereunder. “Business Day”: a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close; provided, however, that (a) when used to describe the date of any borrowing of, or any payment or interest rate determination in respect of, a Eurodollar Loan, the term “Business Day” shall also exclude any day on which commercial banks are not open for dealings in Dollar deposits in the London interbank market and (b) when used in connection with a Foreign Currency Loan, the term “Business Day” shall also exclude any day on which banks are not open for foreign exchange dealings between banks in the exchange of the home country of such Foreign Currency (or, in the case of a Foreign Currency Loan denominated in Euro, on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open). “Capital Stock”: any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing. “Change of Control”: any acquisition by any Person or Group of Persons, either directly or indirectly, of (a) the power to elect, appoint or cause the election or appointment of at least a majority of the members of the Board of Directors of the Company (or any other Person to which all or substantially all of the properties and assets of the Company have been transferred), through beneficial ownership of the Capital Stock of the Company (or such other Person) or through contract, agreement, arrangement or proxy, or (b) all or substantially all of the properties and assets of the Company. “Citibank”: Citibank, N.A., together with its successors and/or assigns.   3 -------------------------------------------------------------------------------- “Closing Date”: the date on which this Agreement becomes effective in accordance with subsection 4.1. “Code”: the Internal Revenue Code of 1986, as amended from time to time. “Commitment”: as to any Bank, the obligation of such Bank (a) to make Revolving Credit Loans to the Company hereunder, (b) to participate in Swing Line Loans made to the Company hereunder and (c) to purchase participation interests in the Letters of Credit, in an aggregate principal Dollar Amount (determined as of the most recent Revaluation Date) at any one time outstanding not to exceed the amount set forth opposite such Bank’s name on Schedule 1.1 or in the Commitment Transfer Supplement pursuant to which it became a Bank, as such amount may be reduced pursuant to subsection 2.5 or subsection 9.6 or increased pursuant to subsection 2.20 or subsection 9.6. “Commitment Percentage”: as to any Bank at any time, the percentage of the aggregate Commitments then constituted by such Bank’s Commitment. “Commitment Period”: the period from and including the Closing Date to but not including the Termination Date or such earlier date on which the Commitments shall terminate as provided herein. “Committed Swing Line Loan”: as defined in subsection 2.19(a). “Commonly Controlled Entity”: an entity, whether or not incorporated, which is under common control with the Company within the meaning of Section 4001 of ERISA or is part of a group which includes the Company and which is treated as a single employer under Section 414 of the Code. “Competitor”: any Person significantly and directly engaged in the business of payment instruments or consumer funds transfers. “Consolidated Net Assets”: the gross book value of the assets of the Company and its Subsidiaries (which under GAAP would appear on the consolidated balance sheet of the Company and its Subsidiaries) less all reserves (including, without limitation, depreciation, depletion and amortization) applicable thereto and less (i) minority interests and (ii) liabilities (determined in accordance with GAAP) which, in accordance with their terms, will be settled within one year after the date of determination. “Consolidated Net Income”: the net income of the Company and its Subsidiaries (which under GAAP would appear on the consolidated income statement of the Company and its Subsidiaries), excluding, however, (i) any equity of the Company or a Subsidiary in the unremitted earnings of any corporation which is not a Subsidiary, (ii) gains from the write-up in the book value of any asset and (iii) in the case of an acquisition of any Person which is accounted for on a purchase basis, earnings of such Person prior to its becoming a Subsidiary. “Consolidated Net Worth”: the sum of (i) the par value (or value stated on the books of such corporation) of the capital stock of all classes of the Company and its Subsidiaries, plus (or minus in the case of a deficit) (ii) the amount of the consolidated surplus, whether capital or   4 -------------------------------------------------------------------------------- earned, of the Company and its Subsidiaries, and plus (or minus in the case of a deficit) (iii) retained earnings of the Company and its Subsidiaries, all as determined in accordance with GAAP; provided, however, that Consolidated Net Worth shall exclude the effects of currency translation adjustments and the application of FAS 115. “Contractual Obligation”: as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. “Default”: any of the events specified in Section 7, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. “Defaulted Amount”: with respect to any Bank at any time, any amount required to be paid by such Bank to the Administrative Agent or any other Bank hereunder at or prior to such time that has not been so paid as of such time. In the event that a portion of a Defaulted Amount shall be deemed paid pursuant to Section 2.24(b), the remaining portion of such Defaulted Amount shall be considered a Defaulted Amount originally required to be paid hereunder on the same date as the Defaulted Amount so deemed paid in part. “Defaulting Bank”: at any time, a Bank that, at such time, owes a Defaulted Loan or a Defaulted Amount. “Defaulted Loan”: with respect to any Bank at any time, the portion of any Loan required to be made by such Bank to the Company pursuant to Section 2.1, 2.18, 2.19 or 2.22(e) at or prior to such time that has not been made by such Bank. In the event that a portion of a Defaulted Loan shall be deemed paid pursuant to Section 2.12(c), the remaining portion of such Defaulted Loan shall be considered a Defaulted Loan originally required to be paid hereunder on the same date as the Defaulted Loan so deemed paid in part. “Dollar Amount”: at any time, (a) with respect to Dollars or an amount denominated in Dollars, such amount and (b) with respect to an amount of any Foreign Currency or an amount denominated in such Foreign Currency, the equivalent amount thereof in Dollars as determined by the Administrative Agent at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) applicable to such Foreign Currency. “Dollars” and “$”: dollars in lawful currency of the United States of America. “Domestic Dollar Loans”: the collective reference to Fixed Rate Bid Loans and ABR Loans. “EBITDA”: for any period, net income (or net loss) plus the sum of (a) interest expense, (b) income tax expense, (c) depreciation expense, (d) amortization expense, (e) any other non-cash deductions, losses or charges made in determining net income for such period (f) extraordinary losses or charges and (g) one-time transaction fees and expenses incurred in connection with the spin-off of the Company from First Data Corporation, or the issuance of (or refinancing of) Indebtedness incurred in connection with such spin-off, and minus extraordinary gains, in each case determined in accordance with GAAP for such period.   5 -------------------------------------------------------------------------------- “EMU”: Economic and Monetary Union as contemplated in the Treaty on European Union. “EMU Legislation”: legislative measures of the European Council (including without limitation European Council regulations) for the introduction of, changeover to or operation of a single or unified European currency (whether known as the Euro or otherwise), being in part the implementation of the third stage of EMU. “Environmental Laws”: any and all Federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees or requirements of any Governmental Authority regulating, relating to or imposing liability or standards of conduct concerning environmental protection matters. “ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time to time. “Euro” shall mean the single currency of Participating Member States of the European Union. “Eurodollar Loans”: Loans the rate of interest applicable to which is based on the Eurodollar Rate. “Eurodollar Rate”: a rate per annum determined by the Administrative Agent pursuant to the following formula:     Eurodollar Rate =    LIBOR         1.00 - Eurodollar Reserve Percentage    “Eurodollar Reserve Percentage”: for any day, (A) for any Eurodollar Loan with respect to which the Mandatory Cost Rate does not apply, the maximum rate (expressed as a decimal and rounded upwards, if necessary, to the next higher 1/100th of 1%) at which any bank subject thereto would be required to maintain reserves under Regulation D of the Board of Governors of the Federal Reserve System (or any successor or similar regulations relating to such reserve requirements) against Eurocurrency Liabilities (as that term is used in Regulation D), if such liabilities were outstanding and (B) for any Eurodollar Loan with respect to which the Mandatory Cost Rate does apply, zero (0). The Eurodollar Reserve Percentage shall be adjusted automatically on and as of the effective date of any change in the Eurodollar Reserve Percentage. “Event of Default”: any of the events specified in Section 7, provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. “Excluded Individuals”: with respect to any Person, the officers, directors, employees, agents and representatives of such Person involved, directly or indirectly, in the payment instruments and consumer funds transfer business of such Person. “Extension of Credit”: as to any Bank, the making of a Loan or a Swing Line Loan by such Bank or the issuance of, or participation in, a Letter of Credit by such Bank.   6 -------------------------------------------------------------------------------- “Facility Fee Rate”: for each day during each calculation period, a rate per annum based on the Ratings in effect on such day, as set forth below:   Rating    Facility Fee Rate   Rating I    0.050 % Rating II    0.060 % Rating III    0.080 % Rating IV    0.100 % Rating V    0.125 % “Federal Funds Effective Rate”: as defined in the definition of “ABR”. “Federal Reserve Board”: the Board of Governors of the Federal Reserve System, and any Governmental Authority succeeding to any of its principal functions. “Fee Letters”: collectively, (a) the letter agreement dated September 7, 2006 addressed to the Company from the Administrative Agent and the Lead Arranger, as amended, modified or otherwise supplemented and (b) the letter agreement dated September __, 2006 addressed to the Company from the Syndication Agent, as amended, modified or otherwise supplemented. “Financing Lease”: any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee. “Fixed Rate Bid Loan”: any Bid Loan made at a fixed rate (as opposed to a rate based upon the Eurodollar Rate). “Fixed Rate Bid Loan Request”: any Bid Loan Request requesting the Banks to offer to make Fixed Rate Bid Loans. “Foreign Currency”: (a) Euros and (b) British Pound Sterling. “Foreign Currency Equivalent”: with respect to any amount denominated in Dollars, the equivalent amount thereof in the applicable Foreign Currency as determined by the Administrative Agent at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) applicable to such Foreign Currency. “Foreign Currency Loan”: any Loan denominated in a Foreign Currency. “Funded Indebtedness”: any indebtedness for money borrowed, created, issued, incurred, assumed or guaranteed which would, in accordance with GAAP, be classified as long-term debt, but in any event including all indebtedness for money borrowed, whether secured or unsecured, maturing more than one year, or extendible at the option of the obligor to a date more than one year, after the date of determination thereof (excluding any amount thereof included in current liabilities).   7 -------------------------------------------------------------------------------- “GAAP”: as to a particular Person, such accounting principles as, in the opinion of the independent public accountants regularly retained by such Person, conform at the time to United States generally accepted accounting principles. “Governmental Authority”: any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. “Group of Persons” means any related Persons that would constitute a “group” for purposes of Section 13(d) and Rule 13d-5 under the Securities Exchange Act of 1934, as amended (as such Section and Rule are in effect as of the date of this Agreement). “Guarantee Obligation”: as to any Person (the “guaranteeing person”), and without duplication, any obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any bank under any letter of credit) to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing the payment or in effect guaranteeing the payment of any Indebtedness (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor or (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation; provided, however, that the term Guarantee Obligation shall not include (x) endorsements of instruments for deposit or collection in the ordinary course of business or (y) any bond or guarantee given by the Company or any Subsidiary on behalf of any Subsidiary solely for the performance of contractual obligations with customers or on behalf of customers in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary payment obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by the Company in good faith. “Indebtedness”: of any Person at any date and without duplication, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services (other than trade liabilities not more than 60 days past due incurred in the ordinary course of business and payable in accordance with customary practices or endorsements for the purpose of collection in the ordinary course of business and excluding the deferred purchase price of property or services to be repaid through earnings of the purchaser to the extent such amount is not characterized as indebtedness in accordance with GAAP), (b) any other indebtedness of such Person which is evidenced by a note, bond, debenture or similar instrument, (c) all obligations of   8 -------------------------------------------------------------------------------- such Person under Financing Leases, (d) all payment obligations of such Person in respect of acceptances issued or created for the account of such Person and (e) all liabilities secured by any Lien on any property owned by such Person even though such Person has not assumed or otherwise become liable for the payment thereof; provided that, if such Person has not assumed or otherwise become liable in respect of such indebtedness, such obligations shall be deemed to be in an amount equal to the lesser of (i) the amount of such indebtedness and (ii) the book value of the property subject to such Lien at the time of determination. For the purposes of this definition, the following shall not constitute Indebtedness: the issuance of payment instruments, consumer funds transfers, or other amounts paid to or received by the Company, any of its Subsidiaries or any agent thereof in the ordinary course of business in order for the Company or such Subsidiary to make further distribution to a third party, to the extent payment in respect thereof has been received by the Company, such Subsidiary or any agent thereof. “Information Materials”: the Confidential Information Memorandum dated September 2006 in respect of the transactions contemplated hereby sent by Citibank to each of the Banks, including all supplements and amendments thereto. “Insolvency”: with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA. “Insolvent”: pertaining to a condition of Insolvency. “Interest Payment Date”: (a) as to any ABR Loan other than a Swing Line Loan, the last day of each March, June, September and December and the Termination Date, (b) as to any Eurodollar Loan having an Interest Period of three months or less or any Fixed Rate Bid Loan having an Interest Period of 90 days or less, the last day of such Interest Period, (c) as to any Eurodollar Loan or Fixed Rate Bid Loan having an Interest Period longer than three months or 90 days, respectively, each day which is three months or 90 days, respectively, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period and (d) as to any Swing Line Loan, each of the dates occurring at thirty day intervals after the Borrowing Date of such Swing Line Loan and the date of payment of principal thereof. “Interest Period”: (a) with respect to any Eurodollar Loan: (i) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan and ending one, two, three, six, or, subject to clause (G) of this definition, two weeks or nine or twelve months thereafter, as selected by the Company in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto; and (ii) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Eurodollar Loan and ending one, two, three, six, or, subject to clause (G) of this definition, two weeks or nine or twelve months, thereafter, as selected by the Company by irrevocable notice to the Administrative Agent not less than (x) with respect to Eurodollar Loans denominated in Dollars, three Business Days prior to the last day of the then   9 -------------------------------------------------------------------------------- current Interest Period with respect thereto and (y) with respect to Eurodollar Loans denominated in Foreign Currency, four Business Days prior to the last day of the then current Interest Period with respect thereto; and (b) with respect to any Bid Loan, the period specified in the Bid Loan Confirmation with respect to such Bid Loan; provided that, all of the foregoing provisions relating to Interest Periods are subject to the following: (A) if any Interest Period pertaining to a Eurodollar Loan would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day; (B) if any Interest Period pertaining to a Fixed Rate Bid Loan would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day; (C) any Interest Period that would otherwise extend beyond the Termination Date shall end on the Termination Date; (D) if the Company shall fail to give notice as provided in clause (a)(ii) above, the Company shall be deemed to have selected (A) in the case of Loans denominated in Dollars, an ABR Loan to replace the affected Eurodollar Loan and (B) in the case of Loans denominated in Foreign Currencies, an Interest Period of one month; (E) any Interest Period pertaining to a Eurodollar Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month; (F) no more than eight (8) Eurodollar Loans may be in effect at any time. For purposes hereof, Eurodollar Loans with different Interest Periods shall be considered as separate Eurodollar Loans, even if they shall begin on the same date, although borrowings, extensions and conversions may, in accordance with the provisions hereof, be combined at the end of existing Interest Periods to constitute a new Eurodollar Loan with a single Interest Period; and (G) in the case of any such Eurodollar Loans, the Company and shall not be entitled to select an Interest Period having a duration of two weeks, nine or twelve months unless, by 2:00 P.M. (New York City time) on the third Business Day prior to the first day of such Interest Period, each Bank notifies the Administrative Agent that such Bank will be providing funding for such Eurodollar Loans with such Interest Period (the failure of any Bank to so respond by such time being deemed for all purposes of this Agreement as an objection by such Bank to the requested duration of such Interest Period); provided that, if any or all of the Banks object to the requested duration of such   10 -------------------------------------------------------------------------------- Interest Period, the duration of the Interest Period for such Eurodollar Loans shall be one, two, three or six months, as specified by the Company in the applicable Borrowing Certificate as the desired alternative to an Interest Period of two weeks or nine or twelve months, provided, that the Company shall not be entitled to select an Interest Period having duration of two weeks for any Interest Period commencing later than December 29, 2006. “Issuing Lender”: with respect to any Letter of Credit, Citibank, N.A., Wells Fargo Bank, National Association or any other Lender that has a LOC Commitment, as chosen by the Company. “Issuing Lender Fees”: as defined in subsection 2.4. “Lead Arrangers”: Citigroup Global Markets Inc. and Wells Fargo Bank, National Association. “Letter of Credit” any letter of credit issued by an Issuing Lender pursuant to the terms hereof, as such Letter of Credit may be amended, modified, extended, renewed or replaced from time to time. “Letter of Credit Facing Fee”: as defined in subsection 2.4. “Letter of Credit Fee”: as defined in subsection 2.4. “LIBOR”: for any Eurodollar Loan for any Interest Period therefor, either (a) the rate of interest per annum determined by the Administrative Agent appearing on (x) in the case of Dollars, the Telerate Page 3750 (or any successor page), (y) in the case of a Foreign Currency other than Euros, the appropriate page of the Telerate screen which displays British Bankers Association Interest Settlement Rates for deposits in such Foreign Currency and (z) in the case of Euros, Page 248 of the Moneyline Telerate Service (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to deposits in Euro by reference to the Banking Federation of the European Union Settlement Rates for deposits in Euro) (or, in each case, (i) such other page or service as may replace such page on such system or service for the purpose of displaying such rates and (ii) if more than one rate appears on such screen, the arithmetic mean for all such rates) as the London interbank offered rate for deposits in the applicable currency at approximately 11:00 A.M. (London time), on the second full Business Day preceding the first day of such Interest Period, and in an amount approximately equal to the amount of the Eurodollar Loan and for a period approximately equal to such Interest Period or (b) if such rate is for any reason not available, the rate per annum equal to the rate at which the Administrative Agent or its designee is offered deposits in such currency at or about 11:00 A.M. (London time), two Business Days prior to the beginning of such Interest Period in the interbank eurodollar market where the eurodollar and foreign currency and exchange operations in respect of its Eurodollar Loans are then being conducted for settlement in immediately available funds, for delivery on the first day of such Interest Period for the number of days comprised therein, and in an amount comparable to the   11 -------------------------------------------------------------------------------- amount of the Eurodollar Loan to be outstanding during such Interest Period. With respect to any Eurodollar Loan denominated in British Pounds Sterling, for any Interest Period, “LIBOR” shall mean the rate equal to the sum of (A) the rate determined in accordance with the foregoing terms of this definition plus (B) the Mandatory Cost Rate for such Interest Period. “LIBOR Bid Loan”: any Bid Loan made and/or being maintained at a rate of interest based upon the Eurodollar Rate. “LIBOR Bid Loan Request”: any Bid Loan Request requesting the Banks to offer to make LIBOR Bid Loans. “Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any Financing Lease having substantially the same economic effect as any of the foregoing), it being understood that the holding of money or investments for the purpose of honoring payment instruments or consumer funds transfers, or other amounts paid to or received by the Company, any of its Subsidiaries or any agent thereof in the ordinary course of business in order for the Company or such Subsidiary to make further distribution to a third party, shall not be considered a “Lien” for the purposes of this definition. “Loan Documents”: this Agreement, the LOC Documents and the Notes. “Loans”: Revolving Credit Loans, Swing Line Loans and Bid Loans. “LOC Commitment”: (a) the commitment of each Issuing Lender to issue Letters of Credit in an aggregate available Dollar Amount (determined as of the most recent Revaluation Date) of Letters of Credit issued by such Issuing Lender at any one time outstanding not to exceed the amount set forth opposite such Issuing Lender’s name on Schedule 1.1 as such amount may be reduced pursuant to subsection 2.5 or subsection 9.6 or increased pursuant to subsection 2.20 or subsection 9.6 and (b) with respect to each Bank, the commitment of such Bank to purchase participation interests in the Letters of Credit up to such Bank’s Commitment Percentage of all LOC Obligations. “LOC Committed Amount”: collectively, the aggregate amount of all of the LOC Commitments of the Banks to issue and participate in Letters of Credit as referenced in subsection 2.22 and, individually, the amount of each Bank’s LOC Commitment. “LOC Documents”: with respect to any Letter of Credit, such Letter of Credit, any amendments thereto, any documents delivered in connection therewith, any application therefor, and any agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (a) the rights and obligations of the parties concerned or (b) any collateral security for such obligations. “LOC Mandatory Borrowing”: as defined in subsection 2.22(f).   12 -------------------------------------------------------------------------------- “LOC Obligations”: at any time, the sum of (a) the maximum amount which is, or at any time thereafter may become, available to be drawn under Letters of Credit then outstanding, assuming compliance with all requirements for drawings referred to in such Letters of Credit plus (b) the aggregate amount of all drawings under Letters of Credit honored by the Issuing Lenders but not theretofore reimbursed. “Majority Banks”: at any time, the Banks holding (or under subsection 2.19(e) participating in) more than 50% of the aggregate unpaid principal amount of the Revolving Credit Loans and Participation Interests or, if no Loans and Participation Interests are then outstanding, the Banks holding more than 50% of the aggregate amount of the Commitments. “Mandatory Cost Rate”: with respect to any Loan or other Obligation booked outside the United States for any Interest Period, a rate per annum reflecting the cost to the Banks of complying with all reserve, special deposit, capital adequacy, solvency, liquidity ratios, fees or other requirements of or imposed by the Bank of England, the Financial Services Authority, the European Central Bank or any other governmental or regulatory authority for such Interest Period attributable to such Loan or Obligation (rounded up if necessary to 4 decimal places) as conclusively determined by the Administrative Agent. “Material Adverse Effect”: a material adverse effect on the ability of the Company to perform its obligations under this Agreement or the Notes. “Moody’s”: Moody’s Investors Service, Inc. “Multiemployer Plan”: a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA. “Notes”: the collective reference to the Revolving Credit Notes, the Swing Line Notes and Bid Notes. “Obligations”: all of the obligations, indebtedness and liabilities of the Company to the Banks (including the Issuing Lenders and the Swing Line Bank) and the Administrative Agent, whenever arising, under this Agreement, the Notes or any of the other Loan Documents including principal, interest, fees, reimbursements and indemnification obligations and other amounts (including, but not limited to, any interest accruing after the occurrence of a filing of a petition of bankruptcy under the Bankruptcy Code with respect to the Company, regardless of whether such interest is an allowed claim under the Bankruptcy Code). “PBGC”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA. “Participant”: as defined in subsection 9.6(b). “Participating Member State”: each country so described in any EMU Legislation. “Participation Interest”: the purchase by a Bank of a participation interest in Letters of Credit as provided in subsection 2.22 and in Swing Line Loans as provided in Section 2.19.   13 -------------------------------------------------------------------------------- “Person”: an individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, Governmental Authority or other entity of whatever nature. “Plan”: at a particular time, any employee benefit plan which is covered by ERISA and in respect of which the Company or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA. “Pounds Sterling”: British pounds sterling, the lawful currency of the United Kingdom. “Prime Rate”: as defined in the definition of ABR. “Principal Facility”: the real property, fixtures, machinery and equipment relating to any facility owned by the Company or any Subsidiary, except for any facility that, in the opinion of the Board of Directors of the Company, is not of material importance to the business conducted by the Company and its Subsidiaries, taken as a whole. “Purchased Receivables”: accounts receivable purchased by the Company or any of its Subsidiaries from third parties and not originally created by the sale of goods or services by the Company or any of its Subsidiaries. “Purchased Receivables Financing”: any financing transaction pursuant to which Purchased Receivables are sold, transferred, securitized or otherwise financed by any Receivables Subsidiary and as to which there is no recourse to the Company or any of its other Subsidiaries (other than customary representations and warranties made in connection with the sale or transfer of Purchased Receivables). “Purchasing Banks”: as defined in subsection 9.6(c). “Rating”: the respective rating of each of the Rating Agencies applicable to the long-term senior unsecured non-credit enhanced debt of the Company, as announced by the Rating Agencies from time to time. “Rating Agencies”: collectively, S&P and Moody’s. “Rating Category”: each of Rating I, Rating II, Rating III, Rating IV and Rating V.   14 -------------------------------------------------------------------------------- “Rating I”, “Rating II”, “Rating III”, “Rating IV” and “Rating V”: the respective Ratings set forth below:   Rating Category   S&P   Moody’s Rating I   greater than or equal to A   greater than or equal to A2 Rating II   equal to A-   equal to A3 Rating III   equal to BBB+   equal to Baa1 Rating IV   equal to BBB   equal to Baa2• Rating V   less than BBB   less than Baa2 provided, that (i) if on any day the Ratings of the Rating Agencies do not fall in the same Rating Category, and the lower of such Ratings (i.e., the Rating Category designated by a numerically higher Roman numeral) is one Rating Category lower than the higher of such Ratings, then the Rating Category of the higher of such Ratings shall be applicable for such day, (ii) if on any day the Ratings of the Rating Agencies do not fall in the same Rating Category, and the lower of such Ratings is more than one Rating Category lower than the higher of such Ratings, then the Rating Category next lower from that of the higher of such Ratings shall be applicable for such day, (iii) if on any day the Rating of only one of the Rating Agencies is available, then the Rating Category determined by such Rating shall be applicable for such day and (iv) if on any day a Rating is available from neither of the Rating Agencies, then Rating V shall be applicable for such day. Any change in the applicable Rating Category resulting from a change in the Rating of a Rating Agency shall become effective on the date such change is publicly announced by such Rating Agency. “Receivables Subsidiary”: any Subsidiary of the Company which purchases Purchased Receivables directly or to which Purchased Receivables are transferred by the Company or any of its Subsidiaries, in either case with the intention of engaging in a Purchased Receivables Financing. “Regulation U”: Regulation U of the Board of Governors of the Federal Reserve System. “Regulation X”: Regulation X of the Board of Governors of the Federal Reserve System. “Reimbursement Obligation”: the obligation of the Company to reimburse the Issuing Lenders pursuant to subsection 2.22(d) for amounts drawn under Letters of Credit. “Related Financings”: the $2,400,000,000 credit facility among First Financial Management Corporation, a wholly owned Subsidiary of the Company, the lenders parties thereto and Citicorp North America, Inc., as administrative agent, and any refinancings thereof. “Reorganization”: with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA. “Reportable Event”: any of the events set forth in Section 4043(b) of ERISA, other than those events as to which the thirty day notice period is waived by the PBGC. “Requirement of Law”: as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law (including, without limitation, Environmental Laws), treaty, rule or regulation or determination of an arbitrator or a   15 -------------------------------------------------------------------------------- court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. “Responsible Officer”: the chairman and the chief executive officer of the Company, the chief financial officer of the Company, the treasurer of the Company or the senior vice president-finance of the Company. “Revaluation Date”: with respect to any Extension of Credit, each of the following: (a) in connection with the origination of any new Extension of Credit, the Business Day which is the earliest of the date such credit is extended or the date the rate is set; (b) in connection with any extension or conversion or continuation of an existing Loan, the Business Day that is the earlier of the date such advance is extended, converted or continued, or the date the rate is set, as applicable, in connection with any extension, conversion or continuation; (c) each date a Letter of Credit is issued or renewed or amended in such a way as to modify the LOC Obligations; (d) the date of any reduction of the Commitments; and (e) such additional dates as the Administrative Agent or the Majority Banks shall deem necessary. For purposes of determining availability hereunder, the rate of exchange for any Foreign Currency shall be the Spot Rate. “Revolving Credit Loan”: as defined in subsection 2.1. “Revolving Credit Note”: as defined in subsection 2.2. “S&P”: Standard & Poor’s Ratings Services. “Short-Term Ratings”: with respect to any Person, the short-term debt ratings of such Person issued by the Rating Agencies. “Significant Subsidiary”: at any date, any Subsidiary of the Company which, together with its Subsidiaries, (i) has a proportionate share of Consolidated Net Assets that exceeds 10% at the time of determination or (ii) has equity in the Consolidated Net Income that exceeds 10% for the period of the four most recently completed fiscal quarters preceding the time of determination. “Single Employer Plan”: any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan. “Spin-Off Financial Statements”: as defined in subsection 3.1. “Spot Rate”: with respect to any Foreign Currency, the rate quoted by Citibank as the spot rate for the purchase by Citibank of such Foreign Currency with Dollars through its principal foreign exchange trading office at approximately 11:00 A.M. New York City time, on the date two Business Days prior to the date as of which the foreign exchange computation is made. “Subsidiary”: as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or   16 -------------------------------------------------------------------------------- other entity are at the time owned, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of the Company. “Swing Line Commitment”: the obligation of the Swing Line Bank to make Committed Swing Line Loans pursuant to subsection 2.19 in an aggregate amount at any one time outstanding up to $150,000,000. “Swing Line Loan”: as defined in subsection 2.19(a). “Swing Line Note”: as defined in subsection 2.19(b). “Termination Date”: September 27, 2011. “Tranche”: the reference to Eurodollar Loans the Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day); Tranches may be identified as “Eurodollar Tranches”. “Transferee”: as defined in subsection 9.6(f). “Treaty on European Union”: the Treaty of Rome of March 25, 1957, as amended by the Single European Act 1986 and the Maastricht Treaty (which was signed at Maastricht on February 1, 1992 and came into force on November 1, 1993), as amended from time to time. “Type”: as to any Loan, its nature as an ABR Loan or a Eurodollar Loan. “Unrefunded Swing Line Loans”: as defined in subsection 2.19(d). “Utilization Fee Rate”: for each day during each calculation period, a rate per annum based on the Ratings in effect on such day, as set forth below:   Rating    Utilization Fee Rate   Rating I    0.050 % Rating II    0.050 % Rating III    0.100 % Rating IV    0.100 % Rating V    0.100 % “Western Union Form 10”: the Form 10 of the Company, filed with the Securities Exchange Commission on June 6, 2006, as amended prior to the Closing Date.   17 -------------------------------------------------------------------------------- 1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in the Notes or any certificate or other document made or delivered pursuant hereto. (b) As used herein and in the Notes, and any certificate or other document made or delivered pursuant hereto, accounting terms relating to the Company and its Subsidiaries not defined in subsection 1.1 and accounting terms partly defined in subsection 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP. (c) The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection, Schedule and Exhibit references are to this Agreement unless otherwise specified. (d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. 1.3 Accounting Terms. Unless otherwise specified herein, all accounting terms used herein shall be interpreted, and all accounting determinations hereunder shall be made, in accordance with GAAP applied on a basis consistent with the most recent audited consolidated financial statements of the Company delivered to the Banks; provided that, if at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in this Agreement, and the Company, the Majority Banks or the Administrative Agent shall so request, the Administrative Agent, the Banks and the Company shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Majority Banks); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Company shall provide to the Administrative Agent financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. 1.4 Exchange Rates; Currency Equivalents. (a) The Administrative Agent shall determine the Spot Rates as of each Revaluation Date to be used for calculating the Dollar Amounts of Extensions of Credit and amounts outstanding hereunder denominated in Foreign Currencies. Such Spot Rates shall become effective as of such Revaluation Date and shall be the Spot Rates employed in converting any amounts between the applicable currencies until the next Revaluation Date to occur. Except for purposes of financial statements delivered by the Company hereunder or calculating financial covenants hereunder or except as otherwise provided herein, the applicable amount of any currency for purposes of the Loan Documents shall be such Dollar Amount as so determined by the Administrative Agent.   18 -------------------------------------------------------------------------------- (b) Wherever in this Agreement in connection with an Extension of Credit, conversion, continuation or prepayment of a Loan, an amount, such as a required minimum or multiple amount, is expressed in Dollars, but such Extension of Credit or Loan is denominated in a Foreign Currency, such amount shall be the relevant Foreign Currency Equivalent of such Dollar Amount (rounded upwards to the nearest 1,000 units of such Foreign Currency), as determined by the Administrative Agent. 1.5 Computation of Dollar Amounts. References herein to minimum Dollar Amounts and integral multiples stated in Dollars, where they shall also be applicable to Foreign Currency, shall be deemed to refer to approximate Foreign Currency Equivalents. SECTION 2 AMOUNT AND TERMS OF COMMITMENTS 2.1 Commitments. (a) Subject to the terms and conditions hereof, each Bank severally agrees to make revolving credit loans (each, a “Revolving Credit Loan”; collectively, the “Revolving Credit Loans”) in Dollars and in Foreign Currencies to the Company from time to time during the Commitment Period in an aggregate principal Dollar Amount (determined as of the most recent Revaluation Date) at any one time outstanding which, when added to the amount of such Bank’s Commitment Percentage of the aggregate principal amount of all Swing Line Loans and LOC Obligations then outstanding, shall not exceed the amount of such Bank’s Commitment; provided that, (i) after giving effect to the use of proceeds of Revolving Credit Loans to repay any Swing Line Loans or LOC Obligations, the aggregate principal Dollar Amount (determined as of the most recent Revaluation Date) of Revolving Credit Loans, Swing Line Loans, Bid Loans and LOC Obligations outstanding at any one time shall not exceed the aggregate amount of the Commitments at such time; and (ii) the aggregate principal Dollar Amount (determined as of the most recent Revaluation Date) of Revolving Credit Loans that are Foreign Currency Loans outstanding to the Company shall not exceed $250,000,000. During the Commitment Period the Company may use the Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in part, and reborrowing, all in accordance with the terms and conditions hereof. (b) The Revolving Credit Loans may from time to time be (i) Eurodollar Loans, (ii) ABR Loans, or (iii) a combination thereof, as determined by the Company and notified to the Administrative Agent in accordance with subsections 2.3 and 2.7, provided that (1) no Revolving Credit Loan shall be made as a Eurodollar Loan after the day that is one month prior to the Termination Date and (2) all Foreign Currency Loans must be Eurodollar Loans. 2.2 Revolving Credit Notes. The Revolving Credit Loans made by each Bank shall be evidenced by a promissory note of the Company, substantially in the form of Exhibit A with   19 -------------------------------------------------------------------------------- appropriate insertions as to payee, date and principal amount (a “Revolving Credit Note”), payable to the order of such Bank and in a principal Dollar Amount equal to such Bank’s Commitment. Each Bank is hereby authorized to record the date, Type, currency and amount of each Revolving Credit Loan made by such Bank, each continuation thereof, each conversion of all or a portion thereof to another Type, the date and amount of each payment or prepayment of principal thereof and, in the case of Eurodollar Loans, the length of each Interest Period with respect thereto, on the schedule annexed to and constituting a part of its Revolving Credit Note, and any such recordation shall constitute prima facie evidence of the accuracy of the information so recorded, provided that the failure of any Bank to make any such recordation (or any error in such recordation) shall not affect the obligations of the Company hereunder or under any Revolving Credit Note in respect of the Revolving Credit Loans. Each Revolving Credit Note shall (x) be dated the Closing Date, (y) be stated to mature on the Termination Date and (z) provide for the payment of interest in accordance with subsection 2.9. 2.3 Procedure for Borrowing. The Company may borrow under the Commitments during the Commitment Period on any Business Day, provided that the Company shall deliver to the Administrative Agent a Borrowing Certificate (which certificate to be effective on the requested Borrowing Date must be received by the Administrative Agent (a) prior to 12:00 noon, New York City time, three Business Days prior to the requested Borrowing Date, if all or any part of the requested Revolving Credit Loans are to be initially Eurodollar Loans, (b) prior to 10:00 A.M., London, England time, four Business Days prior to the requested Borrowing Date, if all or any part of the requested Revolving Credit Loans are to be Foreign Currency Loans and (c) prior to 12:00 noon, New York City time, on the requested Borrowing Date, otherwise), specifying (i) the amount to be borrowed, (ii) the currency to be borrowed, (iii) the requested Borrowing Date, (iv) whether the borrowing is to be of Eurodollar Loans, ABR Loans or a combination thereof (if the borrowing is to be denominated in a Foreign Currency, the borrowing must be comprised entirely of Eurodollar Loans) and (v) if the borrowing is to be entirely or partly of Eurodollar Loans, the aggregate amount of such Eurodollar Loans and the amounts of each such Eurodollar Loan and the respective length of the initial Interest Period therefor. Each borrowing under the Commitments shall be in a Dollar Amount equal to (x) in the case of ABR Loans other than a Swing Line Loan, $5,000,000 or a whole multiple of $1,000,000 in excess thereof (or, if the then Available Commitments are less than $5,000,000, such lesser amount) and (y) in the case of Eurodollar Loans, $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Upon receipt of a Borrowing Certificate, the Administrative Agent shall promptly notify each Bank thereof. Each Bank will make the amount of its pro rata share of each borrowing available to the Administrative Agent for the account of the Company at the applicable office of the Administrative Agent specified in subsection 9.2 or such other office specified by the Administrative Agent from time to time prior to (a) 2:00 P.M., New York City time in the case of ABR Loans and 11:00 A.M., New York City time in the case of Eurodollar Loans denominated in Dollars and (b) the Applicable Time specified by the Administrative Agent in the case of any Foreign Currency Loan, on the Borrowing Date requested by the Company in Dollars or the applicable Foreign Currency and in funds immediately available to the Administrative Agent. Such borrowing will then be made available to the Company by the Administrative Agent crediting the account of the Company on the books of such office with the aggregate of   20 -------------------------------------------------------------------------------- the amounts made available to the Administrative Agent by the Banks and in like funds as received by the Administrative Agent. 2.4 Fees. (a) The Company agrees to pay to the Administrative Agent, for the account of each Bank, a facility fee for the period from and including the Closing Date through the Termination Date, calculated as an amount equal to the product of (i) the Facility Fee Rate and (ii) the average daily amount of the Commitment of such Bank (regardless of usage) during the period for which such facility fee is calculated, payable in arrears on the last day of each December, March, June and September (for the quarterly period ended on such date) and on the Termination Date or such earlier date on which the Commitments shall terminate as provided herein (for the period from the last quarterly payment date to the Termination Date or such other date, as applicable). Such payments shall commence on December 31, 2006, and such first payment shall be for the period from the Closing Date through December 31, 2006. (b) The Company agrees to pay to the Administrative Agent, the Syndication Agent and the Lead Arranger for their own account, as the case may be, the fees in the respective amounts and at the respective times set forth in the Fee Letters. (c) If on any date the aggregate outstanding principal Dollar Amount (determined as of the most recent Revaluation Date) of Loans and LOC Obligations hereunder exceeds 50% of the aggregate Commitments of all Banks hereunder, the Company will pay to the Administrative Agent for the ratable benefit of the Banks a utilization fee (the “Utilization Fee”) at a per annum rate equal to the Utilization Fee Rate in effect on such date on the outstanding principal Dollar Amount (determined as of the most recent Revaluation Date) of Loans and LOC Obligations, payable in arrears on the last day of each December, March, June and September (for the quarterly period ended on such date) and on the Termination Date. (d) In consideration of the LOC Commitments, the Company agrees to pay to the Administrative Agent a fee (the “Letter of Credit Fee”) equal to the Applicable Margin per annum on the average daily maximum amount available to be drawn under each Letter of Credit from the date of issuance to the date of expiration. The Letter of Credit Fee shall be for the ratable benefit of the Banks (including the Issuing Lenders). (e) In addition to the Letter of Credit Fees payable pursuant to subsection (d) hereof, the Company shall pay to each Issuing Lender for its own account without sharing by the other Banks the reasonable and customary charges from time to time of such Issuing Lender with respect to the amendment, transfer, administration, cancellation and conversion of, and drawings under, such Letters of Credit (collectively, the “Issuing Lender Fees”). Each Issuing Lender may charge, and retain for its own account without sharing by the other Banks, an additional facing fee (the “Letter of Credit Facing Fee”) in an amount per annum to be agreed between the applicable Issuing Lender and the Company on the average daily maximum amount available to be drawn under each such Letter of Credit issued by it. The Letter of Credit Facing Fee shall be payable quarterly   21 -------------------------------------------------------------------------------- in arrears on the last day of each December, March, June and September (for the quarterly period ended on such date) and on the Termination Date. 2.5 Termination or Reduction of Commitments. The Company shall have the right, upon not less than five Business Days’ notice to the Administrative Agent, to terminate the Commitments or, from time to time, to reduce the amount of the Commitments, provided that no such termination or reduction shall be permitted if, after giving effect thereto and to any prepayments of the Loans made on the effective date thereof, the aggregate principal Dollar Amount (determined as of the most recent Revaluation Date) of the Loans and LOC Obligations then outstanding would exceed the Commitments then in effect. Upon receipt of any such notice the Administrative Agent shall promptly notify each Bank thereof. Any such reduction shall be in an amount equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof and shall reduce permanently the Commitments then in effect. Any reduction or termination of the Commitment of the Swing Line Bank shall automatically result in a termination or reduction of the Swing Line Commitment of the Swing Line Bank such that, after giving effect thereto, the Swing Line Commitment of the Swing Line Bank is equal to or less than the Commitment of the Swing Line Bank. 2.6 Prepayments. (a) Subject to subsection 2.16, the Company may at any time and from time to time prepay the Revolving Credit Loans, in whole or in part, without premium or penalty, upon irrevocable notice to the Administrative Agent given prior to 10:00 A.M., New York City time, at least three Business Days in advance in the case of Eurodollar Loans and on the requested prepayment date in the case of ABR Loans, specifying the date and amount of prepayment and whether the prepayment is of Eurodollar Loans, ABR Loans or a combination thereof, and, if of a combination thereof, the amount allocable to each. Upon receipt of any such notice the Administrative Agent shall promptly notify each Bank thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein. Partial prepayments shall be in an aggregate principal Dollar Amount (determined as of the most recent Revaluation Date) of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. The Company shall not have the right to prepay any principal amount of any Bid Loan without the prior written consent of the applicable Bank then making such Bid Loan. (b) If at any time after the Closing Date, (i) the sum of the aggregate principal Dollar Amount (determined as of the most recent Revaluation Date) of outstanding Revolving Credit Loans, Swing Line Loans, Bid Loans and LOC Obligations shall exceed the aggregate amount of the Commitments at such time or (ii) the aggregate principal Dollar Amount (determined as of the most recent Revaluation Date) of Revolving Credit Loans that are Foreign Currency Loans outstanding to the Company exceeds $250,000,000, in each case, the Loans shall immediately be prepaid in an amount sufficient to eliminate such excess. 2.7 Conversion and Continuation Options. (a) The Company may elect from time to time to convert Revolving Credit Loans that are Eurodollar Loans denominated in Dollars to ABR Loans, by giving the Administrative Agent at least two Business Days’ prior irrevocable notice of such election, provided that any such conversion of Eurodollar Loans may only be made on   22 -------------------------------------------------------------------------------- the last day of an Interest Period with respect thereto. The Company may elect from time to time to convert ABR Loans to Eurodollar Loans denominated in Dollars by giving the Administrative Agent at least three Business Days’ prior irrevocable notice of such election. Any such notice of conversion to Eurodollar Loans shall specify the length of the initial Interest Period or Interest Periods therefor. Upon receipt of any such notice the Administrative Agent shall promptly notify each Bank thereof. All or any part of outstanding Eurodollar Loans denominated in Dollars and ABR Loans may be converted as provided herein, provided that (i) no Loan may be converted into a Eurodollar Loan when any Event of Default has occurred and is continuing and the Administrative Agent or the Majority Banks have determined that such a conversion is not appropriate, (ii) any such conversion may only be made if, after giving effect thereto, subsection 2.8 shall not have been contravened and (iii) no Loan may be converted into a Eurodollar Loan after the date that is one month prior to the Termination Date. For purposes of this subsection, any reference to an ABR Loan shall be deemed to exclude any Swing Line Loan. (b) Any Revolving Credit Loans that are Eurodollar Loans may be continued as such upon the expiration of the then current Interest Period with respect thereto by the Company giving notice to the Administrative Agent, in accordance with the applicable provisions of the term “Interest Period” set forth in subsection 1.1, of the length of the next Interest Period to be applicable to such Loans, provided that no Eurodollar Loan may be continued as such (i) when any Event of Default has occurred and is continuing and the Administrative Agent or the Majority Banks have determined that such a continuation is not appropriate, (ii) if, after giving effect thereto, subsection 2.8 would be contravened or (iii) after the date that is one month prior to the Termination Date. Upon receipt of any such notice the Administrative Agent shall promptly notify each Bank thereof. (c) Unless otherwise agreed to by the Majority Banks, upon the occurrence and during the continuance of any Event of Default, all Foreign Currency Loans then outstanding shall be exchanged into Dollars (based on the Dollar Amount (determined as of the most recent Revaluation Date) of such Foreign Currency Loans on the date of redenomination) on the last day of the then current Interest Periods of such Foreign Currency Loans; provided that in each case the Company shall be liable for any currency exchange loss related to such payments and shall promptly pay to each Bank upon receipt of notice thereof by the Company from such Bank the amount of any such loss incurred by such Bank. 2.8 Minimum Amounts of Tranches. All borrowings, conversions and continuations of Loans hereunder and all selections of Interest Periods hereunder shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of the Loans comprising each Eurodollar Tranche shall be equal to a Dollar Amount (determined as of the most recent Revaluation Date) of $5,000,000 or a whole multiple of $1,000,000 in excess thereof.   23 -------------------------------------------------------------------------------- 2.9 Interest Rates and Payment Dates. (a) Each ABR Loan shall bear interest at a rate per annum equal to the ABR. (b) Each Revolving Credit Loan that is a Eurodollar Loan shall bear interest for each day during each Interest Period with respect thereto at a rate per annum equal to the Eurodollar Rate determined for such Interest Period plus the Applicable Margin. (c) Each Bid Loan shall bear interest as provided in subsection 2.18. (d) If all or a portion of (i) the principal amount of any Loan or (ii) any interest payable thereon shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum which is (x) in the case of overdue principal, the rate that would otherwise be applicable thereto pursuant to the foregoing provisions of this subsection plus 2% or (y) in the case of overdue interest, the rate described in paragraph (a) of this subsection plus 2%, in each case from the date of such non-payment until such amount is paid in full (as well after as before judgment). (e) Interest on each Revolving Credit Loan and each Swing Line Loan shall be payable in arrears on each Interest Payment Date, provided that interest accruing pursuant to paragraph (d) of this subsection shall be payable on demand. Interest on each Bid Loan shall be payable as set forth in the applicable Bid Note. 2.10 Computation of Interest and Fees. (a) Facility fees and, whenever it is calculated on the basis of the Prime Rate, interest on ABR Loans and Foreign Currency Loans denominated in Pounds Sterling, shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed; otherwise, interest and fees shall be calculated on the basis of a 360-day year for the actual days elapsed. The Administrative Agent shall as soon as practicable notify the Company and the Banks of each determination of a Eurodollar Rate. The Administrative Agent shall as soon as practicable notify the Company and the Banks of the effective date and the amount of each such change in interest rate. (b) Each determination of an interest rate by the Administrative Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Company and the Banks in the absence of manifest error. The Administrative Agent shall, at the request of the Company, deliver to the Company a statement showing the quotations used by the Administrative Agent in determining any interest rate pursuant to subsection 2.9(b) or (c). 2.11 Inability to Determine Interest Rate. In the event that prior to the first day of any Interest Period: (a) the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Company) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, or   24 -------------------------------------------------------------------------------- (b) the Administrative Agent shall have received notice from the Majority Banks that the Eurodollar Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Banks (as conclusively certified by such Banks) of making or maintaining their affected Loans during such Interest Period, the Administrative Agent shall give telecopy or telephonic (confirmed in writing) notice thereof to the Company and the Banks as soon as practicable thereafter. If such notice is given (w) any affected Foreign Currency Loans requested to be made on the first day of such Interest Period shall be made, at the sole option of the Company, in Dollars as ABR Loans or such request shall be cancelled, (x) any Eurodollar Loans denominated in Dollars requested to be made on the first day of such Interest Period shall be made as ABR Loans or Fixed Rate Bid Loans based upon the ABR, (y) any Loans that were to have been converted on the first day of such Interest Period to Eurodollar Loans shall be converted to or continued as ABR Loans in Dollars and (z) any Loans that pursuant to subsection 2.7(b) were to have been continued on the first day of such Interest Period as Eurodollar Loans shall be converted to ABR Loans in Dollars. Until such notice has been withdrawn by the Administrative Agent, no further Eurodollar Loans shall be made or continued as such, nor shall the Company have the right to convert Loans to Eurodollar Loans. 2.12 Pro Rata Treatment and Payments. (a) Each borrowing of Revolving Credit Loans and any reduction of the Commitments shall be made pro rata according to the respective Commitment Percentages of the Banks. Unless otherwise required by the terms of this Agreement, each payment under this Agreement or any Note shall be applied, first, to any fees then due and owing by the Company pursuant to subsection 2.4, second, to interest then due and owing in respect of the Notes of the Company and, third, to principal then due and owing hereunder and under the Notes of the Company. Each payment on account of any fees pursuant to subsection 2.4 for the account of Banks shall be made pro rata in accordance with the respective amounts due and owing (except as to the Letter of Credit Facing Fee and the Issuing Lender Fees). Each payment (other than prepayments) by the Company on account of principal of and interest on the Revolving Credit Loans shall be made pro rata according to the respective amounts due and owing. Without limiting the terms of the preceding sentence, accrued interest on any Loans denominated in a Foreign Currency shall be payable in the same Foreign Currency as such Loan. Payments made pursuant to subsection 2.13 shall be applied in accordance with such section. All payments (including prepayments) to be made by the Company on account of principal, interest and fees shall be made without defense, set-off or counterclaim (except as provided in subsection 2.15(b)) and shall be made to the Administrative Agent for the account of the Banks at the Administrative Agent’s office specified in subsection 9.2 or such other office specified by the Administrative Agent in immediately available funds and (i) in the case of Loans or other amounts denominated in Dollars, shall be made in Dollars not later than 12:00 noon New York City time on the date when due and (ii) in the case of Loans or other amounts denominated in a Foreign Currency, unless otherwise specified herein, shall be made in such Foreign Currency not later than the Applicable Time specified by the Administrative Agent on the date when due. Any payment   25 -------------------------------------------------------------------------------- received after the foregoing deadlines shall be deemed received on the next Business Day. The Administrative Agent shall distribute such payments to the Banks entitled thereto promptly upon receipt in like funds as received. If any payment hereunder (other than payments on the Eurodollar Loans) becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. If any payment on a Eurodollar Loan becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day unless the result of such extension would be to extend such payment into another calendar month, in which event such payment shall be made on the immediately preceding Business Day. (b) Notwithstanding any other provisions of this Agreement to the contrary, after the exercise of remedies by the Administrative Agent or the Banks pursuant to Section 7 (or after the Commitments shall automatically terminate and the Loans (with accrued interest thereon) and all other amounts under the Loan Documents (including without limitation the maximum amount of all contingent liabilities under Letters of Credit) shall automatically become due and payable in accordance with the terms of such Section), all amounts collected or received by the Administrative Agent or any Bank on account of the Obligations or any other amounts outstanding under any of the Loan Documents shall be paid over or delivered as follows: FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including without limitation reasonable attorneys’ fees) of the Administrative Agent in connection with enforcing the rights of the Banks under the Loan Documents; SECOND, to the payment of any fees owed to the Administrative Agent; THIRD, to the payment of all reasonable out-of-pocket costs and expenses (including without limitation, reasonable attorneys’ fees) of each of the Banks in connection with enforcing its rights under the Loan Documents or otherwise with respect to the Obligations owing to such Bank; FOURTH, to the payment of all of the Obligations consisting of accrued fees and interest; FIFTH, to the payment of the outstanding principal amount of the Obligations and the payment or cash collateralization of the outstanding LOC Obligations; SIXTH, to all other Obligations and other obligations which shall have become due and payable under the Loan Documents or otherwise and not repaid pursuant to clauses ”FIRST” through “FIFTH” above; and SEVENTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive such surplus. In carrying out the foregoing, (i) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding   26 -------------------------------------------------------------------------------- category; (ii) each of the Banks shall receive an amount equal to its pro rata share (based on the proportion that the then outstanding Loans and LOC Obligations held by such Bank bears to the aggregate then outstanding Loans and LOC Obligations) of amounts available to be applied pursuant to clauses “THIRD”, “FOURTH”, “FIFTH” and “SIXTH” above; and (iii) to the extent that any amounts available for distribution pursuant to clause “FIFTH” above are attributable to the issued but undrawn amount of outstanding Letters of Credit, such amounts shall be held by the Administrative Agent in a cash collateral account and applied (A) first, to reimburse the Issuing Lenders from time to time for any drawings under such Letters of Credit and (B) then, following the expiration of all Letters of Credit, to all other obligations of the types described in clauses “FIFTH” and “SIXTH” above in the manner provided in this subsection 2.12(b). (c) Unless the Administrative Agent shall have been notified in writing by any Bank prior to a Borrowing Date that such Bank will not make the amount that would constitute its Commitment Percentage of the borrowing of a Revolving Credit Loan on such date available to the Administrative Agent, the Administrative Agent may assume that such Bank has made such amount available to the Administrative Agent on such Borrowing Date, and the Administrative Agent may, in reliance upon such assumption, make available to the Company a corresponding amount. If such amount is made available to the Administrative Agent on a date after such Borrowing Date, such Bank shall pay to the Administrative Agent on demand an amount equal to the product of (i) the daily average Federal Funds Effective Rate (as defined in the definition of “ABR”) during such period as quoted by the Administrative Agent, (ii) the amount of such Bank’s Commitment Percentage of such borrowing, and (iii) a fraction the numerator of which is the number of days that elapse from and including such Borrowing Date to the date on which such Bank’s Commitment Percentage of such borrowing shall have become immediately available to the Administrative Agent and the denominator of which is 360. A certificate of the Administrative Agent submitted to any Bank with respect to any amounts owing under this subsection shall be conclusive in the absence of manifest error. If such Bank’s Commitment Percentage of such borrowing is not in fact made available to the Administrative Agent by such Bank within three Business Days of such Borrowing Date, the Administrative Agent shall be entitled to recover such amount with interest thereon at the rate per annum applicable to ABR Loans hereunder, on demand, from the Company. (d) Unless the Administrative Agent shall have been notified in writing by the Company, prior to the date on which any payment is due from the Company hereunder (which notice shall be effective upon receipt) that the Company does not intend to make such payment, the Administrative Agent may assume that the Company has made such payment when due, and the Administrative Agent may in reliance upon such assumption (but shall not be required to) make available to each Bank on such payment date an amount equal to the portion of such assumed payment to which such Bank is entitled hereunder, and if the Company has not in fact made such payment to the Administrative Agent, such Bank shall, on demand, repay to the Administrative Agent the amount made available to such Bank. If such amount is repaid to the Administrative Agent on a date after the date such amount was made available to such Bank, such Bank shall pay to the Administrative Agent on demand interest on such amount in respect of each day from the   27 -------------------------------------------------------------------------------- date such amount was made available by the Administrative Agent to such Bank to the date such amount is recovered by the Administrative Agent at a per annum rate equal to the Federal Funds Effective Rate. A certificate of the Administrative Agent submitted to the Company with respect to any amount owing under this subsection shall be conclusive in the absence of manifest error. 2.13 Illegality. (a) Notwithstanding any other provision herein, if any change in any Requirement of Law or in the interpretation or application thereof shall make it unlawful for any Bank to make or maintain Eurodollar Loans as contemplated by this Agreement, (i) the commitment of such Bank hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and convert Domestic Dollar Loans to Eurodollar Loans shall forthwith be cancelled and (ii) such Bank’s Loans then outstanding as Eurodollar Loans, if any, shall be converted automatically to ABR Loans or Fixed Rate Bid Loans denominated in Dollars based upon the ABR on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a Eurodollar Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Company shall pay to such Bank such amounts, if any, as may be required pursuant to subsection 2.16. (b) Notwithstanding any other provision herein, if there shall have occurred any change in national or international financial, political or economic conditions (including the imposition of or any change in exchange controls) or currency exchange rates which would make it unlawful or impossible for any Bank to make Loans denominated in any Foreign Currency to the Company, as contemplated by this Agreement, (i) the commitment of such Bank hereunder to make Foreign Currency Loans shall forthwith be cancelled and (ii) such Bank’s Loans then outstanding as Foreign Currency Loans, if any, shall be converted automatically to ABR Loans denominated in Dollars. If any conversion of a Foreign Currency Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, the Company shall pay to such Bank such amounts, if any, as may be required pursuant to subsection 2.16. 2.14 Requirements of Law. (a) In the event that Eurodollar Reserve Percentage or any change in any Requirement of Law or in the interpretation or application thereof after the date of this Agreement or compliance by any Bank with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof: (i) shall subject any Bank to any tax of any kind whatsoever with respect to this Agreement, any Note, any Letter of Credit or any application related thereto, or any Eurodollar Loan made by it, or change the basis of taxation of payments to such Bank in respect thereof (except for taxes covered by subsection 2.15 and changes in franchise taxes or the rate of tax on the overall net income of such Bank);   28 -------------------------------------------------------------------------------- (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Bank which is not otherwise included in the determination of the Eurodollar Rate or the interest rate applicable to any Bid Loan hereunder; or (iii) shall impose on such Bank any other condition; and the result of any of the foregoing is to increase the cost to such Bank, by an amount which such Bank deems to be material, of making, converting into, continuing or maintaining Eurodollar Loans or Bid Loans or the Letters of Credit (or the Participation Interests therein), or to reduce any amount receivable hereunder in respect thereof then, in any such case, the Company shall promptly pay such Bank, upon its demand, any additional amounts necessary to compensate such Bank for such increased cost or reduced amount receivable as provided in this Section 2.14(a). If any Bank becomes entitled to claim any additional amounts pursuant to this subsection, it shall promptly notify the Company, through the Administrative Agent, of the event by reason of which it has become so entitled. A certificate as to any additional amounts payable pursuant to this subsection submitted by such Bank, through the Administrative Agent, to the Company in good faith and setting forth in reasonable detail the calculation of such amounts shall be conclusive in the absence of manifest error; provided that the Company’s obligations under this Section 2.14(a) shall be limited to amounts accruing not more than 180 days prior to the invoice thereof by such Bank (such time period to be extended as necessary to take into account any retroactive application of a change in law giving rise to such obligations). This covenant shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder until the second anniversary of such payment and termination. (b) In the event that any Bank or corporation controlling such Bank shall have determined that any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Bank or such corporation with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof does or shall have the effect of reducing the rate of return on such Bank’s capital as a consequence of its obligations hereunder to a level below that which such Bank could have achieved but for such change or compliance (taking into consideration such Bank’s policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, after submission by such Bank in good faith to the Company (with a copy to the Administrative Agent) of a written request therefor setting forth in reasonable detail the calculation of such amount (which request shall be conclusive in the absence of manifest error), the Company shall pay to such Bank such additional amount or amounts as will compensate such Bank for such reduction; provided that the Company’s obligations under this Section 2.14(b) shall be limited to amounts accruing not more than 180 days prior to the invoice thereof by such Bank (such time period to be extended as necessary to take into account any retroactive application of a change in law giving rise to such obligations). This covenant shall survive the   29 -------------------------------------------------------------------------------- termination of this Agreement and the payment of the Notes and all other amounts payable hereunder until the second anniversary of such payment and termination. 2.15 Taxes. (a) Subject to subsection 2.15(b) or 9.6(g), as appropriate, all payments made by the Company under this Agreement and the Notes shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding, in the case of the Administrative Agent and each Bank, net income taxes, branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which such Bank is located and franchise taxes (imposed in lieu of net income taxes) imposed on the Administrative Agent or such Bank, as the case may be, as a result of a present or former connection between the jurisdiction of the government or taxing authority imposing such tax and the Administrative Agent or such Bank (excluding a connection arising solely from the Administrative Agent or such Bank having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or the Notes) or any political subdivision or taxing authority thereof or therein (all such non-excluded taxes, levies, imposts, duties, charges, fees, deductions and withholdings being hereinafter called “Taxes”). If any Taxes are required to be withheld from any amounts payable to the Administrative Agent or any Bank hereunder or under the Notes, the amounts so payable to the Administrative Agent or such Bank (so long as such Bank is in compliance with subsection 2.15(b) or 9.6(g), as appropriate and if applicable) shall be increased to the extent necessary to yield to the Administrative Agent or such Bank (after payment of all Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and the Notes. Whenever any Taxes are payable by the Company, as promptly as possible thereafter the Company shall send to the Administrative Agent for its own account or for the account of such Bank, as the case may be, a certified copy of an original official receipt received by the Company showing payment thereof. If the Company fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required receipts or other required documentary evidence, the Company shall indemnify the Administrative Agent and the Banks for any incremental taxes, interest or penalties that may become payable by the Administrative Agent or any Bank as a result of any such failure. The agreements in this subsection shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder. (b) Each Bank party to this Agreement on the Closing Date that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) agrees that, on or prior to the Closing Date, it will deliver to the Company and the Administrative Agent (i) two duly completed copies of United States Internal Revenue Service Form W-8BEN or W-8ECI or successor applicable form, as the case may be or (ii) in the case of such a Bank claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate to the effect that such Bank is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent   30 -------------------------------------------------------------------------------- shareholder” of the Company within the meaning of Section 881(c)(3)(B) of the Code or (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code and (y) two duly completed copies of United States Internal Revenue Service Form W-8BEN, in each case certifying such Bank’s entitlement to a complete exemption from United States withholding tax with respect to interest payments to be made under this Agreement and under any Note. Each such Bank also agrees to deliver to the Company and the Administrative Agent two further copies of such forms, or successor applicable forms or other manner of certification, as the case may be, on or before the date that any such form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Company, and such extensions or renewals thereof as may reasonably be requested by the Company or the Administrative Agent, unless in any such case an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Bank from duly completing and delivering any such form with respect to it and such Bank so advises the Company and the Administrative Agent. Each Bank party to this Agreement on the Closing Date that is a United States person (as such term is defined in Section 7701(a)(30) of the Code) agrees that, on or prior to the Closing Date, it will deliver to the Company and the Administrative Agent two duly completed copies of United States Internal Revenue Service Form W-9, certifying that it is not subject to United States backup withholding tax. 2.16 Indemnity. The Company agrees to indemnify each Bank and to hold each Bank harmless from any loss or expense which such Bank may sustain or incur as a consequence of (a) default by the Company in payment when due of the principal amount of or interest on any Eurodollar Loan or Bid Loan, (b) default by the Company in making a borrowing or conversion after the Company has given (or is deemed to have given) a notice in accordance with subsection 2.18 (so long as the Company shall have accepted a Bid Loan offered in connection with any such notice), (c) default by the Company in making a borrowing of, conversion into or continuation of Eurodollar Loans after the Company has given a notice requesting the same in accordance with the provisions of this Agreement, (d) default by the Company in making any prepayment of Eurodollar Loans after the Company has given a notice thereof in accordance with the provisions of this Agreement or (e) the making of a prepayment or conversion, or the purchase pursuant to subsection 2.17, of Eurodollar Loans or Fixed Rate Bid Loans on a day which is not the last day of an Interest Period with respect thereto, including, without limitation, in each case, any such loss (other than non-receipt of the Applicable Margin or, without duplication, anticipated profits) or expense arising from the reemployment of funds obtained by it or from fees payable to terminate the deposits from which such funds were obtained (it being understood that any such calculation will be made on notional amounts as the Banks are not required to show that they matched deposits specifically). A certificate as to any additional amounts payable pursuant to this subsection submitted by such Bank, through the Administrative Agent, to the Company in good faith shall be conclusive in the absence of manifest error. This covenant shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder. 2.17 Action of Affected Banks. Each Bank agrees to use reasonable efforts (including reasonable efforts to change the booking office for its Loans) to avoid or minimize any illegality   31 -------------------------------------------------------------------------------- pursuant to subsection 2.13 or any amounts which might otherwise be payable pursuant to subsection 2.14(a) or 2.15; provided, however, that such efforts shall not cause the imposition on such Bank of any additional costs or legal or regulatory burdens deemed by such Bank to be material and shall not be deemed by such Bank to be otherwise disadvantageous or contrary to its policies. In the event that such reasonable efforts are insufficient to avoid all such illegality or all amounts that might be payable pursuant to subsection 2.14(a) or 2.15, then such Bank (the “Affected Bank”) shall use its reasonable efforts to transfer to any other Bank (which itself is not then an Affected Bank) its Loans and Commitment subject to the provisions of subsection 9.6(c); provided, however, that such transfer shall not be deemed by such Affected Bank, in its sole discretion, to be disadvantageous to it or contrary to its policies. In the event that the Affected Bank is unable, or otherwise is unwilling, so to transfer its Loans and Commitment, the Company may designate an alternate lender (reasonably acceptable to the Administrative Agent) to purchase the Affected Bank’s Loans and Commitment, at par and including accrued interest, and, subject to the provisions of subsection 9.6(c), the Affected Bank shall transfer its Commitment to such alternate lender and such alternate lender shall become a Bank hereunder. Any fee payable to the Administrative Agent pursuant to subsection 9.6(e) in connection with such transfer shall be for the account of the Company. 2.18 Bid Loans. (a) The Company may request one or more Banks to make offers to make Bid Loans denominated in Dollars from time to time on any Business Day during the period from the Closing Date until the date seven days prior to the Termination Date in the manner set forth in this subsection 2.18, provided that the aggregate principal Dollar Amount (determined as of the most recent Revaluation Date) of all Revolving Credit Loans, Swing Line Loans, LOC Obligations and Bid Loans outstanding at any one time shall not exceed the aggregate amount of the Commitments at such time. Each Bank may, but shall have no obligation to, make such offers, and the Company may, but shall have no obligation to, accept any such offers in the manner set forth herein. (b) (i) The Company may request Bid Loans by delivering a Bid Loan Request to the Administrative Agent, not later than 10:00 A.M. (New York City time) four Business Days prior to the proposed Borrowing Date (in the case of a LIBOR Bid Loan Request), and not later than 3:00 p.m. (New York City time) one Business Day prior to the proposed Borrowing Date (in the case of a Fixed Rate Bid Loan Request). Each Bid Loan Request shall solicit Bid Quotes for Bid Loans in an aggregate principal Dollar Amount (determined as of the most recent Revaluation Date) of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and for not more than four alternative maturity dates for such Bid Loans, none of which shall be earlier than seven days from the respective requested Borrowing Date or later than the earlier of (A) the date (1) 180 days from the respective requested Borrowing Date in the case of a Fixed Rate Bid Loan Request and (2) 6 months from the respective requested Borrowing Date in the case of a LIBOR Bid Loan Request and (B) the Termination Date. Bid Loan Requests may be submitted no more frequently than once during any period of three successive Business Days. The Administrative Agent shall promptly notify   32 -------------------------------------------------------------------------------- each Bank by facsimile transmission of the contents of each Bid Loan Request received by it. (ii) In the case of a LIBOR Bid Loan Request, upon receipt of notice from the Administrative Agent of the contents of such Bid Loan Request, any Bank that elects, in its sole discretion, to do so, may irrevocably offer to make one or more Bid Loans at the Eurodollar Rate plus or minus a margin for each such Bid Loan determined by such Bank in its sole discretion. Any such irrevocable offer shall be made by delivering a Bid Quote to the Administrative Agent, before 10:00 A.M. (New York City time) three Business Days before the proposed Borrowing Date, setting forth the maximum amount of Bid Loans for each maturity date which such Bank would be willing to make (which amount may, subject to subsection 2.1(a), exceed such Bank’s Commitment) and the margin above or below the Eurodollar Rate at which such Bank is willing to make each such Bid Loan; the Administrative Agent shall advise the Company before 10:30 A.M. (New York City time) three Business Days before the proposed Borrowing Date, of the contents of each such Bid Quote received by it. If the Administrative Agent in its capacity as a Bank shall, in its sole discretion, elect to make any such offer, it shall advise the Company of the contents of its Bid Quote before 9:45 A.M. (New York City time) three Business Days before the proposed Borrowing Date. (iii) In the case of a Fixed Rate Bid Loan Request, upon receipt of notice from the Administrative Agent of the contents of such Bid Loan Request, any Bank that elects, in its sole discretion, to do so, may irrevocably offer to make one or more Bid Loans at a rate or rates of interest for each such Bid Loan determined by such Bank in its sole discretion. Any such irrevocable offer shall be made by delivering a Bid Quote to the Administrative Agent, before 9:30 A.M. (New York City time) on the proposed Borrowing Date, setting forth the maximum amount of Bid Loans for each maturity date which such Bank would be willing to make (which amount may, subject to subsection 2.1(a), exceed such Bank’s Commitment) and the rate or rates of interest therefor; the Administrative Agent shall advise the Company before 10:00 A.M. (New York City time) on the proposed Borrowing Date of the contents of each such Bid Quote received by it. If the Administrative Agent in its capacity as a Bank shall, in its sole discretion, elect to make any such offer, it shall advise the Company of the contents of its Bid Quote before 9:15 A.M. (New York City time) on the proposed Borrowing Date. (iv) The Company shall before 11:30 A.M. (New York City time) three Business Days before the proposed Borrowing Date in the case of a LIBOR Bid Loan Request and before 10:30 A.M. (New York City time) on the proposed Borrowing Date in the case of a Fixed Rate Bid Loan Request either, in its absolute discretion: (A) cancel such Bid Loan Request by giving the Administrative Agent telephone notice to that effect, or   33 -------------------------------------------------------------------------------- (B) accept one or more of the offers made by any Bank or Banks pursuant to clause (ii) or clause (iii) above, as the case may be, by giving telephone notice (immediately confirmed by execution and facsimile transmission of a Bid Loan Confirmation) to the Administrative Agent of the amount of Bid Loans to be made by each Bank (which amount shall be equal to or less than the maximum amount requested to be made, but in no event less than $5,000,000 and in integral multiples of $1,000,000 in excess thereof, notified to the Company by the Administrative Agent on behalf of such Bank for such Bid Loans pursuant to clause (ii) or clause (iii) above, as the case may be), provided that the Company may not accept offers for Bid Loans in an aggregate principal amount in excess of the maximum principal amount requested in the related Bid Loan Request. (v) If the Company notifies the Administrative Agent that a Bid Loan Request is cancelled pursuant to clause (iv)(A) above, the Administrative Agent shall give prompt telephone notice thereof to the Banks, and the Bid Loans requested thereby shall not be made. (vi) If the Company accepts one or more of the offers made by any Bank or Banks pursuant to clause (iv)(B) above, the Administrative Agent shall as promptly as practicable following receipt of the Company’s acceptance, three Business Days before the proposed Borrowing Date in the case of a LIBOR Bid Loan Request and on the proposed Borrowing Date in the case of a Fixed Rate Bid Loan Request, notify each Bank which has made such an offer, of the aggregate amount of such Bid Loans to be made on such Borrowing Date for each maturity date and of the acceptance of any offers for each maturity date to make such Bid Loans made by such Bank. Each Bank which is to make a Bid Loan shall, before 12:00 noon (New York City time) on the Borrowing Date specified in the Bid Loan Request applicable thereto, make available to the Administrative Agent at its office set forth in subsection 9.2 the amount of such Bank’s Bid Loans, in immediately available funds. The Administrative Agent will make such funds available to the Company as soon as practicable on such date at the Administrative Agent’s aforesaid address. (vii) Each Bid Loan shall be evidenced by a promissory note of the Company, substantially in the form of Exhibit E, with appropriate insertions (a “Bid Note”), payable to the order of the applicable Bank and representing the obligation of the Company to pay the unpaid principal amount of all Bid Loans made by such Bank, and to pay interest thereon as prescribed in subsection 2.18(e). Each such Bank is hereby authorized to record the date and amount of each Bid Loan made by such Bank, the maturity date thereof, the date and amount of each payment of principal thereof and the interest rate with respect thereto on the schedule annexed to and constituting part of its Bid Note or in the books and records of such Bank in such manner as is reasonable and customary, and any such recordation shall constitute prima facie evidence of the accuracy of the information so recorded, provided that the failure to make any such   34 -------------------------------------------------------------------------------- recordation shall not affect the obligations of the Company hereunder or under any Bid Note. Each Bid Note shall be dated the Closing Date and each Bid Loan evidenced thereby shall bear interest for the period from and including the Borrowing Date thereof on the unpaid principal amount thereof from time to time outstanding at the applicable rate per annum determined as provided in, and such interest shall be payable as specified in, subsection 2.18(e). (c) Within the limits and on the conditions set forth in this subsection 2.18, the Company may from time to time borrow under this subsection 2.18, repay pursuant to paragraph (d) below, and reborrow under this subsection 2.18. (d) The Company shall repay to the Administrative Agent for the account of each Bank which has made a Bid Loan on the maturity date of each Bid Loan (such maturity date being that specified by the Company for repayment of such Bid Loan in the related Bid Loan Request) the then unpaid principal amount of such Bid Loan. The Company shall not have the right to prepay any principal amount of any Bid Loan without the prior written consent of the applicable Bank then making such Bid Loan. (e) The Company shall pay interest on the unpaid principal amount of each Bid Loan from the date of such Bid Loan to the stated maturity date thereof, at the rate of interest for such Bid Loan determined pursuant to paragraph (b) above (calculated on the basis of a 360 day year for actual days elapsed), payable on the Interest Payment Date specified by the Company for such Bid Loan in the related Bid Loan Request as provided in the Bid Note evidencing such Bid Loan. 2.19 Swing Line Commitments. (a) Subject to the terms and conditions hereof, the Swing Line Bank hereby agrees to make swing line loans to the Company (individually, a “Committed Swing Line Loan”; collectively the “Committed Swing Line Loans”; or the “Swing Line Loans”) from time to time during the Commitment Period in an aggregate principal amount at any one time outstanding not to exceed the Swing Line Commitment; provided that the aggregate unpaid principal amount of all Swing Line Loans, together with the aggregate unpaid principal amount of all Revolving Credit Loans, LOC Obligations and all Bid Loans at any one time outstanding, may not exceed the aggregate amount of the Commitments. Amounts borrowed by the Company under this subsection 2.19 may be repaid and, through but excluding the Termination Date, reborrowed. All Committed Swing Line Loans shall be made as ABR Loans and may not be converted into Eurodollar Loans. Each borrowing of Swing Line Loans shall be in an amount equal to $5,000,000 or a whole multiple of $1,000,000 in excess thereof. The Company shall give the Administrative Agent (which shall promptly notify the Swing Line Bank) irrevocable notice (which notice must be received by the Administrative Agent prior to 2:00 P.M., New York City time) on the requested Borrowing Date specifying the amount of the requested Committed Swing Line Loan to be made by the Swing Line Bank. The proceeds of each Committed Swing Line Loan shall be made available by the Swing Line Bank to the Administrative Agent for the account of the Company at the applicable office of the Administrative Agent specified prior to 4:30 p.m. on the requested Borrowing Date.   35 -------------------------------------------------------------------------------- (b) The Swing Line Loans made by the Swing Line Bank to the Company shall be evidenced by a promissory note of the Company substantially in the form of Exhibit I, with appropriate insertions (the “Swing Line Note”), payable to the order of the Swing Line Bank and representing the obligation of the Company to pay the unpaid principal amount of the Swing Line Loans made to the Company, with interest thereon as prescribed in subsection 2.9. The Swing Line Bank is hereby authorized to record the Borrowing Date, the amount of each Swing Line Loan made to the Company and the date and amount of each payment or prepayment of principal thereof, on the schedule annexed to and constituting a part of its Swing Line Note (or any continuation thereof) and any such recordation shall constitute prima facie evidence of the accuracy of the information so recorded. Each Swing Line Note shall (a) be dated the Closing Date, (b) be stated to mature on the Termination Date and (c) bear interest for the period from the date thereof to the Termination Date on the unpaid principal amount thereof from time to time outstanding at the applicable interest rate per annum determined as provided in, and payable as specified in, subsection 2.9. (c) In the event that the Company has not notified the Administrative Agent of its intent to repay the Swing Line Loans made on any Borrowing Date by 12:00 noon New York City time on the Business Day immediately following such Borrowing Date and has not in fact repaid such Swing Line Loans (including accrued interest thereon) in full by such time, the Company shall be deemed to have made an irrevocable request to the Administrative Agent under subsection 2.3 (which for purposes of this subsection shall be deemed to be timely and sufficient) for a borrowing on such date of Revolving Credit Loans that are ABR Loans in an aggregate amount equal to the then unpaid aggregate principal amount of such Swing Line Loans made to the Company. The proceeds of such Revolving Credit Loans shall be immediately applied to repay such Swing Line Loans. (d) In the event that for any reason whatsoever (including, without limitation, the occurrence of an event specified in paragraph (g) of Section 7 with respect to the Company), the procedures set forth in the foregoing paragraph (c) are not followed, each Bank shall, upon notice from the Administrative Agent, promptly purchase from the Swing Line Bank participations in (or, if and to the extent specified by the Swing Line Bank, a direct interest in) the Swing Line Loans made by the Swing Line Bank (collectively, the “Unrefunded Swing Line Loans”) in an aggregate amount equal to the amount of the Revolving Credit Loan it would have been obligated to make pursuant to the procedures set forth in the foregoing paragraph (c). (e) Each Bank shall, not later than 4:00 P.M. New York City time on the Business Day on which such notice is received (if such notice is received by 2:15 P.M. New York City time) or 9:00 A.M. New York City time on the next succeeding Business Day (if such notice is received after 2:15 P.M. New York City time), make available the amount of the Revolving Credit Loan to be made by it (or the amount of the participations or direct interests to be purchased by it, as the case may be) to the   36 -------------------------------------------------------------------------------- Administrative Agent at the applicable office of the Administrative Agent specified in subsection 9.2 and the amount so received by the Administrative Agent shall promptly be made available to the Swing Line Bank by remitting the same, in immediately available funds, to the Swing Line Bank, in accordance with the provisions of paragraph (g) below. (f) Whenever, at any time after the Swing Line Bank has received from any Bank such Bank’s participating interest in an Unrefunded Swing Line Loan pursuant to paragraph (d) above, the Swing Line Bank receives any payment on account thereof, the Swing Line Bank will distribute to such Bank its participating interest in such amount (appropriately adjusted in the case of interest payments, to reflect the period of time during which such Bank’s participating interest was outstanding and funded); provided, however, that in the event that such payment received by the Swing Line Bank is required to be returned, such Bank will return to the Swing Line Bank any portion thereof previously distributed by the Swing Line Bank to it. (g) All payments (including prepayments) to be made by the Company hereunder and under the Swing Line Notes, whether on account of principal, interest, fees or otherwise, shall be made without set off, counterclaim or any other deduction whatsoever and shall be made prior to 1:00 P.M., New York City time, on the due date thereof to the Administrative Agent, for the account of the Swing Line Bank, at the Administrative Agent’s office specified in subsection 9.2, in Dollars and in immediately available funds, and upon receipt by the Administrative Agent of any payment made by the Company in accordance with the terms of this Agreement and the Swing Line Notes, the Company shall have satisfied its payment obligation with respect to the obligation on account of which such payment was made. Any such payment made at or after 1:00 P.M. New York City time, on any day shall be deemed made on the following Business Day. The Administrative Agent shall distribute such payments to the Swing Line Bank promptly upon receipt in like funds as received. If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension. (h) Anything in this Agreement to the contrary notwithstanding (including, without limitation, in subsection 4.2), the obligation of each Bank to make its Revolving Credit Loan (or purchase its participation or direct interest in such Swing Line Loan, as the case may be) pursuant to this subsection 2.19 is unconditional under any and all circumstances whatsoever and shall not be subject to set-off, counterclaim or defense to payment that such Bank may have or have had against the Company, the Administrative Agent, the Swing Line Bank or any other Bank and, without limiting any of the foregoing, shall be unconditional irrespective of (i) occurrence of any Default or Event of Default, (ii) the financial condition of the Company, any Affiliate, the Administrative Agent, the Swing Line Bank or any other Bank or (iii) the termination or cancellation of the Commitments. The Company agrees that any Bank so purchasing a participation (or direct interest) in such Swing Line Loan may exercise all rights of set-off, bankers’ lien, counter claim or similar rights with respect to such participation as fully as if such Bank were a direct holder of a Swing Line Loan in the amount of such participation.   37 -------------------------------------------------------------------------------- 2.20 Increase of Commitments. (a) At the request of the Company to the Administrative Agent, the aggregate Commitments hereunder may be increased after the Closing Date on one or more occasions by not more than $500,000,000 provided that (i) each such increase is in a minimum amount of $50,000,000 and $10,000,000 increments in excess thereof, (ii) the sum of the aggregate Commitments hereunder shall not exceed $2,000,000,000 after giving effect to such increases, (iii) each Bank whose Commitment is increased consents, (iv) the consent of the Administrative Agent is obtained, (v) no Default or Event of Default shall have occurred and be continuing, (vi) each of the representations and warranties made on the Closing Date are true and correct in all material respects on and as of the date of such increase and (vii) if, after giving effect to such increase, the sum of the aggregate Commitments hereunder shall exceed $1,500,000,000, the approval of the Board of Directors of the Company, or a properly empowered committee of such Board, shall be obtained. (b) In the event that the Company and one or more of the Banks (or other financial institutions which may elect to participate with the consent of the Administrative Agent) shall agree, in accordance with Section 2.20(a), upon such an increase in the aggregate Commitments, the Company, the Administrative Agent and each financial institution in question shall enter into a Commitment Increase Supplement (a form of which is attached hereto as Exhibit J) setting forth the amounts of the increase in Commitments and providing that the additional financial institutions participating shall be deemed to be included as Banks for all purposes of this Agreement. Upon the execution and delivery of such Commitment Increase Supplement as provided above, and upon satisfaction of such other conditions as the Administrative Agent may specify (including the delivery of certificates and legal opinions on behalf of the Company relating to the amendment and new Notes), this Agreement shall be deemed to be amended accordingly. (c) No Bank shall have any obligation to increase its Commitment in the event of such a request by the Company hereunder. 2.21 Payment in Full at Maturity. The Company shall pay to the Administrative Agent, for the account of each Bank, the entire outstanding principal amount owing under the Agreement or under any Notes, together with accrued but unpaid interest and all other sums owing under the Agreement, on the Termination Date unless accelerated sooner pursuant to Section 7. 2.22 Letter of Credit Subfacility. (a) Issuance. Subject to the terms and conditions hereof and of the LOC Documents, if any, and any other terms and conditions which the Issuing Lenders may reasonably require, during the Commitment Period the Issuing Lenders shall issue, and the Banks shall participate in, Letters of Credit for the account of the Company from time to time upon request in a form acceptable to the applicable Issuing Lender; provided, however, that (i) the aggregate amount of LOC Obligations shall not at any time exceed   38 -------------------------------------------------------------------------------- $250,000,000 (the “LOC Committed Amount”), (ii) the aggregate amount of LOC Obligations in respect of Letters of Credit issued by any Issuing Lender shall not exceed the LOC Commitment of such Issuing Lender, (iii) the Dollar Amount (determined as of the most recent Revaluation Date) of outstanding Revolving Credit Loans plus outstanding Swing Line Loans plus outstanding Bid Loans plus outstanding LOC Obligations shall not exceed the aggregate amount of the Commitments at such time, (iv) Letters of Credit shall be issued for lawful corporate purposes and may be issued as standby letters of credit and (v) all Letters of Credit shall be denominated in Dollars or Foreign Currency. Except as otherwise expressly agreed upon by all the Banks, no Letter of Credit shall have an original expiry date more than twelve (12) months from the date of issuance; provided, however, subject to the other terms and conditions to the issuance of Letters of Credit hereunder, the expiry dates of Letters of Credit may be extended annually or periodically from time to time on the request of the Company or by operation of the terms of the applicable Letter of Credit to a date not more than twelve (12) months from the date of extension; provided, further, that no Letter of Credit, as originally issued or as extended, shall have an expiry date extending beyond the date that is thirty (30) days prior to the Termination Date. Each Letter of Credit shall comply with the related LOC Documents. The issuance and expiry date of each Letter of Credit shall be a Business Day. Any Letters of Credit issued hereunder shall be in a minimum original face amount of $50,000. (b) Notice and Reports. The request for the issuance of a Letter of Credit shall be submitted to the applicable Issuing Lender at least five (5) Business Days prior to the requested date of issuance. Each Issuing Lender will promptly, upon the issuance, amendment or expiration of any Letter of Credit, or upon request, provide to the Administrative Agent for dissemination to the Banks a detailed report specifying the Letters of Credit which are then issued and outstanding and any activity with respect thereto which may have occurred since the date of any prior report, and including therein, among other things, the account party, the beneficiary, the face amount, expiry date as well as any payments or expirations which may have occurred. Each Issuing Lender will further provide to the Administrative Agent promptly upon request copies of the Letters of Credit. Each Issuing Lender will provide to the Administrative Agent promptly upon request a summary report of the nature and extent of LOC Obligations then outstanding. (c) Participations. Each Bank, upon issuance of a Letter of Credit, shall be deemed to have purchased without recourse a risk participation from the applicable Issuing Lender in such Letter of Credit and the obligations arising thereunder and any collateral relating thereto, in each case in an amount equal to its Commitment Percentage of the obligations under such Letter of Credit and shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety, and be obligated to pay to the applicable Issuing Lender therefor and discharge when due, its Commitment Percentage of the obligations arising under such Letter of Credit. Without limiting the scope and nature of each Bank’s participation in any Letter of Credit, to the extent that an Issuing Lender has not been reimbursed as required hereunder or under any LOC Document, each such Bank shall pay to such Issuing Lender its Commitment Percentage of such unreimbursed drawing in same day funds on the day of notification by such Issuing Lender of an unreimbursed drawing pursuant to and in accordance with the provisions of   39 -------------------------------------------------------------------------------- subsection (d) hereof if such notice is received at or before 2:00 P.M. (New York City time), otherwise such payment shall be made at or before 12:00 Noon (New York City time) on the Business Day next succeeding the day such notice is received. The obligation of each Bank to so reimburse the Issuing Lenders shall be absolute and unconditional and shall not be affected by the occurrence of a Default, an Event of Default or any other occurrence or event. Any such reimbursement shall not relieve or otherwise impair the obligation of the Company to reimburse the Issuing Lenders under any Letter of Credit, together with interest as hereinafter provided. (d) Reimbursement. In the event of any drawing under any Letter of Credit, the applicable Issuing Lender will promptly notify the Company and the Administrative Agent. The Company shall reimburse the applicable Issuing Lender on the day of drawing under any Letter of Credit (with the proceeds of a Revolving Credit Loan obtained hereunder or otherwise) in same day funds as provided herein or in the LOC Documents. If the Company shall fail to reimburse such Issuing Lender as provided herein, the unreimbursed Dollar Amount of such drawing shall bear interest at a per annum rate equal to the ABR plus two percent (2%) for so long as such amount shall be unreimbursed. Unless the Company shall immediately notify the applicable Issuing Lender and the Administrative Agent of its intent to otherwise reimburse such Issuing Lender, the Company shall be deemed to have requested a LOC Mandatory Borrowing in the amount of the drawing as provided in subsection (f) hereof, the proceeds of which will be used to satisfy the reimbursement obligations. Each Issuing Lender will promptly notify the other Banks of the amount of any unreimbursed drawing and each Bank shall promptly pay to the Administrative Agent for the account of the applicable Issuing Lender in Dollars and in immediately available funds, the amount of such Bank’s Commitment Percentage of such unreimbursed drawing. Such payment shall be made on the day such notice is received by such Bank from such Issuing Lender if such notice is received at or before 2:00 P.M. (New York City time), otherwise such payment shall be made at or before 12:00 Noon (New York City time) on the Business Day next succeeding the day such notice is received. If such Bank does not pay such amount to the applicable Issuing Lender in full upon such request, such Bank shall, on demand, pay to the Administrative Agent for the account of the applicable Issuing Lender interest on the unpaid amount during the period from the date of such drawing until such Bank pays such amount to such Issuing Lender in full at a rate per annum equal to, if paid within two (2) Business Days of the date of drawing, the Federal Funds Effective Rate and thereafter at a rate equal to the ABR. Each Bank’s obligation to make such payment to the Issuing Lenders, and the right of each Issuing Lender to receive the same, shall be absolute and unconditional, shall not be affected by any circumstance whatsoever and without regard to the termination of this Agreement or the Commitments hereunder, the existence of a Default or Event of Default or the acceleration of the Obligations hereunder and shall be made without any offset, abatement, withholding or reduction whatsoever. (e) Repayment Obligation Absolute. The Company’s reimbursement obligations hereunder relating to any Letter of Credit shall be absolute, unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including, without limitation, the following circumstances (it   40 -------------------------------------------------------------------------------- being understood that any such payment by the Company is without prejudice to, and does not constitute a waiver of, any rights the Company might have or might acquire as a result of the payment by any Issuing Lender or any Bank of any draft or the reimbursement by the Company thereof): (i) any lack of validity or enforceability of this Agreement, any Note, any Letter of Credit or any other agreement or instrument relating thereto (all of the foregoing being, collectively, the “L/C Related Documents”); (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Company in respect of any L/C Related Document or any other amendment or waiver of or any consent to departure from all or any of the L/C Related Documents; (iii) the existence of any claim, set-off, defense or other right that the Company may have at any time against any beneficiary or any transferee of a Letter of Credit (or any Persons for which any such beneficiary or any such transferee may be acting), any Issuing Lender, the Administrative Agent, any Bank or any other Person, whether in connection with the transactions contemplated by the L/C Related Documents or any unrelated transaction; (iv) any statement or any other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (v) payment by any Issuing Lender under a Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of such Letter of Credit; (vi) any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any guarantee, for all or any of the Obligations of the Company in respect of the L/C Related Documents; or (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including, without limitation, any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company or a guarantor. (f) Repayment with Revolving Credit Loans. On any day on which the Company shall have requested, or been deemed to have requested, a Revolving Credit Loan to reimburse a drawing under a Letter of Credit, the Administrative Agent shall give notice to the Banks that a Revolving Credit Loan has been requested or deemed requested in connection with a drawing under a Letter of Credit, in which case a Revolving Credit Loan borrowing comprised entirely of ABR Loans (each such borrowing, a “LOC Mandatory Borrowing”) shall be immediately made (without giving effect to any termination of the Commitments pursuant to Section 7) pro rata based on each Bank’s respective Commitment Percentage (determined before giving effect to any termination of the Commitments pursuant to Section 7). The proceeds of such LOC   41 -------------------------------------------------------------------------------- Mandatory Borrowing shall be paid directly to the applicable Issuing Lender for application to the respective LOC Obligations. Each Bank hereby irrevocably agrees to make such Revolving Credit Loans immediately upon any such request or deemed request on account of each LOC Mandatory Borrowing in the amount and in the manner specified in the preceding sentence and on the same such date notwithstanding (i) the amount of LOC Mandatory Borrowing may not comply with the minimum amount for borrowings of Revolving Credit Loans otherwise required hereunder, (ii) whether any conditions specified in Section 4.2 are then satisfied, (iii) whether a Default or an Event of Default then exists, (iv) failure for any such request or deemed request for Revolving Credit Loan to be made by the time otherwise required in Section 2.3, (v) the date of such LOC Mandatory Borrowing, or (vi) any reduction in the aggregate amount of the Commitments after any such Letter of Credit may have been drawn upon; provided, however, that in the event any such LOC Mandatory Borrowing should be less than the minimum amount for borrowings of Revolving Credit Loans otherwise provided in Section 2.3, the Company shall pay to the Administrative Agent for its own account an administrative fee of $500. In the event that any LOC Mandatory Borrowing cannot for any reason be made on the date otherwise required above (including, without limitation, as a result of the commencement of a proceeding under the Bankruptcy Code), then each such Bank hereby agrees that it shall forthwith fund (as of the date the LOC Mandatory Borrowing would otherwise have occurred, but adjusted for any payments received from the Company on or after such date and prior to such purchase) its Participation Interests in the outstanding LOC Obligations; provided, further, that in the event any Bank shall fail to fund its Participation Interest on the day the LOC Mandatory Borrowing would otherwise have occurred, then the amount of such Bank’s unfunded Participation Interest therein shall bear interest payable by such Bank to the applicable Issuing Lender upon demand, at the rate equal to, if paid within two (2) Business Days of such date, the Federal Funds Effective Rate, and thereafter at a rate equal to the ABR. (g) Modification, Extension. The issuance of any supplement, modification, amendment, renewal, or extension to any Letter of Credit shall, for purposes hereof, be treated in all respects the same as the issuance of a new Letter of Credit hereunder. (h) Letter of Credit Governing Law. Unless otherwise expressly agreed by the applicable Issuing Lender and the Company when a Letter of Credit is issued, the rules of “International Standby Practices 1998,” as most recently published by the Institute of International Banking Law & Practice at the time of issuance, shall apply to each standby Letter of Credit. 2.23 Indemnification; Nature of Issuing Lender’s Duties. (a) In addition to its other obligations under Section 2.22, the Company hereby agrees to protect, indemnify, pay and save each Issuing Lender harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys’ fees) that any Issuing Lender may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of any Letter of Credit on behalf such Company or (ii) the failure of an Issuing Lender to honor a drawing under a Letter of Credit issued on behalf of the Company as a result of any act or omission,   42 -------------------------------------------------------------------------------- whether rightful or wrongful, of any present or future de jure or de facto government or Governmental Authority (all such acts or omissions, herein called “Government Acts”). (b) As between the Company and the Issuing Lenders, the Company shall assume all risks of the acts, omissions or misuse of any Letter of Credit by the beneficiary thereof. No Issuing Lender shall be responsible: (i) for the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of any Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, that may prove to be invalid or ineffective for any reason; (iii) for failure of the beneficiary of a Letter of Credit to comply fully with conditions required in order to draw upon a Letter of Credit; (iv) for errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) for errors in interpretation of technical terms; (vi) for any loss or delay in the transmission or otherwise of any document required in order to make a drawing under a Letter of Credit or of the proceeds thereof; and (vii) for any consequences arising from causes beyond the control of the applicable Issuing Lender, including, without limitation, any Government Acts. None of the above shall affect, impair, or prevent the vesting of the Issuing Lenders’ rights or powers hereunder. (c) In furtherance and extension and not in limitation of the specific provisions hereinabove set forth, any action taken or omitted by an Issuing Lender, under or in connection with any Letter of Credit or the related certificates, if taken or omitted in the absence of gross negligence or willful misconduct, shall not put such Issuing Lender under any resulting liability to the Company. It is the intention of the parties that this Agreement shall be construed and applied to protect and indemnify the Issuing Lenders against any and all risks involved in the issuance of the Letters of Credit, all of which risks are hereby assumed by the Company, including, without limitation, any and all risks of the acts or omissions, whether rightful or wrongful, of any Government Authority. No Issuing Lender shall, in any way, be liable for any failure by an Issuing Lender or anyone else to pay any drawing under any Letter of Credit as a result of any Government Acts or any other cause beyond the control of such Issuing Lender. Notwithstanding anything to the contrary herein, the Company shall have a claim against any Issuing Lender and such Issuing Lender shall be liable to the Company, to the extent of any direct, but not consequential, damages suffered by the Company that the Company proves were caused by (i) such Issuing Lender’s willful misconduct or gross negligence in determining whether documents presented under any Letter of Credit comply with the terms of the Letter of Credit or (ii) such Issuing Lender’s willful failure to make lawful payment under a Letter of Credit after the presentation to it of a draft and certificates strictly complying with the terms and conditions of the Letter of Credit. In furtherance and not in limitation of the foregoing, such Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary.   43 -------------------------------------------------------------------------------- (d) Except as provided in subsection (e) below, nothing in this Section 2.23 is intended to limit the Reimbursement Obligation of the Company contained in Section 2.22(d) hereof. The obligations of the Company under this Section 2.23 shall survive the termination of this Agreement. No act or omissions of any current or prior beneficiary of a Letter of Credit shall in any way affect or impair the rights of the Issuing Lenders to enforce any right, power or benefit under this Agreement. (e) Notwithstanding anything to the contrary contained in this Section 2.20 the Company shall have no obligation to indemnify an Issuing Lender in respect of any liability incurred by such Issuing Lenders arising out of the gross negligence or willful misconduct of such Issuing Lender (including action not taken by such Issuing Lender), as determined by a court of competent jurisdiction. 2.24 Defaulting Banks. (a) In the event that, at any one time (i) any Bank shall be a Defaulting Bank, (ii) such Defaulting Bank shall owe a Defaulted Loan to the Company and (iii) the Company shall be required to make any payment hereunder to or for the account of such Defaulting Bank, then the Company may, so long as no Event of Default shall occur or be continuing at such time and to the fullest extent permitted by applicable law, set off and otherwise apply the obligations of the Company to make such payment to or for the account of such Defaulting Bank against the obligation of such Defaulting Bank to make such Defaulted Loan. In the event that, on any date, the Company shall so set off and otherwise apply its obligation to make any such payment against the obligation of such Defaulting Bank to make any such Defaulted Loan on or prior to such date, the amount so set off and otherwise applied by the Company shall constitute for all purposes of this Agreement a Loan by such Defaulting Bank made on the date of such setoff under the provision hereof pursuant to which such Defaulted Loan was originally required to have been made. Such Loan shall be considered, for all purposes of this Agreement, to comprise part of the Loan in connection with which such Defaulted Loan was originally required to have been made. The Company shall notify the Administrative Agent at any time the Company exercises its right of set-off pursuant to this subsection (a) and shall set forth in such notice (A) the name of the Defaulting Bank and the Defaulted Loan required to be made by such Defaulting Bank and (B) the amount set off and otherwise applied in respect of such Defaulted Loan pursuant to this subsection (a). Any portion of such payment otherwise required to be made by the Company to or for the account of such Defaulting Bank which is paid by the Company, after giving effect to the amount set off and otherwise applied by the Company pursuant to this subsection (a), shall be applied by the Administrative Agent as specified in subsection (b) of this Section 2.24. (b) In the event that, at any one time, (i) any Bank shall be a Defaulting Bank, (ii) such Defaulting Bank shall owe a Defaulted Amount to the Administrative Agent or any of the other Banks and (iii) the Company shall make any payment hereunder to the Administrative Agent for the account of such Defaulting Bank, then the Administrative Agent may, on its behalf or on behalf of such other Bank and to the fullest extent permitted by applicable law, apply at such time the amount so paid by the Company to or for the account of such Defaulting Bank to the payment of each such Defaulted Amount   44 -------------------------------------------------------------------------------- to the extent required to pay such Defaulted Amount. In the event that the Administrative Agent shall so apply any such amount to the payment of any such Defaulted Amount on any date, the amount so applied by the Administrative Agent shall constitute for all purposes of this Agreement payment, to such extent, of such Defaulted Amount on such date. Any such amount so applied by the Administrative Agent shall be retained by the Administrative Agent or distributed by the Administrative Agent to such other Banks in the following order of priority: first, to the Administrative Agent for any Defaulted Amounts then owing to it, in its capacity as such, ratably in accordance with such Defaulted Amounts then owing to the Administrative Agent; second, to the Issuing Banks and the Swing Line Bank for any Defaulted Amounts then owing to them, in their capacities as such, ratably in accordance with such respective Defaulted Amounts then owing to the Issuing Banks and the Swing Line Bank; and third, to any Bank for any Defaulted Amounts then owing to such Bank, ratably in accordance with such respective Defaulted Amounts then owing to such Bank. (c) The rights and remedies against a Defaulting Bank under this Section 2.24 are in addition to other rights and remedies that the Company may have against such Defaulting Bank with respect to any Defaulted Loan and that the Administrative Agent or any Bank may have against such Defaulting Bank with respect to any Defaulted Amount. SECTION 3 REPRESENTATIONS AND WARRANTIES To induce the Banks to enter into this Agreement and to make the Loans the Company hereby represents and warrants to the Administrative Agent and each Bank as of the Closing Date and as of the date of each Extension of Credit that: 3.1 Financial Condition. The combined financial statements of the Company and its Subsidiaries delivered to the Administrative Agent in connection with this Agreement, including the audited financial statement for the fiscal year ended December 31, 2005 and the unaudited pro forma financial statements included in the Western Union Form 10 (the “Spin-Off Financial Statements”), copies of which have heretofore been furnished to each Bank, present fairly the combined financial condition of the Company and its Subsidiaries as of the dates and for the periods indicated, subject to the qualifications with respect to the pro forma financial statements set forth therein. Neither the Company nor any of its Subsidiaries had, at the date of the most recent balance sheet referred to above, any guarantee obligation, contingent liability or liability for taxes, or any long-term lease or unusual forward or long-term commitment, including, without limitation, any interest rate or foreign currency swap or exchange transaction, which is not reflected in the foregoing statements or in the notes thereto and which, to the best of the Company’s knowledge, would have a Material Adverse Effect.   45 -------------------------------------------------------------------------------- 3.2 No Change. Except as disclosed in the Western Union Form 10 (or in any Form 10-Q, 8-K or other public filing of the Company with the Securities Exchange Commission filed after date thereof but prior to the Closing Date), during the period from date of the Spin-Off Financial Statements to and including the Closing Date, no change, or development or event involving a prospective change, has occurred which has had or could reasonably be expected to have a Material Adverse Effect; provided, however that the foregoing representation is made solely as of the Closing Date and on the date of any commitment increase pursuant to Section 2.20. 3.3 Corporate Existence; Compliance with Law. Each of the Company and its Significant Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, except to the extent that, in the aggregate, the failure of any such Subsidiaries to be duly organized, validly existing or in good standing would not have a Material Adverse Effect, (b) has the corporate (or other) power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, except to the extent that, in the aggregate, the failure of any such Subsidiaries to have any such power, authority or legal right would not have a Material Adverse Effect, (c) is duly qualified and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification except to the extent that, in the aggregate, the failure of the Company and its Subsidiaries to so qualify or be in good standing would not have a Material Adverse Effect, and (d) is in compliance with all Requirements of Law except to the extent that, in the aggregate, the failure of the Company and its Subsidiaries to comply therewith would not have a Material Adverse Effect. 3.4 Corporate Power; Authorization; Enforceable Obligations. The Company has the corporate power and authority, and the legal right, to make, deliver and perform this Agreement and the Notes and to borrow hereunder and has taken all necessary corporate action to authorize its Obligations on the terms and conditions of this Agreement and the Notes and to authorize the execution, delivery and performance of this Agreement and the Notes. No consent or authorization of, filing with or other act by or in respect of, any Governmental Authority or any other Person (except as have been obtained or made) is required in connection with the borrowings hereunder or with the execution, delivery, performance, validity or enforceability of this Agreement or the Notes. This Agreement has been, and each Note will be, duly executed and delivered on behalf of the Company. This Agreement constitutes, and each Note when executed and delivered will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 3.5 No Legal Bar. The execution, delivery and performance of this Agreement and the Notes, the Obligations hereunder and the use of the proceeds thereof will not violate any Requirement of Law or Contractual Obligation of the Company or of any of its Subsidiaries and will not result in, or require, the creation or imposition of any Lien on any of its or their respective properties or revenues pursuant to any such Requirement of Law or Contractual Obligation.   46 -------------------------------------------------------------------------------- 3.6 No Material Litigation. No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Company, threatened by or against the Company or any of its Subsidiaries or against any of its or their respective properties or revenues which (a) except as listed on Schedule 3.6 or disclosed in the Western Union Form 10 (or in any subsequent filing of the Company with the Securities and Exchange Commission made prior to the Closing Date), on the Closing Date and on the date of any commitment increase pursuant to Section 2.20, would have a Material Adverse Effect or (b) would have a material adverse effect on the validity or enforceability of this Agreement or any of the Notes or the rights or remedies of the Administrative Agent or the Banks hereunder or thereunder, provided, however that the representation in clause (a) of this Section 3.6 is made solely as of the Closing Date and on the date of any commitment increase pursuant to Section 2.20. 3.7 No Default. No Default or Event of Default has occurred and is continuing. 3.8 Taxes. Each of the Company and its Significant Subsidiaries has filed or caused to be filed all tax returns which, to the knowledge of the Company, are required to be filed and has paid all material taxes shown to be due and payable on said returns or on any assessments made against it or any of its property and all material other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority (other than any the amount or validity of which are currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the books of the Company or its Subsidiaries, as the case may be); on the Closing Date and on the date of any commitment increase pursuant to Section 2.20, no tax Lien has been filed, and, to the knowledge of the Company, no claim is being asserted, with respect to any such tax, fee or other charge. 3.9 Federal Regulations. No part of the proceeds of any Loans or Letters of Credit will be used for “purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U or Regulation X of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect if such use would violate, or cause the Loans or the Commitments to be in violation of, the provisions of the Regulations of such Board of Governors. If requested by any Bank or the Administrative Agent at any time (and in any case prior to or concurrently with the borrowing of any Loan the proceeds of which will be used to purchase or carry margin stock), the Company will furnish to the Administrative Agent and each Bank a statement to the foregoing effect in conformity with the requirements of FR Form U-1 referred to in said Regulation U. 3.10 ERISA. Except to the extent that all of the following, in the aggregate, would not have a Material Adverse Effect: (i) no Reportable Event has occurred during the five-year period prior to the date on which this representation is made or deemed made with respect to any Plan, and each Plan has complied in all material respects with the applicable provisions of ERISA and the Code; (ii) the present value of all accrued benefits under each Single Employer Plan maintained by the Company or any Commonly Controlled Entity (based on those assumptions used to fund the Plans) did not, as of the last annual valuation date prior to the date on which this representation is made or deemed made, exceed the value of the assets of such Plan allocable to such accrued benefits based upon the actuarial assumptions used by such Plan; (iii) neither the Company nor any Commonly Controlled Entity has or has had any liability or obligation in   47 -------------------------------------------------------------------------------- respect of any Multiemployer Plan; and (iv) the present value (determined using actuarial and other assumptions which are reasonable in respect of the benefits provided and the employees participating) of the liability of the Company and each Commonly Controlled Entity for post retirement benefits, if any, to be provided to their current and former employees under Plans which are welfare benefit plans (as defined in Section 3(1) of ERISA) does not, in the aggregate, exceed the assets under all such Plans or other funding arrangements allocable to such benefits, if any; (v) no application for a minimum funding waiver with respect to a Plan has been made; and (vi) the PBGC has not instituted proceedings to terminate a Plan pursuant to Section 4042 of ERISA, nor has any event of condition descried in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee to administer, such Plan occurred. 3.11 Investment Company Act. Neither the Company nor any of its Subsidiaries is subject to registration as an “investment company” or is “controlled” by such a company, within the meaning of the Investment Company Act of 1940, as amended. 3.12 Purpose of Loans. The proceeds of the Loans and Letters of Credit shall be used by the Company to refinance existing Indebtedness, to provide financing for the working capital needs of the Company, to provide back-up and liquidity for the short term Indebtedness of the Company and to provide funds for general corporate purposes, including, without limitation, acquisitions and cash payments to be made to First Data Corporation in connection with the spin-off of the Company from First Data Corporation as set forth in the Western Union Form 10; provided that, the Company shall not apply proceeds of the Loans and Letters of Credit, directly or indirectly, in repayment of the Related Financings. 3.13 Disclosure. On the Closing Date and on the date of any commitment increase pursuant to Section 2.20, neither this Agreement, the Notes, nor the Information Materials, taken as a whole with the Western Union Form 10 (or in any subsequent filing of the Company with the Securities and Exchange Commission made prior to the Closing Date) contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances in which they were made, not materially misleading. 3.14 Ranking. The Loans shall remain at least pari passu with all other senior unsecured obligations of the Company. 3.15 Compliance with OFAC, FCPA. Company is in material compliance with all applicable United States economic and trade sanctions, including those administered by the Office of Foreign Asset Control within the United States Department of the Treasury, and the United States Foreign Corrupt Practices Act. 3.16 Closing Date Representations and Warranties. The representations and warranties of the Company made in this Agreement on or as of the Closing Date shall be deemed to be made immediately after giving effect to the spin-off of the Company described in the Western Union Form 10.   48 -------------------------------------------------------------------------------- SECTION 4 CONDITIONS PRECEDENT 4.1 Conditions to Effectiveness. The agreements of each Bank contained herein are subject to the satisfaction of the following conditions precedent: (a) Loan Documents. The Administrative Agent shall have received (i) this Agreement, executed and delivered by a duly authorized officer of the Company, and (ii) for the account of each Bank, a Note conforming to the requirements hereof and executed by a duly authorized officer of the Company. (b) Corporate Proceedings of the Company. The Administrative Agent shall have received a copy of the resolutions, in form and substance reasonably satisfactory to the Administrative Agent, of the Board of Directors of the Company authorizing (i) the execution, delivery and performance of this Agreement and the Notes and (ii) the borrowings contemplated hereunder, certified by the Secretary or an Assistant Secretary of the Company as of the Closing Date, which certificate shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded and are in full force and effect and shall be in form and substance satisfactory to the Administrative Agent. (c) Corporate Documents. The Administrative Agent shall have received true and complete copies of the certificate of incorporation and by-laws of the Company, certified as of the Closing Date as complete and correct copies thereof by the Secretary or an Assistant Secretary of the Company. (d) No Violation. The consummation of the transactions contemplated hereby shall not contravene, violate or conflict with, nor involve the Administrative Agent or any Bank in any violation of, any Requirement of Law. (e) Fees. The Administrative Agent shall have received the fees to be received on the Closing Date referred to in subsection 2.4. (f) Legal Opinion. The Administrative Agent shall have received the executed legal opinion of counsel of the Company, substantially in the form of Exhibit C, and the Company hereby instructs its counsel to execute and deliver such opinion to the Administrative Agent. Such legal opinion shall cover such other matters incident to the transactions contemplated by this Agreement as the Administrative Agent may reasonably require. (g) Litigation. Except as listed on Schedule 3.6 hereto, there shall exist no pending or threatened litigation, bankruptcy or insolvency, injunction, order or claim which could have a material adverse effect on this Agreement or the Company and its Subsidiaries taken as a whole. (h) Consents and Approvals. All consents and approvals of the boards of directors, shareholders and other applicable third parties necessary in connection with this Agreement shall have been obtained.   49 -------------------------------------------------------------------------------- (i) Material Adverse Change. No material adverse change shall have occurred since the date of the Spin-Off Financial Statements in the business, assets, liabilities, condition (financial or otherwise) or prospects of the Company and its Subsidiaries taken as a whole. (j) Financial Statements. The Administrative Agent shall have received copies of the financial statements referred to in Section 3.1 hereof, each in form and substance reasonably satisfactory to it. (k) Patriot Act Certificate. The Administrative Agent shall have received a certificate reasonably satisfactory thereto, for benefit of itself and the Banks, provided by the Company that sets forth information required by the Patriot Act including, without limitation, the identity of the Company, the name and address of the Company and other information that will allow the Administrative Agent or any Bank, as applicable, to identify such Company in accordance with the Patriot Act (as defined in Section 9.9 hereof). (l) Consummation of Spin-Off. All conditions precedent to the transactions described in the Western Union Form 10 relative to the spin-off of the Company from First Data Corporation (other than any condition of payment with the proceeds of Loans made hereunder) shall have been satisfied. 4.2 Conditions to Each Loan. The agreement of each Bank and each Swing Line Bank to make any Loan (other than the conversion or continuation of any Loan pursuant to subsection 2.7) requested to be made by it on any date (including, without limitation, its initial Loan) and the agreement of the Issuing Lenders to issue Letters of Credit is subject to the satisfaction of the following conditions precedent: (a) Representations and Warranties. Each of the representations and warranties made by the Company in this Agreement shall be true and correct in all material respects on and as of such date as if made on and as of such date, both before and after giving effect to the making of such Loans or the issuance of such Letter of Credit (except any representation or warranty relating to or made expressly as of a specific date shall be true and correct in all material respects solely with respect to and as of such specific date). (b) No Default. No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the Loans requested to be made on such date. (c) Borrowing Certificate. In the case of Revolving Credit Loans, the Administrative Agent shall have received, on or prior to the time required for its receipt pursuant to subsection 2.3, a Borrowing Certificate with respect to the Loans requested to be made on such date. (d) Bid Loan Confirmation. With respect to any Bid Loan, a Bid Loan Confirmation shall have been delivered in accordance with subsection 2.18(b)(iv).   50 -------------------------------------------------------------------------------- (e) Bid Note. With respect to any Bid Loan, the Company shall have delivered a Bid Note to the Bank providing such Bid Loan. Each borrowing or request for the issuance of a Letter of Credit by the Company hereunder shall constitute a representation and warranty by the Company as of the date of such Loan or such issuance that the conditions contained in subsection 4.2(a) and (b) have been satisfied. SECTION 5 AFFIRMATIVE COVENANTS The Company hereby agrees that, so long as the Commitments remain in effect, any Note or LOC Obligation remains outstanding and unpaid or any other amount is owing to any Bank or the Administrative Agent hereunder, the Company shall: 5.1 Financial Statements. Furnish to the Administrative Agent (which shall promptly make available to the Banks): (a) as soon as available, but in any event no later than the earlier of (i) the date that is five days after the Company is required by the SEC to deliver its Form 10-K for any fiscal year of the Company and (ii) 95 days after the end of each fiscal year of the Company, a copy of the consolidated balance sheet of the Company and its consolidated Subsidiaries as at the end of such year and the related consolidated statements of income and retained earnings and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on without a “going concern” or like qualification or exception, or any qualification arising out of the scope of the audit, provided that to the extent different components of such consolidated financial statements are separately audited by different independent public accounting firms, the audit report of any such accounting firm may contain a qualification or exception as to scope of such consolidated financial statements by Ernst & Young LLP or other independent certified public accountants of nationally recognized standing not unacceptable to the Majority Banks (it being understood that any of the following accounting firms: Deloitte & Touche, Ernst & Young LLP, KPMG and PricewaterhouseCoopers shall not be unacceptable to the Banks; and (b) as soon as available, but in any event not later than the earlier of (i) the date that is five days after the Company is required by the SEC to deliver its Form 10-Q for each of the first three quarterly periods of each fiscal year of the Company and (ii) 50 days after the end of each of the first three quarterly periods of each fiscal year of the Company, the unaudited consolidated balance sheet of the Company and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and retained earnings and of cash flows of the Company and its consolidated Subsidiaries for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments);   51 -------------------------------------------------------------------------------- all such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein with a reasonable estimate of the effect on such financial statements on account of such changes in application). 5.2 Certificates; Other Information. Furnish to the Administrative Agent (which shall promptly make available to the Banks): (a) concurrently with the delivery of the financial statements referred to in subsections 5.1(a) and 5.1(b), a certificate of a Responsible Officer stating that such Officer has obtained no knowledge of any Default or Event of Default that has occurred and is continuing except as specified in such certificate; (b) promptly upon receipt thereof, copies of the executive summary portion of any final auditor’s letter or auditor’s report submitted to the Company’s board of directors or any committee thereof relating to internal financial controls of the Company or any Subsidiary; and (c) promptly, such additional financial and other information as any Bank through the Administrative Agent may from time to time reasonably request. 5.3 Conduct of Business and Maintenance of Existence. Continue to engage in business of substantially the same general type as now conducted by it or any business reasonably ancillary, complementary or related thereto, taken as a whole, and preserve, renew and keep in full force and effect its corporate existence and take such reasonable action to maintain all rights, privileges and franchises necessary or desirable in the normal conduct of its business except as otherwise permitted pursuant to subsection 6.4; comply with all Contractual Obligations and Requirements of Law except to the extent that failure to comply therewith would not, in the aggregate, have a Material Adverse Effect. 5.4 Inspection of Property; Books, Records and Discussions. (a) Keep proper books of records and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law are to be made of all dealings and transactions in relation to its business and activities. (b) Permit representatives of the Administrative Agent and the Banks (other than Excluded Individuals of the Administrative Agent and the Banks) which are not Competitors to visit and inspect at their own expense (unless a Default or Event of Default has occurred and is continuing, in which case at the Company’s expense) any of its properties and examine and make abstracts from any of its books and records at any reasonable time upon reasonable prior notice to the Company and as often as may reasonably be desired and to discuss the business, operations, properties and financial and other condition of the Company and its Subsidiaries with officers and employees of the Company and its Subsidiaries and with its independent certified public accountants, provided that (i) representatives of the Company shall have the opportunity to be present at any meeting with its independent certified public accountants and (ii) the Company   52 -------------------------------------------------------------------------------- and its Subsidiaries shall have no obligation to provide access to information which is the subject of a confidentiality agreement between the Company or any of its Subsidiaries, on the one hand, and a customer of the Company or of any of its Subsidiaries, on the other hand. The Administrative Agent shall endeavor to coordinate such visits by the Banks in order to minimize inconvenience to the Company, and so long as no Event of Default shall be continuing, such visits shall occur not more frequently than once per fiscal quarter. 5.5 Notices. Promptly give notice to the Administrative Agent (and the Administrative Agent shall promptly notify each Bank) of: (a) the occurrence of any Default or Event of Default; (b) the occurrence of a Change of Control; (c) any litigation, investigation or proceeding which would have a Material Adverse Effect; (d) the following events, as soon as possible and in any event within ten Business Days after the Company or any Commonly Controlled Entity knows or has reason to know thereof: (i) the occurrence or expected occurrence of any Reportable Event with respect to any Plan, the commencement of any obligation to contribute to any Multiemployer Plan by the Company or any Commonly Controlled Entity, or any withdrawal from, or the termination, Reorganization or Insolvency of any Multiemployer Plan; (ii) the institution of proceedings or the taking of any other action by the PBGC or the Company or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the terminating, Reorganization or Insolvency of, any Plan; (iii) the application for a minimum funding waiver with respect to a Plan has been made; (iv) all of the requirements for imposition of a lien under Section 302(f) of ERISA have been met with respect to any Plan; and (iv) the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA; and (e) the use of the proceeds of any Loans for “purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect. Each notice pursuant to this subsection shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Company proposes to take with respect thereto. 5.6 Covenant to Deliver Guaranty. Upon the date that is the earlier of (x) 364 days after the incurrence of Indebtedness under the Related Financings by any Subsidiary of the Company and (y) the date on which any of the Related Financings are refinanced by any Subsidiary of the Company, if the sum (the “Guarantee Triggering Amount”) of (i) the then outstanding aggregate principal amount of Indebtedness under the Related Financings, plus (ii) the then outstanding aggregate principal amount of all other Indebtedness of any Significant Subsidiary that is subject to limitation under Section 6.1, plus (iii) the aggregate amount of   53 -------------------------------------------------------------------------------- indebtedness secured by Liens permitted under Section 6.2(j), plus (iv) the discounted present value of all net rentals payable under leases covered by Section 6.3(a) (and not expressly excluded therefrom) exceeds the greater of $300,000,000 or 15% of Consolidated Net Worth, then at the Company’s expense, the Company shall: (a) cause each such Subsidiary that has outstanding Indebtedness under the Related Financings (each such Subsidiary, a “Subsidiary Guarantor”) to duly execute and deliver to the Administrative Agent a guaranty, in form and substance reasonably satisfactory to the Administrative Agent, guaranteeing the Obligations, and (b) within 30 days after such request, deliver to the Administrative Agent, upon the request of the Administrative Agent in its sole discretion, (i) a certificate attesting to the solvency of such Subsidiary, (ii) a copy of the resolutions of the board of directors of such Subsidiary authorizing the execution, delivery and performance of such guaranty and (iii) a signed copy of a favorable opinion, addressed to the Administrative Agent and the Banks, Issuing Lenders and the Swing Line Bank, of counsel for such Subsidiary (which may be in-house counsel) reasonably acceptable to the Administrative Agent as to (A) the matters contained in clause (a) above, (B) such guaranty being legal, valid and binding obligations of such Subsidiary thereto enforceable in accordance with their terms (subject to customary exceptions) and (C) such other matters as the Administrative Agent may reasonably request. Any guaranty provided pursuant to this Section 5.6 shall be automatically released upon (i) the sale or other disposition (including by way of consolidation or merger, other than a consolidation or merger into the Company) of any Subsidiary Guarantor or the sale or disposition of the assets as an entirety or substantially as an entirety of such Subsidiary Guarantor (other than to the Company) otherwise permitted by this Agreement, (ii) the Guarantee Triggering Amount being reduced to equal to or less than the greater of $300,000,000 or 15% of Consolidated Net Worth., or (iii) a consolidation or merger of such Subsidiary Guarantor with or into the Company. SECTION 6 NEGATIVE COVENANTS The Company hereby agrees that, so long as the Commitments remain in effect, any Note or LOC Obligation remains outstanding and unpaid or any other amount is owing to any Bank or the Administrative Agent hereunder, the Company shall not: 6.1 Limitation on Significant Subsidiary Indebtedness. Permit any of its Significant Subsidiaries, directly or indirectly, to create, incur, assume or suffer to exist any Indebtedness (which for purposes of this subsection 6.1 shall include, without duplication, Guarantee Obligations) unless immediately thereafter the aggregate amount of (x) all Indebtedness of Significant Subsidiaries (excluding (A) any Guarantee Obligations in respect of Indebtedness under this Agreement, (B) the Related Financings (and any Guarantee Obligations in respect thereof) and (C) Indebtedness owed to the Company or a Significant Subsidiary, including any renewal or replacement of any of the obligations under clauses (A), (B) or (C)), (y)   54 -------------------------------------------------------------------------------- the aggregate amount of indebtedness secured by Liens permitted under Section 6.2(j) and (z) the discounted present value of all net rentals payable under leases covered by subsection 6.3(a) (and not expressly excluded therefrom) would not exceed the greater of $300,000,000 or 15% of Consolidated Net Worth; provided, however, that, solely, for the purposes of this covenant, Indebtedness shall not include indebtedness incurred in connection with (a) overdraft or similar facilities related to settlement, clearing and related activities by a Significant Subsidiary in the ordinary course of business consistent with past practice, (b) Purchased Receivables Financings, (c) to the extent the same constitutes Indebtedness, obligations in respect of net capital adjustments and/or earn-out arrangements pursuant to a purchase or acquisition otherwise permitted under this Agreement, (d) obligations under performance bonds, surety bonds and letter of credit obligations to provide security for worker’s compensation claims or other statutory obligations and obligations in respect of bank overdrafts not more than two days overdue, in each case, incurred in the ordinary course of business, (e) indebtedness owing to insurance companies to finance insurance premiums incurred in the ordinary course of business and (f) Guarantee Obligations with respect to Indebtedness and other liabilities otherwise permitted under this Agreement; and provided, further, that any Indebtedness of a Person (i) existing at the time such Person becomes a Significant Subsidiary or is merged with or into the Company or a Significant Subsidiary or other entity or (ii) assumed by the Company or a Subsidiary in connection with the acquisition of all or a portion of the business of such Person, shall not be deemed to be Indebtedness created, incurred, assumed or guaranteed by a Significant Subsidiary or otherwise deemed to be Indebtedness of a Significant Subsidiary for the purposes of this covenant. 6.2 Limitation on Liens. Directly or indirectly, create, incur, assume or suffer to exist, or permit any of its Significant Subsidiaries to create, incur, assume or suffer to exist, any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except for: (a) any Lien on any property now owned or hereafter acquired or constructed by the Company or a Subsidiary, or on which property so owned, acquired or constructed is located, which Lien (i) in the case of any property so acquired, existed on such property at the time of acquisition thereby by the Company or such Subsidiary or (ii) secures or provides for the payment of any part of the purchase or construction price or cost of improvements of such property and was created prior to, contemporaneously with or within 360 days after, such purchase, construction or improvement (and any replacements or refinancings for such Liens); provided, that (i) if a firm commitment from a bank, insurance company or other lender or investor (not including the Company, a Subsidiary or an Affiliate of the Company) for the financing of the acquisition or construction of property is made prior to, contemporaneously with or within the 360-day period hereinabove referred to, the applicable Lien shall be deemed to be permitted by this paragraph (a) whether or not created or assumed within such period, and (ii) each such Lien is not spread to cover any additional property and the amount of Indebtedness secured thereby is not increased; (b) Liens for taxes not yet delinquent or which are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves with respect   55 -------------------------------------------------------------------------------- thereto are maintained on the books of the Company or its Subsidiaries, as the case may be, in conformity with GAAP; (c) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business; (d) Liens of landlords or of mortgagees of landlords arising by operation of law; (e) pledges, deposits or other Liens in connection with workers’ compensation, unemployment insurance, other social security benefits or other insurance related obligations (including, without limitation, pledges or deposits securing liability to insurance carriers under insurance or self-insurance arrangements) and Liens on the proceeds of insurance policies created in connection with any of the foregoing; (f) Liens arising by reason of any judgment, decree or order of any court or other Governmental Authority, if appropriate legal proceedings which have been duly initiated for the review of such judgment, decree or order, are being diligently prosecuted and have not been finally terminated or the period within which such proceedings may be initiated shall not have expired; (g) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds, judgment and like bonds, replevin and similar bonds and other obligations of a like nature incurred in the ordinary course of business; (h) zoning restrictions, easements, rights-of-way, restrictions on the use of property, other similar encumbrances incurred in the ordinary course of business and minor irregularities of title, which do not materially interfere with the ordinary conduct of the business of the Company and its Subsidiaries taken as a whole; (i) Liens on Purchased Receivables and related assets granted in connection with one or more Purchased Receivables Financings; and (j) any Lien not otherwise permitted under this subsection 6.2, provided that the aggregate amount of indebtedness secured by all such Liens, together with (x) the aggregate principal amount of Subsidiary Indebtedness that is subject to limitation under Section 6.1 and (y) the aggregate sale price of property involved in sale and leaseback transactions not otherwise permitted except under subsection 6.3(a), does not exceed the greater of $300,000,000 or 15% of Consolidated Net Worth.   56 -------------------------------------------------------------------------------- 6.3 Limitation on Sales and Leasebacks. Sell or transfer, or permit any Subsidiary to sell or transfer, (except to the Company or one or more of its wholly-owned Subsidiaries, or both) any Principal Facility owned by it on the date of this Agreement with the intention of taking back a lease of such property, other than a lease relating to computer hardware with lease terms of four years or less, unless either: (a) the sum of the aggregate sale price of property involved in sale and leaseback transactions not otherwise permitted under this subsection plus (x) the aggregate principal amount of Subsidiary Indebtedness subject to limitation under Section 6.1 and (y) the aggregate amount of indebtedness secured by all mortgages, pledges, liens and encumbrances not otherwise permitted except under subsection 6.2(j) does not exceed the greater of $300,000,000 or 15% of Consolidated Net Worth; or (b) the Company within 120 days after the sale or transfer shall have been made by the Company or by any such Subsidiary applies an amount equal to the greater of (i) the net proceeds of the sale of the Principal Facility sold and leased back pursuant to such arrangement or (ii) the fair market value of the Principal Facility sold and leased back at the time of entering into such arrangement (which may be conclusively determined by the Board of Directors of the Company) to the retirement of Funded Indebtedness of the Company; provided, that the amount required to be applied to the retirement of Funded Indebtedness of the Company pursuant to this clause (b) shall be reduced by the principal amount of any Funded Indebtedness of the Company voluntarily retired by the Company within 120 days after such sale, whether or not any such retirement of Funded Indebtedness shall be specified as being made pursuant to this clause (b). Notwithstanding the foregoing, no retirement referred to in this clause (b) may be effected by payment at maturity or pursuant to any mandatory sinking fund payment or any mandatory prepayment provision. 6.4 Limitations on Fundamental Changes. Directly or indirectly, sell, assign, lease, transfer or otherwise dispose of all or substantially all of its assets or consolidate with or merge into any Person or permit any Person to merge into it, provided that the Company may enter into a consolidation or merger with any Person if (i) the survivor formed by or resulting from such consolidation or merger is the Company and (ii) at the time of such consolidation or merger and immediately after giving effect thereto no Default or Event of Default shall have occurred and be continuing. 6.5 Limitations on Restrictions on Dividends. Permit any Significant Subsidiary exclusively organized under the laws of the United States of America or any state thereof to enter into any arrangement with any Person which in any way prohibits, limits the amount of or otherwise impairs the declaration or distribution by such Subsidiary of dividends on its Capital Stock (other than limitations arising under (i) any Requirement of Law, (ii) any agreement or instrument in effect at the time a Person first became a Subsidiary of the Company or the date such agreement or instrument is otherwise assumed by the Company or any of its Subsidiaries, so long as such agreement or instrument was not entered into solely in contemplation of such Person becoming a Subsidiary of the Company or such assumption, and (iii) any agreement or instrument entered into in connection with the sale of such Subsidiary) if such arrangement, together with all other similar arrangements, could reasonably be expected to have a Material Adverse Effect. 6.6 Financial Covenant. Permit the ratio of (i) combined or consolidated EBITDA of the Company and its Subsidiaries for any period of four consecutive fiscal quarters for which financial statements have most recently been delivered under Section 5.1 commencing with the fiscal period ending September 30, 2006 to (ii) interest expense during such period in respect of   57 -------------------------------------------------------------------------------- all Covenant Indebtedness of the Company and its Subsidiaries to be less than 2.00 : 1.00. “Covenant Indebtedness” means all indebtedness that, in accordance with GAAP, is required to be reflected as a liability on a consolidated balance sheet of the Company and its Subsidiaries. SECTION 7 EVENTS OF DEFAULT If any of the following events shall occur and be continuing: (a) The Company shall fail to pay any principal of any Note when due in accordance with the terms thereof or hereof; or the Company shall fail to reimburse the Issuing Lenders for any LOC Obligations when due in accordance with the terms hereof; or the Company shall fail to pay any interest on any Note, or any other amount payable hereunder, within three Business Days after any such interest or other amount becomes due in accordance with the terms thereof or hereof; or (b) Any representation or warranty made, or deemed made pursuant to subsection 4.2, by the Company herein or which is contained in any certificate, document or financial or other statement furnished at any time under or in connection with this Agreement shall prove to have been incorrect in any material respect on or as of the date made or deemed made or furnished; or (c) The Company shall default in the observance or performance of any agreement contained in subsection 5.4(b), 5.5(a) or 5.5(b) or Section 6; or (d) A Change of Control shall occur; or (e) The Company shall default in the observance or performance of any other agreement contained in this Agreement (other than as provided in paragraphs (a) through (d) of this Section), and such default shall continue unremedied for a period of 30 days after the earlier of written notification to the Company by the Administrative Agent or any Bank or after any Responsible Officer becomes aware or, with reasonable diligence, would become aware of such default; or (f) The Company or any of its Significant Subsidiaries shall (i) default in any payment of principal of or interest on any Indebtedness (other than the Notes) or in the payment of any Guarantee Obligation, beyond the period of grace (not to exceed 30 days), if any, provided in the instrument or agreement under which such Indebtedness or Guarantee Obligation was created, and such default shall be continuing; or (ii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness or Guarantee Obligation or contained in any instrument or agreement evidencing, securing or relating thereto beyond any applicable period of grace, and such default shall be continuing, or any other event shall occur or condition exist and be continuing, the effect of which default or other event or condition is to cause, or permit the holders of such Indebtedness or Guarantee Obligation to cause, such Indebtedness to become due or required to be purchased, redeemed or otherwise defeased prior to its stated maturity or such Guarantee Obligation to become payable, provided that the   58 -------------------------------------------------------------------------------- aggregate principal amount of any such Indebtedness and Guarantee Obligations outstanding at such time, when aggregated with the outstanding principal amount of all other such Indebtedness and Guarantee Obligations in respect of which the Company or any Significant Subsidiary shall have so defaulted or an event shall have occurred or a condition exists as described above, aggregates $100,000,000 or more; or (g) (i) The Company or any of its Significant Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets, or the Company or any of its Significant Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Company or any of its Significant Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Company or any of its Significant Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Company or any of its Significant Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Company or any of its Significant Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or (h) (i) Any Person shall engage in any “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Majority Banks, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Company or any Commonly Controlled Entity shall, or in the reasonable opinion of the Majority Banks is likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, would have a Material Adverse Effect; or   59 -------------------------------------------------------------------------------- (i) The rendering against the Company or any Significant Subsidiary of one or more final nonappealable judgments, decrees or orders for the payment of money which, either singly or in the aggregate with all other monies in respect of which a final nonappealable judgment, decree or order for payment shall have been rendered against the Company or any Significant Subsidiary, aggregates $100,000,000 or more, and the continuance of such judgments, decrees or orders unsatisfied and in effect for any period of 30 consecutive days or, in the case of a foreign judgment, decree or order the enforcement of which is not being sought in the United States, 60 consecutive days without a stay of execution; provided, however, that any such amount shall be calculated after deducting from the sum so payable any amount of such judgment or order that is covered by a valid and binding policy of insurance in favor of the Company or such Subsidiary from an insurer that is rated at least “A” by A.M. Best Company, which policy covers full payment thereof and which insurer has been notified, and has not disputed the claim made for payment, of such amount of such judgment or order; then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (g) above with respect to the Company, automatically the Commitments and Swing Line Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement (including without limitation the maximum amount of all contingent liabilities under Letters of Credit) and the Notes shall immediately become due and payable, and (B) if such event is any other Event of Default, either or both of the following actions may be taken: (i) with the consent of the Majority Banks, the Administrative Agent may, or upon the request of the Majority Banks, the Administrative Agent shall, by notice to the Company declare the Commitments and Swing Line Commitments to be terminated forthwith, whereupon the Commitments and Swing Line Commitments shall immediately terminate; and (ii) with the consent of the Majority Banks, the Administrative Agent may, or upon the request of the Majority Banks, the Administrative Agent shall, by notice of default to the Company, (Y) declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement and the Notes to be due and payable forthwith, whereupon the same shall immediately become due and payable and (Z) direct the Company to pay to the Administrative Agent cash collateral as security for the LOC Obligations for subsequent drawings under then outstanding Letters of Credit in an amount equal to the maximum amount that may be drawn under Letters of Credit then outstanding, whereupon the same shall immediately become due and payable. Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived. SECTION 8 THE ADMINISTRATIVE AGENT 8.1 Appointment. Each Bank hereby irrevocably designates and appoints Citibank as the Administrative Agent of such Bank under this Agreement and the Notes and each Bank irrevocably authorizes Citibank, as the Administrative Agent for such Bank, to take such action on its behalf under the provisions of this Agreement and the Notes and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the Notes, together with such other powers as are reasonably incidental thereto. Each Bank acknowledges that the Company may rely on each action taken by the   60 -------------------------------------------------------------------------------- Administrative Agent on behalf of the Banks hereunder. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Bank, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or the Notes or otherwise exist against the Administrative Agent. 8.2 Delegation of Duties. The Administrative Agent may execute any of its duties under this Agreement and the Notes by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys in-fact selected by it with reasonable care. Without limiting the foregoing, the Administrative Agent may appoint one of its affiliates as its agent to perform the functions of the Administrative Agent hereunder relating to the advancing of funds to the Company and distribution of funds to the Banks and to perform such other related functions of the Administrative Agent hereunder as are reasonably incidental to such functions. 8.3 Exculpatory Provisions. Neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or the Notes (except for its or such Person’s own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Banks for any recitals, statements, representations or warranties made by the Company or any officer thereof contained in this Agreement or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection with, this Agreement or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, this Agreement (except for the Administrative Agent’s due execution and delivery) or the Notes or for any failure of the Company to perform its obligations hereunder or thereunder. The Administrative Agent shall not be under any obligation to any Bank to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or the Notes or to inspect the properties, books or records of the Company. 8.4 Reliance by Administrative Agent. (a) The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any Note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Company), independent accountants and other experts selected by the Administrative Agent. The Administrative Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or the Notes unless it shall first receive such advice or concurrence of the Majority Banks as it deems   61 -------------------------------------------------------------------------------- appropriate or it shall first be indemnified to its satisfaction by the Banks against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the Notes in accordance with a request of the Majority Banks (or such other number of Banks as is expressly required hereby), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Banks and all future holders of the Notes. (b) For purposes of determining compliance with the conditions specified in Section 4.1, each Bank that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Bank. 8.5 Notice of Default. The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Bank or the Company referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give prompt notice thereof to the Banks. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Majority Banks; provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Banks. 8.6 Non-Reliance on Administrative Agent and Other Banks. Each Bank expressly acknowledges that neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent hereafter taken, including any review of the affairs of the Company, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Bank. Each Bank represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any other Bank, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Company and made its own decision to make its Loans hereunder and enter into this Agreement. Each Bank also represents that it will, independently and without reliance upon the Administrative Agent or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the Notes, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Company. Except for notices, reports and other documents expressly required to be furnished to the Banks by the Administrative Agent hereunder, the Administrative Agent shall not have any duty or responsibility to provide any Bank with any credit or other information concerning the business, operations, property, condition (financial or otherwise) or creditworthiness of the Company which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.   62 -------------------------------------------------------------------------------- 8.7 Indemnification. The Banks agree to indemnify each of the Administrative Agent, the Swing Line Bank and the Issuing Lenders in their capacity as such (to the extent not reimbursed by the Company and without limiting the obligation of the Company to do so to the extent required pursuant to Section 9.5), ratably according to the respective amounts of their Commitments (or, if the Commitments have been terminated, ratably according to the respective amount of their outstanding Loans or, if no Loans are outstanding, their Commitments as of the date of such termination) from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Notes) be imposed on, incurred by or asserted against the Administrative Agent in any way relating to or arising out of this Agreement, the Notes or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Administrative Agent, the Swing Line Bank or the Issuing Lenders under or in connection with any of the foregoing; provided that no Bank shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Administrative Agent’s, Swing Line Bank’s or any Issuing Lender’s gross negligence or willful misconduct. The agreements in this subsection shall survive the payment of the Notes and all other amounts payable hereunder. 8.8 Administrative Agent in Its Individual Capacity. With respect to its Commitment, the Loans made by it and the Note issued to it, Citibank shall have the same rights and powers under this Agreement as any other Bank and may exercise the same as though it were not the Administrative Agent; and the term “Bank” or “Banks” shall, unless otherwise expressly indicated, include Citibank in its individual capacity. Citibank and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, the Company, any of its Subsidiaries and any Person who may do business with or own securities of the Company or any such Subsidiary, all as if Citibank were not the Administrative Agent and without any duty to account therefor to the Banks. The Administrative Agent shall have no duty to disclose any information obtained or received by it or any of its Affiliates relating to the Company or any of its Subsidiaries to the extent such information was obtained or received in any capacity other than as Administrative Agent. In the event that Citibank or any of its Affiliates shall be or become an indenture trustee under the Trust Indenture Act of 1939 (as amended, the “Trust Indenture Act”) in respect of any securities issued or guaranteed by the Company, the parties hereto acknowledge and agree that any payment or property received in satisfaction of or in respect of any obligation of the Company hereunder or under any other Loan Document by or on behalf of Citibank in its capacity as the Administrative Agent for the benefit of any Bank under this Agreement or any Note (other than Citibank or an Affiliate of Citibank) and which is applied in accordance with this Agreement shall be deemed to be exempt from the requirements of Section 311 of the Trust Indenture Act pursuant to Section 311(b)(3) of the Trust Indenture Act. 8.9 Successor Administrative Agent. The Administrative Agent may resign as Administrative Agent upon 10 days’ notice to the Banks and the Company, such resignation to become effective upon the appointment of a successor Administrative Agent as provided below. If the Administrative Agent shall resign as Administrative Agent under this Agreement, then the Majority Banks shall appoint from among the Banks a successor agent for the Banks, which successor agent shall be approved by the Company if no Default or Event of Default has   63 -------------------------------------------------------------------------------- occurred and is continuing (such approval not to be unreasonably withheld), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent, and the term “Administrative Agent” shall mean such successor agent effective upon its appointment, and the former Administrative Agent’s rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Notes. After any retiring Administrative Agent’s resignation as Administrative Agent, the provisions of this subsection shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement. 8.10 Syndication Agent, etc. Neither the Syndication Agent, any Documentation Agent nor any Persons identified in this Agreement as “Lead Arranger” or “Book Runner” shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Banks and the Swing Line Bank as such. Without limiting the foregoing, none of such Banks or the Swing Line Bank shall have or be deemed to have a fiduciary relationship with any Bank or the Swing Line Bank. Each Bank and the Swing Line Bank hereby makes the same acknowledgments with respect to Banks and the Swing Line Bank as it makes with respect to the Administrative Agent in Section 8.8. SECTION 9 MISCELLANEOUS 9.1 Amendments and Waivers. None of this Agreement, any Note or any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this subsection. With the written consent of the Majority Banks, the Administrative Agent and the Company may, from time to time, enter into written amendments, supplements or modifications hereto and to the Notes for the purpose of changing any provisions of or adding any provisions to this Agreement or the Notes or changing in any manner the rights of the Banks or of the Company hereunder or thereunder or waiving, on such terms and conditions as the Administrative Agent may specify in such instrument, any of the requirements of this Agreement or the Notes or any Default or Event of Default and its consequences; provided, however, that (i) each Bank shall receive a form of any such waiver, amendment, supplement or modification prior to the execution thereof by the Majority Banks or the Administrative Agent and (ii) no such waiver and no such amendment, supplement or modification shall (a) increase or extend the Commitment of any Bank, the maturity of any Note or any installment thereof, or reduce the rate or extend the time of payment of interest thereon (other than an amendment of 2.09(d) or waiver of the obligation of the Company to pay any increased interest pursuant to 2.09(d) or 2.22(d) which may be approved by the Majority Banks or the applicable Issuing Lender), or reduce the amount or extend the time of payment of any fee payable to any Bank hereunder, or change the amount of any Bank’s Commitment or the Swing Line Bank’s Swing Line Commitment, in each case without the consent of the Bank or the Swing Line Bank, as the case may be, affected thereby, or (b) amend, modify or waive any provision of this subsection or reduce the percentage specified in the definition of Majority Banks, or consent to the assignment or transfer by the Company of any of its rights and obligations under this Agreement, or waive the conditions precedent to the making of any Loan set forth in subsection 4.2, in each case without the written consent of all the Banks, (c) amend,   64 -------------------------------------------------------------------------------- modify or waive any provision of Section 8 without the written consent of the then Administrative Agent, (d) amend, modify or waive any provision of the Loan Documents affecting the rights or duties of the Administrative Agent, the Issuing Lenders or the Swing Line Bank under any Loan Document without the written consent of the Administrative Agent, the Issuing Lenders and/or the Swing Line Bank, as applicable, in addition to the Banks required hereinabove to take such action. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Banks and shall be binding upon the Company, the Banks, the Administrative Agent and all future holders of the Notes. In the case of any waiver, the Company, the Banks and the Administrative Agent shall be restored to their former position and rights hereunder and under the outstanding Notes, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon. 9.2 Notices. (a) Except as otherwise provided in subsection (b) below, all notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by telecopy,) and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when delivered by hand, or five days after being deposited in the mail, postage prepaid, or, in the case of telecopy notice, when received, addressed as follows in the case of the Company and the Administrative Agent, and as set forth in Schedule 1.1 in the case of the other parties hereto, or to such other address as may be hereafter notified by the respective parties hereto and any future holders of the Notes:   The Company:    The Western Union Company    12500 E. Mt. Belford Ave. M2385    Englewood, CO 80112    Attention: Treasurer    Telecopy: (720) 332-0213    Confirmation Telephone: (720) 332-5269 with a copy of any notice to the Company to:    The Western Union Company    12500 E. Mt. Belford Ave. M2385    Englewood, CO 80112    Attention: General Counsel’s Office    Telecopy: (720) 332-0515    Confirmation Telephone: (720) 332-5683 The Administrative Agent:    Citibank, N.A., as Administrative Agent    Two Penns Way    New Castle, DE 19720    Attention: Bank Loan Syndications    Telecopier: 212-994-0961    Telephone: 302-894-6128   65 -------------------------------------------------------------------------------- with a copy of any notice to the Administrative Agent to:    Citibank, N.A., as Administrative Agent    400 Perimeter Center Terrace, Suite 600    Atlanta, GA 30346    Attention: David McNeela    Telecopier: 404-921-9163    Telephone: 770-668-8613 provided that any notice, request or demand to or upon the Administrative Agent or the Banks pursuant to subsection 2.3, 2.5, 2.6, 2.7, 2.18 or 2.19 shall not be effective until received. (b) So long as Citibank or any of its Affiliates is the Administrative Agent, the Company shall use commercially reasonable efforts to deliver to the Administrative Agent materials required to be delivered pursuant to Section 5.1 in an electronic medium in a format acceptable to the Administrative Agent and the Company by e-mail at [email protected]. The Company agrees that the Administrative Agent may make such materials, and, without warranty or liability to the Company, other written information, documents, instruments and other material relating to the Company, any of its Subsidiaries or any other materials or matters relating to this Agreement, the Notes or any of the transactions contemplated hereby (collectively, the “Communications”) available to the Banks by posting such notices on a confidential basis on Intralinks or a substantially similar electronic system (the “Platform”) mutually acceptable to the Administrative Agent and the Company. The Company acknowledges that (i) the distribution of material through an electronic medium is not necessarily secure and that there are confidentiality and other risks associated with such distribution, (ii) the Platform is provided “as is” and “as available” and (iii) neither the Administrative Agent nor any of its Affiliates warrants the accuracy, adequacy or completeness of the Communications or the Platform and each expressly disclaims liability for errors or omissions in the Communications or the Platform in the absence of gross negligence or willful misconduct of the Administrative Agent or its Affiliates. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of third party rights or freedom from viruses or other code defects, is made by the Administrative Agent or any of its Affiliates in connection with the Platform. (c) The Administrative Agent agrees that the receipt of the Communications by the Administrative Agent at its e-mail address as set forth above, and each Bank agrees that notice to it (as provided in the next sentence) (a “Notice”) specifying that any Communications have been posted to the Platform, in each case, shall constitute effective delivery of such information, documents or other materials to the Administrative Agent and such Bank for purposes of this Agreement; provided that if requested by any Bank the Administrative Agent shall deliver a copy of the Communications to such Bank by email or telecopier. Each Bank agrees (i) to notify the Administrative Agent in writing of such Bank’s e-mail address to which a Notice may be sent by electronic transmission (including by electronic communication) on or before the date such Bank becomes a party to this Agreement (and from time to time thereafter to ensure that the Administrative Agent has on record an effective e-mail address for such Bank) and (ii) that any Notice may be sent to such e-mail address.   66 -------------------------------------------------------------------------------- 9.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Administrative Agent or any Bank, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 9.4 Survival of Representations and Warranties. All representations and warranties made hereunder and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the Notes. 9.5 Payment of Expenses and Taxes. The Company agrees (a) to pay or reimburse the Administrative Agent for all its reasonable out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of, and any amendment, supplement or modification to, this Agreement and the Notes and any other documents prepared in connection herewith, and the consummation and administration of the transactions contemplated hereby and thereby, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent, (b) to pay or reimburse each Bank and the Administrative Agent for all its costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the Notes and any such other documents, including, without limitation, fees and disbursements of counsel to the Administrative Agent and to the several Banks, (c) to pay, and indemnify and hold harmless each Bank and the Administrative Agent from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the Notes and any such other documents, and (d) to pay, and indemnify and hold harmless each Bank and the Administrative Agent and each of their respective officers, directors, employees and affiliates from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the Notes, and any such other documents (all the foregoing, collectively, the “indemnified liabilities”), provided, that the Company shall have no obligation hereunder to the Administrative Agent or any Bank with respect to indemnified liabilities arising from (i) the gross negligence or willful misconduct of the Administrative Agent or such Bank, (ii) legal proceedings commenced or claims against the Administrative Agent or such Bank by any security holder or creditor thereof arising out of and based upon rights afforded any such security holder or creditor solely in its capacity as such, (iii) legal proceedings commenced or claims against the Administrative Agent or such Bank by any other Bank or by any Transferee or (iv) claims settled without the consent of the Company. In the case of any investigation, litigation or other proceeding or action to which the indemnity in this subsection 9.5 applies, such indemnity shall be effective whether or not such investigation, litigation or other proceeding or action is brought by the Company or any affiliate of the Company, whether or not the party seeking indemnity is otherwise a party thereto and whether or not any aspect of the transactions contemplated hereby is consummated.   67 -------------------------------------------------------------------------------- The agreements in this subsection shall survive repayment of the Notes and all other amounts payable hereunder. 9.6 Successors and Assigns; Participations; Purchasing Banks. (a) This Agreement shall be binding upon and inure to the benefit of the Company, the Banks, the Administrative Agent, all future holders of the Notes and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Bank. (b) Any Bank may, in accordance with applicable law, sell to one or more banks or other entities which are not Competitors (“Participants”) participating interests in any Loan owing to such Bank, any Note held by such Bank, the Commitment of such Bank or any other interest of such Bank hereunder, provided that with respect to any such sale of a participating interest, the Bank selling such participating interest must retain the right to make all determinations under this Agreement other than requests for (i) reductions in the principal amount of the Loans, (ii) reductions in the interest rates payable on the Loans, (iii) reductions in the facility fee payable to such selling Bank pursuant to subsection 2.4 and (iv) waivers and extensions in respect of payment dates on account of principal of the Loans, Interest Payment Dates and the dates on which such facility fee is payable. In the event of any such sale by a Bank of participating interests to a Participant, such Bank’s obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Bank shall remain solely responsible for the performance thereof, such Bank shall remain the holder of any such Note for all purposes under this Agreement, and the Company and the Administrative Agent shall continue to deal solely and directly with such Bank in connection with such Bank’s rights and obligations under this Agreement. The Company agrees that if amounts outstanding under this Agreement and the Notes are due or unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement and any Note to the same extent as if the amount of its participating interest were owing directly to it as a Bank under this Agreement or any Note, provided that such Participant shall only be entitled to such right of setoff if it shall have agreed in the agreement pursuant to which it shall have acquired its participating interest to share with the Banks the proceeds thereof as provided in subsection 9.7. The Company also agrees that each Participant shall be entitled to the benefits of subsections 2.14, 2.15 and 2.16 with respect to its participation in the Commitments and the Loans outstanding from time to time; provided that no Participant shall be entitled to receive any greater amount pursuant to such subsections than the transferor Bank would have been entitled to receive in respect of the amount of the participation transferred by such transferor Bank to such Participant had no such transfer occurred. (c) Any Bank may, in accordance with applicable law and with the consent of the Administrative Agent, the Swing Line Bank and each Issuing Lender (which shall not be unreasonably withheld) at any time sell to any Bank or any affiliate thereof (but only if   68 -------------------------------------------------------------------------------- such affiliate’s Short-Term Ratings equal or exceed the Short-Term Ratings of such selling Bank) and, with the consent of the Company (unless there is an Event of Default under clause (a) or (g) of Article VII occurring or continuing), the Administrative Agent, the Swing Line Bank and each Issuing Lender (which in each case shall not be unreasonably withheld), to one or more additional banks or financial institutions other than the Borrower or any of its Subsidiaries (“Purchasing Banks”) all or any part of its rights and obligations under this Agreement and its Note pursuant to a Commitment Transfer Supplement, substantially in the form of Exhibit D (a “Commitment Transfer Supplement”), executed by such Purchasing Bank, such transferor Bank (and, in the case of a Purchasing Bank that is not then a Bank or an affiliate thereof, by the Company, the Administrative Agent, the Swing Line Bank and each Issuing Lender) and delivered to the Administrative Agent for its acceptance and recording in the Register, provided that (i) in connection with such sale, such transferor Bank must transfer all of its outstanding Commitment to such Purchasing Bank or, if no Commitments are then in effect, such transferor Bank must transfer all of the unpaid Loans and Participation Interests held by such Bank to such Purchasing Bank or (ii) after giving effect to such sale the outstanding Commitment of such transferor Bank must equal or exceed $10,000,000, provided, further, with respect to a Purchasing Bank which was not a Bank or an affiliate of a Bank prior to such sale, the outstanding Commitment of such Purchasing Bank after giving effect to such sale must equal or exceed $10,000,000, unless the Company and the Administrative Agent otherwise agree. Upon such execution, delivery, acceptance and recording, from and after the Transfer Effective Date determined pursuant to (and as defined in) such Commitment Transfer Supplement, (x) the Purchasing Bank thereunder shall be a party hereto and, to the extent provided in such Commitment Transfer Supplement, (in addition to any such rights and obligations theretofore held by it) have the rights and obligations of a Bank hereunder with a Commitment as set forth therein, and (y) the transferor Bank thereunder shall, to the extent provided in such Commitment Transfer Supplement, be released from its obligations under this Agreement (and, in the case of a Commitment Transfer Supplement covering all or the remaining portion of a transferor Bank’s rights and obligations under this Agreement, such transferor Bank shall cease to be a party hereto, provided, that it is expressly understood and agreed that such transferor Bank shall retain (x) all of such transferor Bank’s rights under subsections 2.14, 2.15, 2.16 and 9.5 of this Agreement with respect to any cost, reduction or payment incurred or made prior to the Transfer Effective Date determined pursuant to such Commitment Transfer Supplement, including, without limitation the rights to indemnification and to reimbursement for taxes, costs and expenses and (y) all of such transferor Bank’s obligations under Section 8.7 to the extent any claim thereunder relates to an event arising prior to the Transfer Effective Date determined pursuant to such Commitment Transfer Supplement). Such Commitment Transfer Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of such Purchasing Bank and the resulting adjustment of Commitments and Commitment Percentages arising from the purchase by such Purchasing Bank of all or a portion of the rights and obligations of such transferor Bank under this Agreement and the Notes. On or prior to the Transfer Effective Date determined pursuant to such Commitment Transfer Supplement, the Company, at its own expense, shall execute and deliver to the Administrative Agent in exchange for the   69 -------------------------------------------------------------------------------- surrendered Note a new Note to the order of such Purchasing Bank in an amount equal to the Commitment assumed by it pursuant to such Commitment Transfer Supplement and, if the transferor Bank has retained a Commitment hereunder, a new Note to the order of the transferor Bank in an amount equal to the Commitment retained by it hereunder. Such new Notes shall be dated the Closing Date and shall otherwise be in the form of the Notes replaced thereby. The Note surrendered by the transferor Bank shall be returned by the Administrative Agent to the Company marked “cancelled”. (d) The Administrative Agent shall maintain at its address referred to in subsection 9.2 a copy of each Commitment Transfer Supplement delivered to it and a register (the “Register”) for the recordation of the names and addresses of the Banks and the Commitment of, and principal amount of the Loans owing to, each Bank from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and the Company, the Administrative Agent and the Banks may treat each Person whose name is recorded in the Register as the owner of each Loan recorded therein for all purposes of this Agreement. The Register shall be available for inspection by the Company or any Bank at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of a Commitment Transfer Supplement executed by a transferor Bank and Purchasing Bank (and, in the case of a Purchasing Bank that is not then a Bank or an affiliate thereof, by the Company and the Administrative Agent) together with payment to the Administrative Agent, in the case of a Purchasing Bank that is not then a Bank or an affiliate thereof, of a registration and processing fee of $3,500 by the transferor Bank, the Administrative Agent shall (i) promptly accept such Commitment Transfer Supplement and (ii) on the Transfer Effective Date determined pursuant thereto record the information contained therein in the Register and give notice of such acceptance and recordation to the Banks and the Company. (f) Subject to subsection 9.8, the Company authorizes each Bank to disclose to any Participant or Purchasing Bank (each, a “Transferee”) and any prospective Transferee any and all financial information in such Bank’s possession concerning the Company and its affiliates which has been delivered to such Bank by or on behalf of the Company pursuant to this Agreement or which has been delivered to such Bank by or on behalf of the Company in connection with such Bank’s credit evaluation of the Company and its affiliates prior to becoming a party to this Agreement. (g) If, pursuant to this subsection, any interest in this Agreement or any Note is transferred to any Transferee which is not a United States person (as such term is defined in Section 7701(a)(30) of the Code), the transferor Bank shall require such Transferee, concurrently with the effectiveness of such transfer, to deliver (i) two duly completed copies of United States Internal Revenue Service Form W-8BEN or W-8ECI or successor applicable form, as the case may be or (ii) in the case of such a Bank claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate to the effect that such Bank is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Company within the meaning of Section 881(c)(3)(B) of the Code or (C) a “controlled foreign   70 -------------------------------------------------------------------------------- corporation” described in Section 881(c)(3)(C) of the Code and (y) two duly completed copies of United States Internal Revenue Service Form W-8BEN, in each case certifying such Bank’s entitlement to a complete exemption from United States withholding tax with respect to interest payments to be made under this Agreement and under any Note. The transferor Bank shall also require such Transferee (i) to represent to the transferor Bank (for the benefit of the transferor Bank, the Administrative Agent and the Company) that under applicable law and treaties no taxes will be required to be withheld by the Administrative Agent, the Company or the transferor Bank with respect to any payments to be made to such Transferee in respect of the Loans, (ii) to agree (for the benefit of the transferor Bank, the Administrative Agent and the Company) to provide the transferor Bank (and, in the case of any Purchasing Bank registered in the Register, the Administrative Agent and the Company) new such form or successor applicable form upon the expiration or obsolescence of any previously delivered forms and comparable statements in accordance with applicable U.S. laws and regulations and amendments duly executed and completed by such Transferee and (iii) to comply from time to time with all applicable U.S. laws and regulations with regard to such withholding tax exemption. (h) Nothing herein shall prohibit any Bank or the Swing Line Bank from pledging or assigning any Note to any Federal Reserve Bank in accordance with applicable law. (i) The Swing Line Bank may not (except as provided in subsections 2.19 and 9.6(h)) assign or sell participations in all or any part of its Swing Line Loans, its Swing Line Note or its Swing Line Commitment. (j) Each Issuing Lender may, with the consent of the Company (which consent shall not be unreasonably withheld or delayed), assign to one or more Banks all or a portion of its rights and obligations under the undrawn portion of its LOC Commitment at any time; provided, however, that the parties to each such assignment shall execute and deliver to the Administrative Agent appropriate documentation in respect thereof. 9.7 Adjustments; Set-off. (a) If any Bank (a “benefitted Bank”) shall at any time receive any payment of all or part of its Loans then payable, or interest then payable thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 7(g), or otherwise), in a greater proportion than any such payment to or collateral received by any other Bank, if any, in respect of such other Bank’s Loans then payable, or interest then payable thereon, such benefitted Bank shall purchase for cash from the other Banks such portion of each such other Bank’s Loans or such interest thereon, or shall provide such other Banks with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefitted Bank to share the excess payment or benefits of such collateral or proceeds ratably with each of the Banks; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefitted Bank, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of   71 -------------------------------------------------------------------------------- such recovery, but without interest. The Company agrees that each Bank so purchasing a portion of another Bank’s Loans or interest thereon may exercise all rights of payment (including, without limitation, rights of set-off) with respect to such portion as fully as if such Bank were the direct holder of such portion. (b) In addition to any rights and remedies of the Banks provided by law, if an Event of Default has occurred and is continuing, each Bank and each of its Affiliates shall have the right, without prior notice to the Company, any such notice being expressly waived by the Company to the extent permitted by applicable law, upon any amount becoming due and payable by the Company hereunder or under the Notes (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Bank, any of its Affiliates or any branch or agency thereof to or for the credit or the account of the Company. The aforesaid right of set-off may be exercised by such Bank and each of its Affiliates against the Company or against any trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, receiver or execution, judgment or attachment creditor of the Company, or against anyone else claiming through or against the Company or any such trustee in bankruptcy, debtor in possession, assignee for the benefit of creditors, receiver, or execution, judgment or attachment creditor, notwithstanding the fact that such right of set-off shall not have been exercised by such Bank or its Affiliates prior to the occurrence of any Event of Default. Each Bank agrees promptly to notify the Company and the Administrative Agent after any such set-off and application made by such Bank or its Affiliates, provided that the failure to give such notice shall not affect the validity of such set-off and application. 9.8 Table of Contents and Section Headings. The table of contents and the section and subsection headings herein are intended for convenience only and shall be ignored in construing this Agreement. 9.9 Confidentiality. Each of the Banks and the Administrative Agent agrees to keep confidential (and to cause its officers, directors, employees, agents and representatives, and its Affiliates’ officers, directors, employees, agents and representatives who gain access to Confidential Materials (as defined below), to keep confidential) any information which is or has been obtained pursuant to the terms of this Agreement (including, without limitation, subsection 5.4(b)) (collectively, the “Confidential Materials”), except that such Bank or the Administrative Agent, as the case may be, shall be permitted to disclose the Confidential Materials (a) to such of the officers, directors, employees, agents, independent auditors and representatives of the Bank or any of its Affiliates as need to know such Confidential Materials in connection with its administration of its Commitment and Loans (provided such persons are informed of the confidential nature of the Confidential Materials and the restrictions imposed by this subsection), (b) to the extent required by law (including, without limitation disclosure to bank examiners and regulatory officials) or legal process (in which event such Bank or the Administrative Agent, as the case may be, will promptly notify the Company of any such requirement), (c) to the extent such Confidential Materials become publicly available other than as a result of a breach of the provisions of this subsection, (d) to the extent the Company shall have consented to such   72 -------------------------------------------------------------------------------- disclosure in writing, (e) to a prospective Transferee which agrees in writing to be bound by the terms of this subsection as if it were a Bank party to this Agreement, (f) to a Governmental Authority in connection with litigation involving this Agreement or the Notes, (g) to Gold Sheets and other similar bank trade publications; such information to consist of deal terms and other information regarding the credit facilities evidenced by this Agreement customarily found in such publications and (h) in connection with any suit, action or proceeding for the purpose of defending itself, reducing its liability, or protecting or exercising any of its claims, rights, remedies or interests under or in connection with this Agreement or any other Loan Document; provided that in no event shall any such Bank or the Administrative Agent disclose any of the Confidential Materials to any of its Excluded Individuals. 9.10 Patriot Act Notice. Each Bank and the Administrative Agent (for itself and not on behalf of any other party) hereby notifies the Company that, pursuant to the requirements of the USA Patriot Act, Title III of Pub. L. 107-56, signed into law October 26, 2001 (the “Patriot Act”), it is required to obtain, verify and record information that identifies the Company, which information includes the name and address of the Company and other information that will allow such Bank or the Administrative Agent, as applicable, to identify the Company in accordance with the Patriot Act. 9.11 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Company and the Administrative Agent. 9.12 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 9.13 Integration. This Agreement represents the entire agreement of the Company, the Administrative Agent and the Banks with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Bank relative to subject matter hereof not expressly set forth or referred to herein or in the Notes. 9.14 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 9.15 Submission To Jurisdiction; Waivers. Each of the Company, the Administrative Agent and the Banks hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the Notes, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of   73 -------------------------------------------------------------------------------- New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Company at its address set forth in subsection 9.2 or at such other address of which the Administrative Agent shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this subsection any special, exemplary, punitive or consequential damages. 9.16 Acknowledgements. Each of the Company, the Administrative Agent and the Banks hereby acknowledges that: (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the Notes; (b) neither the Administrative Agent nor any Bank has any fiduciary relationship to the Company, and the relationship between the Administrative Agent and the Banks, on the one hand, and the Company, on the other hand, is solely that of debtor and creditor; and (c) no joint venture exists among the Banks or among the Company and the Banks. 9.17 WAIVERS OF JURY TRIAL. THE COMPANY, THE ADMINISTRATIVE AGENT AND THE BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES AND FOR ANY COUNTERCLAIM THEREIN. 9.18 Effectiveness. This Agreement shall become effective on the date on which all of the conditions set forth in Section 4.1 have been satisfied or waived by the Banks and all of the parties have signed a copy hereof (whether the same or different copies) and shall have delivered the same to the Administrative Agent pursuant to Section 9.2 or, in the case of the Banks, shall have given to the Administrative Agent written, telecopied or telex notice (actually received) at such office that the same has been signed and mailed to it.   74 -------------------------------------------------------------------------------- 9.19 Judgment Currency. If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or under any other Loan Document in one currency into another currency, the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase the first currency with such other currency on the Business Day preceding that on which final judgment is given. The obligation of the Company in respect of any such sum due from it to the Administrative Agent or any Bank hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency (the “Judgment Currency”) other than currency required to be paid hereunder (the “Contract Currency”), be discharged only to the extent that on the Business Day following receipt by the Administrative Agent or such Bank of any sum adjudged to be so due in the Judgment Currency, the Administrative Agent or such Bank may in accordance with normal banking procedures purchase the Contract Currency with the Judgment Currency. If the amount of the Contract Currency so purchased is less than the sum originally due to the Administrative Agent or such Bank in such Contract Currency, the Company agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Administrative Agent or such Bank or the Person to whom such obligation was owing against such loss. If the amount of the Contract Currency so purchased is greater than the sum originally due to the Administrative Agent or such Bank in such currency, the Administrative Agent and the Banks agree to apply such excess to any Loans or other amounts then due and payable hereunder.   75 -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered in New York, New York by their proper and duly authorized officers as of the day and year first above written.   COMPANY:     THE WESTERN UNION COMPANY, a Delaware corporation     By:   /s/ David G. Barnes       Name:   David G. Barnes       Title:   Executive Vice President Finance and Strategic Development   76 -------------------------------------------------------------------------------- ADMINISTRATIVE AGENT AND BANKS:     CITIBANK, N.A., as Administrative Agent, Swing Line Bank, Issuing Lender and as a Bank     By:   /s/ Kevin Ege       Name:   Kevin Ege       Title:   Vice President   77 -------------------------------------------------------------------------------- WELLS FARGO BANK, NATIONAL ASSOCIATION as Issuing Lender and as a Bank By:   /s/ Scott Bjelde Name:   Scott Bjelde Title:   Senior Vice President   78 -------------------------------------------------------------------------------- THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., NEW YORK BRANCH By:   /s/ Christian A. Giordano Name:   Christian A. Giordano Title:   Authorized Signatory   79 -------------------------------------------------------------------------------- BARCLAYS BANK PLC By:   /s/ Alison McGuigan Name:   Alison McGuigan Title:   Associate Director   80 -------------------------------------------------------------------------------- JPMORGAN CHASE BANK, N.A. By:   /s/ Mark M. Cisz Name:   Mark M. Cisz Title:   Vice President   81 -------------------------------------------------------------------------------- MORGAN STANLEY BANK By:   /s/ Daniel Twenge Name:   Daniel Twenge Title:   Vice President   82 -------------------------------------------------------------------------------- WACHOVIA BANK, NATIONAL ASSOCIATION By:   /s/ Mark B. Felker Name:   Mark B. Felker Title:   Managing Director   83 -------------------------------------------------------------------------------- BNP PARIBAS By:   /s/ Pierre Nicholas Rogers Name:   Pierre Nicholas Rogers Title:   Managing Director By:   /s/ Jamie Dillon Name:   Jamie Dillon Title:   Managing Director   84 -------------------------------------------------------------------------------- DEUTSCHE BANK AG, NEW YORK BRANCH By:   /s/ Brett Hanmer Name:   Brett Hanmer Title:   Vice President By:   /s/ Ruth Leung Name:   Ruth Leung Title:   Director   85 -------------------------------------------------------------------------------- FIFTH THIRD BANK By:   /s/ Peter Caligiuni Name:   Peter Caligiuni Title:   Vice President   86 -------------------------------------------------------------------------------- KEY BANK, N. A. By:   /s/ David A. Wild Name:   David A. Wild Title:   Vice President   87 -------------------------------------------------------------------------------- THE BANK OF NOVA SCOTIA By:   /s/ Todd Meller Name:   Todd Meller Title:   Managing Director   88 -------------------------------------------------------------------------------- CIBC, INC. By:   /s/ Dominic Sorresso Name:   Dominic Sorresso Title:   Executive Director CIBC World Markets Corp. Authorized Signatory   89 -------------------------------------------------------------------------------- LASALLE BANK NATIONAL ASSOCIATION By:   /s/ Doug Pogge Name:   Doug Pogge Title:   First Vice President   90 -------------------------------------------------------------------------------- SOCIÉTÉ GÉNÉRALE By:   /s/ Melissa Goeden Name:   Melissa Goeden Title:   Vice President   91 -------------------------------------------------------------------------------- THE BANK OF NEW YORK By:   /s/ Robert Besser Name:   Robert Besser Title:   Vice President   92

Exhibit 10.1 CONSULTING SERVICES AGREEMENT THIS CONSULTING SERVICES AGREEMENT (“Agreement”) is made and entered into, as of the effective date set forth on the signature page hereof, by and between GTS Consulting, LLC (“GTS”) and ACE American Insurance Company, a Pennsylvania corporation (“ACE”). WHEREAS, Gary Schmalzriedt (“Executive”) is presently employed as Chairman of ACE Overseas General; and WHEREAS, the Executive will retire from ACE effective September 30, 2006; and WHEREAS, ACE considers it essential to obtain the benefit of the Executive’s experience as an executive officer of ACE during the period immediately following the Executive’s termination of employment; WHEREAS, to induce GTS to execute this Agreement for Executive’s services as a consultant, the parties desire to enter into a written Consulting Services Agreement; NOW, THEREFORE, in consideration of the mutual promises set forth herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows: 1. Termination of Employment. Executive will retire from ACE effective September 30, 2006. 2. Independent Contractor. From October 1, 2006 until September 30, 2007, ACE shall retain GTS as an independent contractor, and nothing herein shall be construed or deemed as creating any other relationship during that time. From October 1, 2006 until September 30, 2007, Executive shall not hold the title of Chairman ACE Overseas General and shall not have the authority of that officer position to act on behalf of ACE. 3. Consulting Services. From October 1, 2006 to September 30, 2007, GTS hereby agrees to provide and perform for the benefit of ACE the duties and responsibilities described below and in addition those as may be prescribed from time to time by the Board of Directors of ACE Limited and/or the Chief Executive Officer of ACE Limited (“Consulting Services”). GTS shall ensure that Executive shall devote such time and attention to the Consulting Services as may be necessary or required to complete such Consulting Services. Executive shall be permitted to travel at the request of ACE management in the performance of the Consulting Services in accordance with the ACE Executive Travel Policy. Executive shall be entitled to fly business class for all business travel on airplanes. For the term of the Agreement, GTS through Executive will, as requested by ACE and agreed to by GTS, such agreement not to be unreasonably withheld, provide services to Employer which -------------------------------------------------------------------------------- relate to matters for which Executive was responsible in connection with his former position with Employer or which relate to the establishment and operation of a training program known as a “War College.” Executive will serve as Dean of the War College and in such role, will design the curriculum, solicit instructors and be responsible for delivery of the program. Upon reasonable advanced notice, Executive will make himself available during the term of this Agreement to provide Consulting Services for periods of time as reasonably required by Employer and will report to Evan Greenberg concerning the provision of Consulting Services. 4. Termination of this Agreement. ACE may terminate this Agreement with or without cause at ACE’s discretion and convenience at any time prior to September 30, 2007 by giving the Executive thirty (30) days prior written notice. In addition, ACE may terminate this Agreement immediately for cause, which shall include the failure to perform the Consulting Services, without prior written notice and such termination shall be effective immediately upon notice to the Executive. In the event that this Agreement is terminated for cause, all consideration described in paragraph 5 below shall cease as of the date this Agreement is terminated. “Cause” shall mean embezzlement of ACE funds, habitual insobriety or drug abuse during business hours or while performing the Consulting Services, conviction of a crime involving moral turpitude, or gross negligence in the performance of the Executive’s Consulting Services which gross negligence has had a material adverse effect on the consolidated business, assets, properties or financial condition of ACE or its affiliates. If the Agreement is terminated without cause, Executive will still receive the consideration set forth in paragraphs 5(a), (b) and (c) below. 5. Consideration. As consideration for the GTS’s performance of the Consulting Services from October 1, 2006 through September 30, 2007, ACE shall compensate the Executive as follows:     a. GTS will receive a total of $100,000 for time worked on the Consulting Services during the term of the Agreement, plus reasonable out-of-pocket expenses of Executive, which are approved, documented, and consistent with Employer’s Travel and Expense Policy;     b. fees for Consulting Services and expenses will be paid on a quarterly basis in 4 equal installments of $25,000;     c. subject to approval by the Compensation Committee of the ACE Limited Board of Directors, all unvested options to purchase shares of ACE Limited stock held by Executive on the Retirement Date will not be forfeited but will continue to vest in accordance with and remain subject to the terms and conditions of the awards under the applicable ACE Limited Long Term Incentive Plan. As a result of this provision, Executive’s awards of Incentive Stock Options will be converted to Non-Qualified Stock Options;   -2- --------------------------------------------------------------------------------   d. subject to approval by the Compensation Committee of the ACE Limited Board of Directors, all restricted shares of ACE Limited stock will continue to vest during the term of the Agreement, as though Executive’s termination of employment occurred on the last day of the term of the Agreement. Such restricted shares shall be subject to the following additional conditions: (i) Executive will incur a tax liability for the restricted shares of ACE Limited stock as said shares vest, and (ii) continued vesting in the restricted shares is expressly conditioned on Executive continuing to perform Consulting Services under this Agreement to the satisfaction of Employer during the term of the Agreement.     e. GTS and Executive shall have sole responsibility for paying any federal, state or local taxes. 6. Confidential Information. The GTS and Executive recognize and acknowledge that while employed by ACE, the Executive had access to, has learned and been provided with, and has prepared and created, certain confidential and proprietary business information and trade secrets for ACE; and, further, the Executive hereby acknowledges and agrees that all corporate records and other confidential information not released to the public, all trade secrets and all other confidential or proprietary information of ACE, in each case relating to the business and operations of ACE, are confidential and the sole property of ACE (collectively referred to as “Confidential Information”). The Executive and GTS acknowledge that, in their performance of the Consulting Services, they may become privy to Confidential Information. GTS and Executive agree not to use or disclose any Confidential Information except in the regular or normal course of the their performance of the Consulting Services. On September 30, 2007, or upon the termination of this Agreement, if earlier, the GTS and Executive will surrender to ACE all written Confidential Information in their possession. Further, GTS and Executive agree that, on September 30, 2007, or upon the termination of this Agreement, if earlier, not to use or cause to be used for the Executive’s own benefit or for the benefit of any third parties, or to disclose to any third party, in any manner, directly or indirectly, any Confidential Information. 7. Indemnification. ACE shall indemnify and hold harmless the Executive against any claims, causes of action, liabilities, debts, and judgments, as well as any and all reasonable costs and expenses, including reasonable attorneys’ fees, that may be incurred by the Executive in any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, or administrative, or investigative and whether formal or informal, because of the Executive’s performance of the Consulting Services described in this Agreement, unless and to the extent determined to be caused by the Executive’s gross negligence or willful misconduct. 8. Covenant Not to Compete. From October 1, 2006 until September 30, 2007, GTS and the Executive shall not, without the prior written consent of ACE, directly or indirectly, own,   -3- -------------------------------------------------------------------------------- manage or operate or participate in the ownership, management or operation of, or be connected as an officer, director, employee, partner or shareholder with, any business entity which competes with or which is engaged in activities in competition with those activities conducted by ACE or any of its parents, subsidiaries or affiliates, within the geographic territory served by ACE; provided, however, that ownership of five percent (5%) or less of a class of outstanding securities of or other ownership interests in such a business entity shall not constitute a breach or violation of the foregoing covenant. In the event that the provisions of this paragraph 8 should ever be deemed to exceed the time or geographic limitations permitted by applicable law, then such provisions shall be deemed reformed to the maximum permissible time of geographic limitations. 9. No Right to Employment. Nothing in this Agreement shall create any right in the Executive to employment with ACE or any affiliate of ACE. 10. Severability and Survival. In the event any provision of this Agreement shall be determined to be invalid, the remainder of this Agreement shall continue in full force and effect. The duties and obligations of GTS and the Exeuctive set forth herein with respect to ACE’s Confidential Information, and the provisions hereof relating to such duties and obligations, shall survive indefinitely completion of the Consulting Services and the termination of this Agreement for any reason. 11. Captions. Captions contained in this Agreement are inserted for convenience only and in no way define, limit or extend the scope of intent of any provision of this Agreement. 12. Arbitration and Applicable Law. GTS, Executive and ACE agree that any disagreements, disputes, or claims arising out of or relating to the validity of this Agreement or how it is interpreted or implemented and those involving in any way, or related to Executive’s employment with ACE or the termination of that employment, shall be resolved exclusively by arbitration in Philadelphia, Pennsylvania, in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association and judgment upon the award rendered by the Arbitrator may be entered in any court having jurisdiction over the matter. The terms and conditions of this Agreement shall be construed and enforced according to the laws of the Commonwealth of Pennsylvania, without regard to Pennsylvania conflicts of laws principles. 13. Assignment. This is a contract for the personal services of the Executive. GTS may not assign this Agreement or delegate Executive’s duties hereunder without the prior written consent of ACE and any attempted assignment or delegation shall be of no force or effect. 14. Entire Agreement; Amendments. There are no representations, agreements, arrangements, or understandings, oral or written, as to the Consulting Services to be performed and provided under this Agreement except as expressed herein. This Agreement may not be amended except in a writing signed by both parties hereto.   -4- -------------------------------------------------------------------------------- 15. Notice. Any written notice under this Agreement shall be personally delivered to the other party or sent by certified or registered mail, return receipt requested and postage prepaid, to ACE at 436 Walnut Street, Philadelphia, Pa. 19106, c/o Phillip Cole and to the Executive at the most recent home address of which he has informed ACE, or, as to either party, to such other address as either party may from time to time specify by written notice. IN WITNESS WHEREOF, the parties have executed this Agreement intending to be legally bound as of the effective date set forth below.   GTS CONSULTING, LLC   Gary T. Schmalzriedt, President ACE AMERICAN INSURANCE COMPANY   Phillip B. Cole, Global Human Resource Officer Effective Date:       -5-

TENTH AMENDMENT TO RESTATED AND AMENDED PURCHASE AGREEMENT   This Tenth Amendment and Assignment to Restated and Amended Purchase Agreement ("Tenth Amendment") is effective as of the /6th/ of /October/, 2006, between MILLWORKS TOWN CENTER, LLC, an Ohio limited liability company ("Purchaser"), and THE KIRK & BLUM MANUFACTURING COMPANY, an Ohio corporation ("Seller"). WITNESSETH: WHEREAS , Seller and Trademark Property Company entered into that certain Restated and Amended Purchase Agreement dated June 20, 2005, as amended by that certain First Amendment to Restated and Amended Purchase Agreement dated July 15, 2005 and the Second Amendment to Restated and Amended Purchase Agreement dated September 14, 2005; Seller, Trademark Property Company and Purchaser entered into the Third Amendment and Assignment to Restated and Amended Purchase Agreement dated October 20, 2005; Seller and Purchaser entered into the Fourth Amendment to Restated and Amended Purchase Agreement dated December 29, 2005; Seller and Purchaser entered into the Fifth Amendment to Restated and Amended Purchase Agreement dated March 1, 2006; Seller and Purchaser entered into the Sixth Amendment to Restated and Amended Purchase Agreement dated April 21, 2006; Seller and Purchaser entered into the Seventh Amendment to Restated and Amended Purchase Agreement dated May 9, 2006; Seller and Purchaser entered into the Eighth Amendment to Restated and Amended Purchase Agreement dated May 26, 2006; and Seller and Purchaser entered into the Ninth Amendment to Restated and Amended Purchase Agreement dated June 8, 2006 (as amended, the "Agreement"), covering the sale of two (2) separate parcels of land, as more particularly described therein (unless otherwise defined herein, all defined terms in this Tenth Amendment will have the same meaning as in the Agreement); and WHEREAS , Purchaser and Seller have previously agreed that the Closing of Parcel A was extended to occur on or before August 31, 2006; NOW, THEREFORE , for good and valuable consideration -- which the parties acknowledge receiving -- Seller and Purchaser hereby agree as follows: Purchaser agrees to deposit, within two (2) business days of the execution date of this Tenth Amendment, Fifty Thousand Dollars ($50,000.00) (the "Escrow Deposit") in accordance with the escrow agreement between Purchaser and Seller of even date herewith (the "Escrow Agreement"). The Escrow Deposit shall be fully and unconditionally refundable to Purchaser until October 31, 2006. Thereafter, the Escrow Deposit is refundable to Purchaser only in the event of default by Seller under the Agreement. The Escrow Deposit shall be fully applicable to the Purchase Price at the Closing of Parcel A. Purchaser agrees to deposit on or before October 31, 2006, Four Hundred Thousand Dollars ($400,000.00) (the "Additional Deposit") in accordance with the Escrow Agreement. The Additional Deposit shall be refundable to Purchaser only in the event of default by Seller under the Agreement. The Additional Deposit shall be fully applicable to the Purchase Price at the Closing of Parcel A. All prior deposits and/or extension fees paid by or on behalf of Purchaser and/or Trademark Property Company shall be fully applicable to the Purchase Price at the Closing of Parcel A. The parties agree that the total amount of such prior deposits and extension fees paid prior to the execution of this Tenth Amendment is Four Hundred Twenty-Five Thousand Dollars ($425,000.00), all of which is applicable to the Purchase Price at the Closing on Parcel A. Closing of Parcel A is hereby extended to on or before December 1, 2006. Closing of Parcel B is hereby extended to on or before the later of (i) /August 15, 2007/ or (ii) thirty (30) days after Purchaser's receipt of written notice from Seller certifying that Seller has completely vacated Parcel B and is no longer occupying any portion thereof, but in no event shall Seller occupy Parcel B beyond the date which is ten (10) months after the Closing of Parcel A provided the Closing of Parcel B occurs. Except as specifically modified by the terms of this Tenth Amendment, all of the terms and provisions of the Agreement shall remain in full force and effect and unmodified and are hereby ratified by the parties. This Agreement may be executed in any number of counterparts, each of which will be an original, and all of which -- when taken together -- will constitute one (1) document. Facsimile signatures will be treated as original signatures for all purposes hereunder.   EFFECTIVE as of the day and year first above written.       PURCHASER: MILLWORKS TOWN CENTER, LLC , an Ohio limited liability company   By: /s/ Kent M. Arnold Name: /s/ Kent M. Arnold Its: /Managing Member/       SELLER: THE KIRK & BLUM MANUFACTURING COMPANY , an Ohio corporation   By: /s/Dennis W. Blazer Name: /s/Dennis W. Blazer Its: /Treasurer/      

Exhibit 10(d) PPL Corporation Restricted Stock Unit Agreement This Letter Agreement will confirm a grant to you of Restricted Stock Units ("Units") of PPL Corporation Common Stock under the PPL Incentive Compensation Plan or the PPL Incentive Compensation Plan for Key Employees (the "Plan"). 1.  Grant of Units. The Company hereby grants to you Units representing a future delivery of a specified number of shares of common stock of the Company at a specified time, as shown on Exhibit A of this Agreement, under the terms and conditions set forth herein and the Plan. 2.  Issuance of Stock. Upon the lapse of restrictions on your Units, PPL Corporation's Investor Relations specialists will implement a procedure to identify PPL Corporation common stock in the number of shares you are entitled to receive after the lapse of restrictions on your Units. Pursuant to Paragraph 5, the total number of shares will be reduced by that number of shares equal in value to your income tax withholding obligation. PPL Corporation uses a stock transfer agent to place common stock in your name. For issuance of common stock under the Incentive Compensation Plan for Key Employees, the transfer of common stock to pay income tax withholding may be delayed until after the first quarter dividend record date, in order to provide dividends on the shares to participants prior to the sale of the shares. However, for retirement, death or disability, or change in control (paragraphs 6, 7, and 9), there shall be no delay in the transfer of common stock. Depending upon market volatility, holidays, and whether the Company elects to use treasury shares, unissued shares, or purchase on the open market, there will be a delay between the date the restrictions on your Units lapse and the date shares are registered in your name. This time lapse will normally not exceed 15 days and will not in any event exceed 30 days. Your shares will be registered in your name and deposited into a PPL Dividend Reinvestment Program ("DRIP") account. 3.  Dividend Equivalents. With respect to each dividend or distribution paid or made on Common Stock to holders of record while you hold Units hereunder, you shall be paid a dollar equivalent as salary at approximately the same time such dividend or distribution on Common Stock is paid or made, but in no event later than March 15 of the year following the calendar year of the dividend or distribution on common stock. 4.  Applicability of the Plan. This Agreement and the Units granted hereunder are subject to all the terms and conditions of the Plan, which are hereby incorporated by reference, and may not be assigned or transferred, except by will or the laws of descent and distribution in the case of your death. 5.  Withholding Taxes. Upon the lapse of restrictions on your Units and receipt of shares pursuant to Paragraph 4 (the “Payment Event”), the Company will pay all applicable withholding taxes by withholding from the shares otherwise payable to you shares of common stock equivalent in value (calculated based on the stock price on the date of the Payment Event) to the dollar amount of withholding taxes for which you are obligated. 6.  Retirement. "Retirement" means termination of employment with the Company and your election for monthly retirement benefits to commence immediately under the PPL Retirement Plan, or, if you are not a participant in the PPL Retirement Plan, you elect or are eligible for immediate commencement of benefits under any other defined benefit pension plan, whether or not tax qualified (such as the PPL SERP). Twelve months after the date of your retirement all restrictions on your Units lapse, and the income tax withholding and issuance of stock set forth above will take place. 7.  Death or Long-Term Disability. On your death or your receipt of benefits under the PPL Long-Term Disability Plan for three months (by reason of a medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months), restrictions on your Units shall lapse in the same manner as if you continued working until you were age 65, except that the six-month delay otherwise applicable to "specified employees" under Code Section 409A shall not apply. Units shall be paid to your beneficiary in the event of your death. 8.  Termination of Employment. If your employment is terminated, voluntarily or involuntarily, and you are not eligible for or do not elect immediate commencement of monthly retirement benefits under the PPL Retirement Plan (or other defined benefit pension plan if not a PPL Retirement Plan participant), all of your Units will be automatically forfeited. 9.  Change in Control. In the event of a "change in ownership or effective control" of PPL Corporation, as defined in the Plan, restriction on all Units will immediately lapse and payment of stock shall occur in accordance with the provisions of Paragraph 2. 10.  Definitions; Conflict. Capitalized terms not otherwise defined shall have the meaning specified in the Plan. In the event of any conflict between this Agreement and the Plan, the terms of the Plan shall control. 11.  No Right to Continued Employment. The grant of Units shall not confer on you any right to be retained in the employ of the Company or a subsidiary, or to receive subsequent Units or other awards under the Plan. The right of the Company or any subsidiary to terminate your employment with it at any time or as otherwise provided by any agreement between the Company or any subsidiary and you is specifically reserved. 12.  Applicable Law. The validity, construction, interpretation, administration, and effect of the Plan, and of its rules and regulations, and rights relating to the Plan and to this Agreement, shall be governed by the substantive laws, but not the choice of law rules, of the Commonwealth of Pennsylvania. 13.  No Rights of a Shareholder. You shall not have any rights of a shareholder with respect to shares issuable hereunder except to the extent shares have been issued to you as a result of the lapse of restrictions on your Unit. 14.  Amendment. The terms of this Agreement may be amended from time to time by the Committee in its sole discretion in any manner it deems appropriate; provided that no such amendment shall, without your consent, diminish your rights under this Agreement. ____________   To confirm your acceptance of the foregoing, kindly sign and promptly return one copy of Exhibit A of this Letter Agreement to the Company. Sincerely, PPL Corporation By:  /s/ Robert J. Grey                                                                  Robert J. Grey Senior Vice President, General Counsel And Secretary -------------------------------------------------------------------------------- Exhibit A   RESTRICTED STOCK UNIT AGREEMENT   Restricted Stock Unit Award Restricted Stock Units Granted To:  «First_Name» «Last_Name»  SSN: «SSN» Plan: Incentive Compensation Plan            Incentive Compensation Plan for Key Employees [Delete one] Date of Award: ______________________   Date Restrictions on Restricted Stock Units lapse:______________________   Signature of Employee: ______________________   Date: ______________________  

Exhibit 10.19 INDEMNIFICATION AGREEMENT THIS AGREEMENT is entered into, effective as of March 1, 2006 by and between JDS Uniphase Corporation, a Delaware corporation (the “Company”), and Masood A. Jabbar (“Indemnitee”). WHEREAS, it is essential to the Company to retain and attract as directors and officers the most capable persons available; WHEREAS, Indemnitee is a director and/or officer of the Company; WHEREAS, both the Company and Indemnitee recognize the increased risk of litigation and other claims currently being asserted against directors and officers of corporations; WHEREAS, the Certificate of Incorporation and Bylaws of the Company require the Company to indemnify and advance expenses to its directors and officers to the fullest extent permitted under Delaware law, and the Indemnitee will be serving as a director and/or officer of the Company in part in reliance on the Company’s Certificate of Incorporation and Bylaws; and WHEREAS, in recognition of Indemnitee’s need for (i) substantial protection against personal liability based on Indemnitee’s reliance on the aforesaid Certificate of Incorporation and Bylaws, (ii) specific contractual assurance that the protection promised by the Certificate of Incorporation and Bylaws will be available to Indemnitee (regardless of, among other things, any amendment to or revocation of the Certificate of Incorporation and Bylaws or any change in the composition of the Company’s Board of Directors or acquisition transaction relating to the Company), and (iii) an inducement to provide effective services to the Company as a director and/or officer, the Company wishes to provide in this Agreement for the indemnification of and the advancing of expenses to Indemnitee to the fullest extent (whether partial or complete) permitted under Delaware law and as set forth in this Agreement, and, to the extent insurance is maintained, to provide for the continued coverage of Indemnitee under the Company’s directors’ and officers’ liability insurance policies. NOW, THEREFORE, in consideration of the above premises and of Indemnitee serving the Company directly or, at its request, with another enterprise, and intending to be legally bound hereby, the parties agree as follows: -------------------------------------------------------------------------------- 1. Certain Definitions: (a) Board: the Board of Directors of the Company. (b) Affiliate: any corporation or other person or entity that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified. (c) Change in Control: shall be deemed to have occurred if (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, and other than any person holding shares of the Company on the date that the Company first registers under the Act or any transferee of such individual if such transferee is a spouse or lineal descendant of the transferee or a trust for the benefit of the individual, his spouse or lineal descendants), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the total voting power represented by the Company’s then outstanding Voting Securities, or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation that would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) 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 (in one transaction or a series of transactions) of all or substantially all of the Company’s assets. (d) Expenses: any expense, liability, or loss, including attorneys’ fees, judgments, fines, ERISA excise taxes and penalties, amounts paid or to be paid in settlement, any interest, assessments, or other charges imposed thereon, any federal, state, local, or foreign taxes imposed as a result of the actual or deemed receipt of any payments under this Agreement, and all other costs and obligations, paid or incurred in connection with investigating, defending, being a witness in, participating in (including on appeal), or preparing for any of the foregoing in, any Proceeding relating to any Indemnifiable Event. (e) Indemnifiable Event: any event or occurrence that takes place either prior to or after the execution of this Agreement, related to the fact that Indemnitee is or was a director or officer of the Company, or while a director or officer is or was serving at the -------------------------------------------------------------------------------- request of the Company as a director, officer, employee, trustee, agent, or fiduciary of another foreign or domestic corporation, partnership, joint venture, employee benefit plan, trust, or other enterprise, or was a director, officer, employee, or agent of a foreign or domestic corporation that was a predecessor corporation of the Company or of another enterprise at the request of such predecessor corporation, or related to anything done or not done by Indemnitee in any such capacity, whether or not the basis of the Proceeding is alleged action in an official capacity as a director, officer, employee, or agent or in any other capacity while serving as a director, officer, employee, or agent of the Company, as described above. (f) Independent Counsel: the person or body appointed in connection with Section 3. (g) Proceeding: any threatened, pending, or completed action, suit, or proceeding (including an action by or in the right of the Company), or any inquiry, hearing, or investigation, whether conducted by the Company or any other party, that Indemnitee in good faith believes might lead to the institution of any such action, suit, or proceeding, whether civil, criminal, administrative, investigative, or other. (h) Reviewing Party: the person or body appointed in accordance with Section 3. (i) Voting Securities: any securities of the Company that vote generally in the election of directors. 2. Agreement to Indemnify. (a) General Agreement. In the event Indemnitee was, is, or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, a Proceeding by reason of (or arising in part out of) an Indemnifiable Event, the Company shall indemnify Indemnitee from and against any and all Expenses to the fullest extent permitted by law, as the same exists or may hereafter be amended or interpreted (but in the case of any such amendment or interpretation, only to the extent that such amendment or interpretation permits the Company to provide broader indemnification rights than were permitted prior thereto). The parties hereto intend that this Agreement shall provide for indemnification in excess of that expressly permitted by statute, including, without limitation, any indemnification provided by the Company’s Certificate of Incorporation, its Bylaws, vote of its stockholders or disinterested directors, or applicable law. (b) Initiation of Proceeding. Notwithstanding anything in this Agreement to the contrary, Indemnitee shall not be entitled to indemnification pursuant to this Agreement in connection with any Proceeding initiated by Indemnitee against the Company or any director or officer of the Company unless (i) the Company has joined in or the Board has consented to the initiation of such Proceeding; (ii) the Proceeding is one to enforce indemnification rights under Section 5; or (iii) the Proceeding is instituted after a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control) and Independent Counsel has approved its initiation.   2 -------------------------------------------------------------------------------- (c) Expense Advances. If so requested by Indemnitee, the Company shall advance (within ten business days of such request) any and all Expenses to Indemnitee (an “Expense Advance”); provided that (i) such an Expense Advance shall be made only upon delivery to the Company of an undertaking by or on behalf of the Indemnitee to repay the amount thereof if it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company, and (ii) if and to the extent that the Reviewing Party determines that Indemnitee would not be permitted to be so indemnified under applicable law, the Company shall be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse the Company) for all such amounts theretofore paid. If Indemnitee has commenced or commences legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law, as provided in Section 4, any determination made by the Reviewing Party that Indemnitee would not be permitted to be indemnified under applicable law shall not be binding, and Indemnitee shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or have lapsed). Indemnitee’s obligation to reimburse the Company for Expense Advances shall be unsecured and no interest shall be charged thereon. (d) Mandatory Indemnification. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any Proceeding relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, Indemnitee shall be indemnified against all Expenses incurred in connection therewith. (e) Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee is entitled. (f) Prohibited Indemnification. No indemnification pursuant to this Agreement shall be paid by the Company on account of any Proceeding in which judgment is rendered against Indemnitee for an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of any federal, state, or local laws. 3. Reviewing Party. Prior to any Change in Control, the Reviewing Party shall be any appropriate person or body consisting of a member or members of the Board or any other person or body appointed by the Board who is not a party to the particular Proceeding with respect to which Indemnitee is seeking indemnification; after a Change in Control, the Independent Counsel referred to below shall become the Reviewing Party. With respect to all matters arising after a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control) concerning the rights of Indemnitee to indemnity payments and Expense Advances under this   3 -------------------------------------------------------------------------------- Agreement or any other agreement or under applicable law or the Company’s Certificate of Incorporation or Bylaws now or hereafter in effect relating to indemnification for Indemnifiable Events, the Company shall seek legal advice only from Independent Counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company or the Indemnitee (other than in connection with indemnification matters) within the last five years. The Independent Counsel shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement. Such counsel, among other things, shall render its written opinion to the Company and Indemnitee as to whether and to what extent the Indemnitee should be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the Independent Counsel and to indemnify fully such counsel against any and all expenses (including attorneys’ fees), claims, liabilities, loss, and damages arising out of or relating to this Agreement or the engagement of Independent Counsel pursuant hereto. 4. Indemnification Process and Appeal. (a) Indemnification Payment. Indemnitee shall be entitled to indemnification of Expenses, and shall receive payment thereof, from the Company in accordance with this Agreement as soon as practicable after Indemnitee has made written demand on the Company for indemnification, unless the Reviewing Party has given a written opinion to the Company that Indemnitee is not entitled to indemnification under applicable law. (b) Suit to Enforce Rights. Regardless of any action by the Reviewing Party, if Indemnitee has not received full indemnification within thirty days after making a demand in accordance with Section 4(a), Indemnitee shall have the right to enforce its indemnification rights under this Agreement by commencing litigation in any court in the State of California or the State of Delaware having subject matter jurisdiction thereof seeking an initial determination by the court or challenging any determination by the Reviewing Party or any aspect thereof. The Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party not challenged by the Indemnitee shall be binding on the Company and Indemnitee. The remedy provided for in this Section 4 shall be in addition to any other remedies available to Indemnitee at law or in equity. (c) Defense to Indemnification, Burden of Proof, and Presumptions. It shall be a defense to any action brought by Indemnitee against the Company to enforce this Agreement (other than an action brought to enforce a claim for Expenses incurred in defending a Proceeding in advance of its final disposition where the required undertaking has been tendered to the Company) that it is not permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed. In connection with any such action or any determination by the Reviewing Party or otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the burden of proving such a defense or determination shall be on the Company. Neither the failure of the Reviewing Party or the Company (including its Board, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action by Indemnitee that indemnification of the claimant is proper under the circumstances   4 -------------------------------------------------------------------------------- because Indemnitee has met the standard of conduct set forth in applicable law, nor an actual determination by the Reviewing Party or Company (including its Board, independent legal counsel, or its stockholders) that the Indemnitee had not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Indemnitee has not met the applicable standard of conduct. For purposes of this Agreement, the termination of any claim, action, suit, or proceeding, by judgment, order, settlement (whether with or without court approval), conviction, or upon a plea of nolo contendere, or its equivalent, shall not create a presumption that Indemnitee did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 5. Indemnification for Expenses Incurred in Enforcing Rights. The Company shall indemnify Indemnitee against any and all Expenses that are incurred by Indemnitee in connection with any action brought by Indemnitee for     (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or under applicable law or the Company’s Certificate of Incorporation or Bylaws now or hereafter in effect relating to indemnification for Indemnifiable Events, and/or     (ii) recovery under directors’ and officers’ liability insurance policies maintained by the Company, but only in the event that Indemnitee ultimately is determined to be entitled to such indemnification or insurance recovery, as the case may be. In addition, the Company shall, if so requested by Indemnitee, advance the foregoing Expenses to Indemnitee, subject to and in accordance with Section 2(c). 6. Notification and Defense of Proceeding. (a) Notice. Promptly after receipt by Indemnitee of notice of the commencement of any Proceeding, Indemnitee shall, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof; but the omission so to notify the Company will not relieve the Company from any liability that it may have to Indemnitee, except as provided in Section 6(c). (b) Defense. With respect to any Proceeding as to which Indemnitee notifies the Company of the commencement thereof, the Company will be entitled to participate in the Proceeding at its own expense and except as otherwise provided below, to the extent the Company so wishes, it may assume the defense thereof with counsel reasonably satisfactory to Indemnitee. After notice from the Company to Indemnitee of its election to assume the defense of any Proceeding, the Company shall not be liable to Indemnitee under this Agreement or otherwise for any Expenses subsequently incurred by Indemnitee in connection with the defense of such Proceeding other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ legal counsel in such Proceeding, but all Expenses related thereto incurred after notice from the Company of its assumption of the defense shall be at Indemnitee’s expense unless: (i) the employment of legal counsel by Indemnitee has been authorized by the Company, (ii) Indemnitee has reasonably determined that there may be a   5 -------------------------------------------------------------------------------- conflict of interest between Indemnitee and the Company in the defense of the Proceeding, (iii) after a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control), the employment of counsel by Indemnitee has been approved by the Independent Counsel, or (iv) the Company shall not in fact have employed counsel to assume the defense of such Proceeding, in each of which cases all Expenses of the Proceeding shall be borne by the Company. The Company shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the Company or as to which Indemnitee shall have made the determination provided for in (ii), (iii) and (iv) above. (c) Settlement of Claims. The Company shall not be liable to indemnify Indemnitee under this Agreement or otherwise for any amounts paid in settlement of any Proceeding effected without the Company’s written consent, such consent not to be unreasonably withheld; provided, however, that if a Change in Control has occurred (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control), the Company shall be liable for indemnification of Indemnitee for amounts paid in settlement if the Independent Counsel has approved the settlement. The Company shall not settle any Proceeding in any manner that would impose any penalty or limitation on Indemnitee without Indemnitee’s written consent. The Company shall not be liable to indemnify the Indemnitee under this Agreement with regard to any judicial award if the Company was not given a reasonable and timely opportunity, at its expense, to participate in the defense of such action; the Company’s liability hereunder shall not be excused if participation in the Proceeding by the Company was barred by this Agreement. 7. Establishment of Trust. In the event of a Change in Control (other than a Change in Control approved by a majority of the directors on the Board who were directors immediately prior to such Change in Control) the Company shall, upon written request by Indemnitee, create a Trust for the benefit of the Indemnitee and from time to time upon written request of Indemnitee shall fund the Trust in an amount sufficient to satisfy any and all Expenses reasonably anticipated at the time of each such request to be incurred in connection with investigating, preparing for, participating in, and/or defending any Proceeding relating to an Indemnifiable Event. The amount or amounts to be deposited in the Trust pursuant to the foregoing funding obligation shall be determined by the Independent Counsel. The terms of the Trust shall provide that (i) the Trust shall not be revoked or the principal thereof invaded without the written consent of the Indemnitee, (ii) the Trustee shall advance, within ten business days of a request by the Indemnitee, any and all Expenses to the Indemnitee (and the Indemnitee hereby agrees to reimburse the Trust under the same circumstances for which the Indemnitee would be required to reimburse the Company under Section 2(c) of this Agreement), (iii) the Trust shall continue to be funded by the Company in accordance with the funding obligation set forth above, (iv) the Trustee shall promptly pay to the Indemnitee all amounts for which the Indemnitee shall be entitled to indemnification pursuant to this Agreement or otherwise, and (v) all unexpended funds in the Trust shall revert to the Company upon a final determination by the Independent Counsel or a court of competent jurisdiction, as the case may be, that the Indemnitee has been fully indemnified under the terms of this Agreement. The Trustee shall be chosen by the Indemnitee. Nothing in this Section 7 shall relieve the Company of any of its obligations under this Agreement. All income earned on the assets held in the Trust shall be reported as income by   6 -------------------------------------------------------------------------------- the Company for federal, state, local, and foreign tax purposes. The Company shall pay all costs of establishing and maintaining the Trust and shall indemnify the Trustee against any and all expenses (including attorneys’ fees), claims, liabilities, loss, and damages arising out of or relating to this Agreement or the establishment and maintenance of the Trust. 8. Non-Exclusivity. The rights of Indemnitee hereunder shall be in addition to any other rights Indemnitee may have under the Company’s Certificate of Incorporation, Bylaws, applicable law, or otherwise; provided, however, that this Agreement shall supersede any prior indemnification agreement between the Company and the Indemnitee. To the extent that a change in applicable law (whether by statute or judicial decision) permits greater indemnification than would be afforded currently under the Company’s Certificate of Incorporation, Bylaws, applicable law, or this Agreement, it is the intent of the parties that Indemnitee enjoy by this Agreement the greater benefits so afforded by such change. 9. Liability Insurance. To the extent the Company maintains an insurance policy or policies providing general and/or directors’ and officers’ liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company director or officer. 10. Period of Limitations. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company or any Affiliate of the Company against Indemnitee, Indemnitee’s spouse, heirs, executors, or personal or legal representatives after the expiration of two years from the date of accrual of such cause of action, or such longer period as may be required by state law under the circumstances. Any claim or cause of action of the Company or its Affiliate shall be extinguished and deemed released unless asserted by the timely filing and notice of a legal action within such period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action, the shorter period shall govern. 11. Amendment of this Agreement. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be binding unless in the form of a writing signed by the party against whom enforcement of the waiver is sought, and no such waiver shall operate as a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein, no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof. 12. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 13. No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Indemnitee to the extent Indemnitee has otherwise received payment (under any insurance policy, Bylaw, or otherwise) of the amounts otherwise indemnifiable hereunder.   7 -------------------------------------------------------------------------------- 14. Binding Effect. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially all of the business and/or assets of the Company), assigns, spouses, heirs, and personal and legal representatives. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation, or otherwise) to all, substantially all, or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. The indemnification provided under this Agreement shall continue as to Indemnitee for any action taken or not taken while serving in an indemnified capacity pertaining to an Indemnifiable Event even though he may have ceased to serve in such capacity at the time of any Proceeding. 15. Severability. If any provision (or portion thereof) of this Agreement shall be held by a court of competent jurisdiction to be invalid, void, or otherwise unenforceable, the remaining provisions shall remain enforceable to the fullest extent permitted by law. Furthermore, to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of this Agreement containing any provision held to be invalid, void, or otherwise unenforceable, that is not itself invalid, void, or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, void, or unenforceable. 16. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to contracts made and to be performed in such State without giving effect to its principles of conflicts of laws.   8 -------------------------------------------------------------------------------- 17.Notices. All notices, demands, and other communications required or permitted hereunder shall be made in writing and shall be deemed to have been duly given if delivered by hand, against receipt, or mailed, postage prepaid, certified or registered mail, return receipt requested, and addressed to the Company at: JDS Uniphase Corporation Attention: General Counsel 430 North McCarthy Blvd. Milpitas, CA 95035 and to Indemnitee at: _________________________ _________________________ Notice of change of address shall be effective only when given in accordance with this Section. All notices complying with this Section shall be deemed to have been received on the date of hand delivery or on the third business day after mailing. 18. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.   9 -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the day specified above.   JDS Uniphase Corporation By:   /s/ Christopher S. Dewees   Christopher S. Dewees   Senior Vice President and General Counsel INDEMNITEE By:   /s/ Masood A. Jabbar   Masood A. Jabbar   10

Exhibit 10.5 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (“Agreement”), is made and entered into as of the 11th of May, 2006, by and between Kensey Nash Corporation, a Delaware corporation (the “Company”), and Wendy F. DiCicco (“Executive”). Capitalized terms are defined in Exhibit C. In addition, certain other capitalized terms used herein have the definitions given to them in the first places in which they are used. WHEREAS, the Company wishes to retain Executive as an executive employee, and Executive wishes to be employed by the Company in such capacity, all upon the terms and conditions hereinafter set forth; WHEREAS, the Company and Executive entered into that certain Employment Agreement dated as of October 1, 2003 and that certain Termination and Change in Control Agreement dated as of September 1, 2003; and WHEREAS, the Company and Executive desire to amend and restate that Employment Agreement and that Termination and Change in Control Agreement in one single document as set forth herein. NOW, THEREFORE, in consideration of the mutual covenants of parties hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. EMPLOYMENT OF EXECUTIVE. The Company engages and employs Executive in an executive capacity and Executive accepts such employment and agrees to act as an employee of the Company in accordance with the terms of employment hereinafter specified. Executive shall hold the office of Chief Financial Officer and shall, subject to the direction and supervision of the Board, (a) have the responsibilities and authority customarily associated with such office, and (b) perform such other duties and responsibilities as the Board shall from time to time assign to her. Executive agrees diligently and faithfully to serve the Company and to devote her best efforts, her full business time and her highest talents and skills to the furtherance and success of the Company’s business. 2. COMPENSATION. As full and complete compensation to Executive for all services to be rendered by Executive hereunder, the Company shall pay Executive as follows: (a) The Company shall, during the term of Executive’s full-time employment, pay or cause to be paid to Executive a base salary at the rate of $197,600 per annum, or Executive’s most recent per annum base salary, whichever is greater (the “Base Salary”). Such Base Salary shall be paid in periodic installments at the discretion of the Company (but not less frequently than monthly) in accordance with the Company’s normal mode of executive salary payment. (b) The Company may, during the term of Executive’s employment, pay or cause to be paid to Executive an annual cash bonus not to exceed 75% of Executive’s Base Salary for the applicable Performance Period. Such annual cash bonus, if any, shall be paid following the end of the applicable Performance Period, but in no event shall such annual cash bonus be paid later than March 15 following the calendar year in which the applicable Performance Period ends (e.g., the annual cash bonus for the Performance Period ending June 30, 2008 must be paid no later than March 15, 2009). The amount of the Executive’s cash bonus will be determined on an annual basis, in connection with the applicable Company bonus compensation plan (a “Bonus Plan”) and based upon specified goals and objectives, at the discretion of the Chief Executive Officer and the Chief Operating Officer. In addition, Restricted Stock, Stock Options and other equity-based awards may be awarded to the Executive in accordance with the applicable Company incentive compensation plan (an “Incentive Plan”). -------------------------------------------------------------------------------- 3. TERM OF EMPLOYMENT; SEVERANCE. (a) The term of Executive’s employment hereunder (the “Employment Term”) shall commence on the date hereof and shall expire two (2) years after such date. Thereafter, as of the date the Employment Term would otherwise end, the Employment Term may be extended by the Company for a period of at least one (1) year (a “Renewal Term”). Any such Renewal Term shall also be referred to in the Agreement as the Employment Term. The Company shall provide written notice to the Executive of its intent to extend the Employment Term at least sixty (60) days prior to the end of the Employment Term or a subsequent Renewal Term. (b) Termination of Executive’s employment pursuant to this Agreement or voluntary termination of employment shall not constitute a waiver of any of Executive’s obligations hereunder that survive termination hereof, including without limitation those arising under Paragraphs 6 through 10 inclusive hereof. (c) In the event Executive’s employment is terminated by the Company without Cause during the Employment Term, the Company shall pay to Executive a severance fee equal to the greater of (i) any amount of Base Salary remaining until the expiration of the original two-year Employment Term and a payment equal to one Estimated Bonus for each year of the original two-year Employment Term for which the Executive has not yet received such a bonus payment and to which the Executive would otherwise be entitled but for such termination, or (ii) twelve (12) months worth of Executive’s Base Salary and a payment equal to one Estimated Bonus. Such severance fee shall be paid in a lump sum within ten (10) days of the Termination Date, subject to the effectiveness of a release agreement executed by the Executive as described in Paragraph 3(j) below. If such release agreement is not effective within such ten (10) day period, such severance fee shall be paid in a lump sum within five (5) days of the effectiveness of a release agreement executed by the Executive as described in Paragraph 3(j) below. Additionally, the Executive shall continue to be entitled to receive those severance fringe benefits enumerated in Exhibit B hereof until the expiration of the original Employment Term or twelve (12) months, whichever is longer following the Executive’s Termination Date. In addition, upon the termination of Executive’s employment by the Company without Cause during the Employment Term, all of the Executive’s Stock Options and Restricted Stock shall immediately vest and such Stock Options shall remain exercisable for a period of time (the “Extended Exercise Period”) until the later of (i) the 15th day of the third month following the date at which the Stock Option exercise period would otherwise have expired (without extension) under the terms of the applicable Grant Agreement or Incentive Plan or (ii) December 31 of the calendar year in which the Stock Option exercise period would otherwise have expired (without extension) under the terms of the applicable Grant Agreement or Incentive Plan; provided however, the Extended Exercise Period shall not be extended past the term of the Stock Option as such term is defined in the applicable Grant Agreement or Incentive Plan. Upon the expiration of the Extended Exercise Period, all of the Executive’s outstanding and unexercised Stock Options shall be immediately cancelled. (d) In the event Executive’s employment is terminated either by the Company with Cause or by the Executive other than for reasons provided in Paragraphs 3(e) or 3(f) below during the Employment Term, the Company shall have no further obligations hereunder or otherwise with respect to Executive’s employment from and after the Termination Date, except for the payment of Executive’s Base Salary accrued through the Termination Date. (e) In the event, following a Change in Control, the Company terminates the Executive’s employment for a reason other than Cause or the Executive quits her employment with the Company for Good Reason during the Employment Term, the Company shall pay to Executive a severance fee equal to the greater of (i) the amount Executive would be entitled to receive under Paragraph 3(c) of this Agreement for a termination without Cause, or (ii) the sum of (x) two times her regular Base Salary or two times her most recent per annum Base Salary, whichever is greater, and (y) a payment in an amount equal to two times the Estimated Bonus. Such severance fee, subject to the effectiveness of a release agreement executed by the Executive as described in Paragraph 3(j) below, shall be paid in monthly installments for a period of twenty-four (24) months with the first payment, equal to six monthly payments, being made at the beginning of the seventh (7th) month following the Termination Date and subsequent payments being made on a monthly basis -------------------------------------------------------------------------------- thereafter. Additionally, the Executive shall continue to be entitled to receive those severance fringe benefits enumerated in Exhibit B hereof for a period of twenty-four (24) months following the Executive’s Termination Date. Such severance fee shall be in addition to any other compensation or benefits to which the Executive may be entitled under any other plan, program or payroll practice of the Company, other than any applicable severance plan of the Company. In addition, upon a Change in Control which occurs during the Employment Term, vesting of all unvested Stock Options granted and Restricted Stock awarded to Executive shall accelerate such that Executive shall be immediately one hundred percent (100%) vested in all equity awarded. Following a Change in Control, in the event of Executive’s termination without Cause or Executive’s resignation for Good Reason, the Executive’s Stock Options shall remain exercisable for a period of time (the “Extended Exercise Period”) until the later of (i) the 15th day of the third month following the date at which the Stock Option exercise period would otherwise have expired (without extension) under the terms of the applicable Grant Agreement or Incentive Plan or (ii) December 31 of the calendar year in which the Stock Option exercise period would otherwise have expired (without extension) under the terms of the applicable Grant Agreement or Incentive Plan; provided however, the Extended Exercise Period shall not be extended past the term of the Stock Option as such term is defined in the applicable Grant Agreement or Incentive Plan. Upon the expiration of the Extended Exercise Period, all of the Executive’s outstanding and unexercised Stock Options shall be immediately cancelled. (f) In the event Executive’s employment is not renewed by the Company upon the expiration of the Employment Term for a Renewal Term or in the event the Executive’s employment is not renewed by the Company upon the expiration of a subsequent Renewal Term, the Company shall, upon the termination of the Executive’s employment occurring on or within sixty days after (i) the expiration of a Renewal Term, if any, or (ii) the expiration of the Employment Term in the event there is no Renewal Term, unless, prior to any such expiration of the Renewal Term or Employment Term, as applicable, the Company renews the Executive’s employment pursuant to Section 3(a) for substantially the same terms as set forth herein for a period of at least one year from the date of expiration, pay to Executive a severance fee equal to the sum of (x) one half (1/2) of Executive’s Base Salary and (y) one half (1/2) of the Estimated Bonus. Such severance fee shall be paid in a lump sum within ten (10) days of the Termination Date, subject to the effectiveness of a release agreement executed by the Executive as described in Paragraph 3(j) below. If such release agreement is not effective within such ten (10) day period, such severance fee shall be paid in a lump sum within five (5) days of the effectiveness of a release agreement executed by the Executive as described in Paragraph 3(j) below. Additionally, the Executive shall continue to be entitled to receive those severance fringe benefits enumerated in Exhibit B hereof for a period of twelve (12) months following the Executive’s Termination Date. In addition, the Executive’s Stock Options that are vested as of the Termination Date shall remain exercisable for a period of time (the “Extended Exercise Period”) until the later of (i) the 15th day of the third month following the date at which the Stock Option exercise period would otherwise have expired (without extension) under the terms of the applicable Grant Agreement or Incentive Plan or (ii) December 31 of the calendar year in which the Stock Option exercise period would otherwise have expired (without extension) under the terms of the applicable Grant Agreement or Incentive Plan; provided however, the Extended Exercise Period shall not be extended past the term of the Stock Option as such term is defined in the applicable Grant Agreement or Incentive Plan. Upon the Termination Date due to the Company’s non-renewal of the Executive’s employment, all of the Executive’s unvested Stock Options and Restricted Stock shall be immediately cancelled unless otherwise provided in the applicable Grant Agreement and Incentive Plan. Upon the expiration of the Extended Exercise Period, all of the Executive’s remaining outstanding and unexercised Stock Options shall be immediately cancelled. (g) In the event any payments or benefits received by the Executive upon her Termination Date (which payments shall include, without limitation, the vesting of an equity award or other non-cash benefit or property), whether pursuant to the terms of this Agreement or any other plan, arrangement, or agreement with the Company or any affiliated company (collectively, the “Total Payments”) would be subject (in whole or in part) to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or any similar tax as may hereafter be imposed (the “Excise Tax”), the provisions as attached in Exhibit D shall apply. -------------------------------------------------------------------------------- (h) In the event Executive’s employment is terminated by the Executive due to the Executive’s Retirement during the Employment Term, the Executive’s Stock Options that are vested as of the Termination Date shall remain exercisable for a period of time (the “Extended Exercise Period”) until the later of (i) the 15th day of the third month following the date at which the Stock Option exercise period would otherwise have expired (without extension) under the terms of the applicable Grant Agreement or Incentive Plan or (ii) December 31 of the calendar year in which the Stock Option exercise period would otherwise have expired (without extension) under the terms of the applicable Grant Agreement or Incentive Plan; provided however, the Extended Exercise Period shall not be extended past the term of the Stock Option as such term is defined in the applicable Grant Agreement or Incentive Plan. Upon the Termination Date due to the Executive’s Retirement, all of the Executive’s unvested Stock Options and Restricted Stock shall be immediately cancelled unless otherwise provided in the applicable Grant Agreement and Incentive Plan. Upon the expiration of the Extended Exercise Period, all of the Executive’s remaining outstanding and unexercised Stock Options shall be immediately cancelled. (i) The severance fringe benefits the Executive is entitled to receive, if any, under Paragraphs 3(c), 3(e) or 3(f), will cease immediately upon Executive becoming gainfully employed and being eligible for benefits at her new place of employment. The Executive shall notify the Company in writing promptly after Executive’s commencement of such other employment. (j) Notwithstanding anything in this Agreement to the contrary, Executive agrees, as a condition to the receipt of the payment of any severance fee or other benefit as provided for in Paragraphs 3(c), 3(e) or 3(f), that she will execute a release agreement, in the form attached as Exhibit E, releasing any and all claims arising out of Executive’s employment. Executive also agrees that she shall not be entitled to receive any severance fee or other benefits under this Agreement if Executive breaches any of her obligations arising under Paragraphs 8 through 10 hereof. Executive acknowledges that such release agreement must be signed and become effective (if subject to any legally required waiting periods or revocation periods) before the Company will be obligated to make any severance payments or provide any other benefits due under this Agreement following the Executive’s Termination Date. The Executive further acknowledges that if such release agreement is not signed and effective within sixty (60) days of the Termination Date, the severance payments and other benefits described in Paragraphs 3(c), 3(e) or 3(f) shall be forfeited. (k) Any severance fee shall be paid in accordance with the Company’s regular payroll practices as in effect at the time of payment and shall be subject to regular tax and other withholdings in effect with respect to the Executive’s compensation prior to the Executive’s Termination Date. The Company, however, shall not be required to provide additional accruals or contributions under any retirement plan qualified under Section 401(a) of the Internal Revenue Code following the Executive’s Termination Date. (l) The payment of the monthly severance benefit described in Paragraph 3(e) or the provision of any severance fringe benefit as described in this Agreement shall terminate upon the death of Executive if such death occurs prior to the completion of such payments or benefits. -------------------------------------------------------------------------------- 4. FRINGE BENEFITS. (a) During the Employment Term, Executive shall be entitled to participate in all health insurance and retirement benefit programs normally available to other executives of the Company holding positions similar to that of the Executive (subject to all applicable eligibility rules thereof), as from time to time in effect, and the Executive shall also be eligible to receive the benefits listed on Exhibit A hereto. (b) During the Employment Term, Executive shall be entitled to paid vacation as listed in Exhibit A. Executive shall make good faith efforts to schedule such vacations so as to least conflict with the conduct of the Company’s business and shall give the Company adequate advance notice of her planned absences. Accumulated, unused vacation time for executives of the Company is not vested and will not be paid to Executive either while employed or upon the Executive’s Termination Date. 5. REIMBURSEMENTS. During the Employment Term, the Company shall reimburse Executive for all business-related expenses incurred by Executive at the Company’s direction. Executive shall submit to the Company expense reports in compliance with established Company guidelines. 6. INVENTIONS. Executive agrees, on behalf of herself, her heirs and personal representatives, that she will promptly communicate, disclose and transfer to the Company free of all encumbrances and restrictions (and will execute and deliver any papers and take any action at any time deemed necessary by the Company to further establish such transfer) all inventions and improvements relating to Company’s business originated or developed by Executive solely or jointly with others during the term of her employment hereunder. Such inventions and improvements shall belong to the Company whether or not they are patentable and whether or not patent applications are filed thereon. Such transfer shall include all patent rights (if any) to such inventions or improvements in the United States and in all foreign countries. Executive further agrees, at the request of Company, to execute and deliver, at any time during the term of her employment hereunder or after termination thereof, all assignments and other lawful papers (which will be prepared at the Company’s expense) relating to any aspect of the prosecution of such patent applications and rights in the United States and foreign countries. 7. EXPOSURE TO PROPRIETARY INFORMATION. (a) Executive acknowledges and agrees that during the course of her employment by Company, she will be in continuous contact with customers, suppliers and others doing business with the Company throughout the world. Executive further acknowledges that the performance of her duties hereunder will expose her to data and information concerning the business and affairs of the Company, including but not limited to information relative to the Company’s proprietary rights and technology, patents, financial statements, sales programs, pricing programs, profitability analyses and profit margin information, customer buying patterns, needs and inventory levels, supplier identities and other related matters, and that all of such data and information (collectively “the Proprietary Information”) is vital, sensitive, confidential and proprietary to Company. (b) In recognition of the special nature of her employment hereunder, including but not limited to her special access to the Proprietary Information, and in consideration of her employment, Executive agrees to the covenants and restrictions set forth in Paragraphs 8 through 10 inclusive hereof. As used in Paragraphs 6 though 10, the term “Company” shall include, where applicable, any parent, subsidiary, sub-subsidiary, or affiliate of Company. 8. USE OF PROPRIETARY INFORMATION. Executive acknowledges that the Proprietary Information constitutes a protectible business interest of Company, and covenants and agrees that during the term of her employment hereunder and after the Termination Date, she shall not, directly or indirectly, whether individually, as a director, stockholder, owner, partner, employee or agent of any business, or in any other capacity, make known, disclose, furnish, make available or utilize any of the Proprietary Information, other than in the proper performance of her duties during the term of her employment hereunder. Executive’s obligations under this Paragraph with respect to particular Proprietary Information shall terminate only at such time (if any) as the Proprietary Information in question becomes generally known to the public other than through a breach of Executive’s obligations hereunder. -------------------------------------------------------------------------------- 9. RESTRICTION AGAINST COMPETITION AND EMPLOYING OR SOLICITING COMPANY EMPLOYEES, CUSTOMERS OR SUPPLIERS. Executive covenants and agrees that during the Employment Term and for the twelve month period immediately following the Termination Date, she shall not, directly or indirectly, whether individually, as a director, stockholder, partner, owner, employee or agent of any business, or in any other capacity, (i) engage in a business substantially similar to that which is conducted by the Company in any market area in which such business is operated; (ii) solicit any party who is or was a customer or supplier of the Company on the Termination Date or at any time during the six month period immediately prior thereto for the sale or purchase of any type or quantity of products sold by or used in the business of the Company on the Termination Date or at any time within such six month period; or (iii) solicit for employment any person who was or is an employee of the Company on the Termination Date or at any time during the twelve month period immediately prior thereto. If at any time prior to the end of such twelve-month period, the Company determines that the Executive is engaging in Competition, the Company shall have the right to immediately terminate further payments and benefits hereunder. If the Executive engages in Competition at any time during the twelve month period, the Executive shall return all payments paid under Paragraph 3, and the Company shall be entitled to enforce the return of any payments previously paid to the Executive under Paragraph 3 of this Agreement. The Executive shall have the right to appeal any benefit suspension or request for return of benefits to the Board and, if it is determined by the Board that the Executive has not engaged in Competition, payment of all amounts due and unpaid shall be made as soon as reasonably practicable after such determination. 10. RETURN OF COMPANY MATERIALS UPON TERMINATION. Executive acknowledges that all price lists, sales manuals, catalogs, binders, customer lists and other customer information, supplier lists, financial information, and other records or documents containing Proprietary Information prepared by Executive or coming into her possession by virtue of her employment by the Company is and shall remain the property of the Company and that upon her Termination Date hereunder, Executive shall return immediately to the Company all such items in her possession, together with all copies thereof. 11. EQUITABLE REMEDIES.     (a) Executive acknowledges and agrees that the covenants set forth in Paragraphs 6 through 10 inclusive hereof are reasonable and necessary for the protection of the Company’s business interests, that irreparable injury will result to the Company if Executive breaches any of the terms of said covenants, and that in the event of Executive’s actual or threatened breach of any such covenants, the Company will have no adequate remedy at law. Executive accordingly agrees that in the event of any actual or threatened breach by her of any of said covenants, the Company shall be entitled to immediate injunctive and other equitable relief, without bond and without the necessity of showing actual monetary damages. Nothing contained herein shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of any damages which it is able to prove.     (b) Each of the covenants in Paragraphs 6 through 10 inclusive hereof shall be construed as independent of any other covenants or other provisions of this Agreement.     (c) In the event of any judicial determination that any of the covenants set forth in Paragraphs 6 through 10 inclusive hereof is not fully enforceable, it is the intention and desire of the parties that the court treat said covenants as having been modified to the extent deemed necessary by the court to render them reasonable and enforceable, and that the court enforce them to such extent. -------------------------------------------------------------------------------- 12. LIFE INSURANCE. The Company may at its discretion and at any time apply for and procure as owner and for its own benefit and at its own expense, insurance on the life of Executive in such amounts and in such form or forms as the Company may choose. Executive shall cooperate with the Company in procuring such insurance and shall, at the request of Company, submit to such medical examinations, supply such information and execute such documents as may be required by the insurance company or companies to whom the Company has applied for such insurance. Executive shall have no interest whatsoever in any such policy or policies, except that to the extent permitted by such policies, upon the Executive’s Termination Date hereunder, Executive shall have the privilege of purchasing any such insurance from the Company for an amount equal to the actual premiums thereon previously paid by Company. 13. NOTICES. Any notice required or permitted pursuant to the provisions of this Agreement shall be deemed to have been properly given if in writing and when sent by United States mail, certified or registered, postage prepaid, when sent by facsimile or when personally delivered, addressed as follows:   If to Company:                   Kensey Nash Corporation                   735 Pennsylvania Drive                   Exton, PA 19341                   Attention: Joseph W. Kaufmann With a copy to:                   Katten Muchin Rosenman LLP                   525 West Monroe Street                   Suite 1600                   Chicago, IL 60661-3693                   Attention: David R. Shevitz, Esq. If to Executive:                   Wendy F. DiCicco                   205 Roberts Road                   Ardmore, PA 19003 After July 1, 2006:                   948 Drovers Lane                   Chester Springs, PA 19425 Each party shall be entitled to specify a different address for the receipt of subsequent notices by giving written notice thereof to the other party in accordance with this Paragraph. 14. WAIVER OF BREACHES. No waiver of any breach of any of the terms, provisions or conditions of this Agreement shall be construed or held to be a waiver of any other breach, or a waiver of, acquiescence in or consent to any further or succeeding breach thereof. 15. ASSIGNMENT. This Agreement shall not be assignable by either party without the written consent of the other; provided, however, that this Agreement shall be assignable by the Company to any corporation or entity which purchases substantially all of the assets of or succeeds to the business of the Company (a “Successor Employer”), and the Company agrees to cause this Agreement to be assumed by any Successor Employer as a condition to such purchase or succession. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns. 16. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with laws and judicial decisions of the Commonwealth of Pennsylvania. -------------------------------------------------------------------------------- 17. SEVERABILITY. If any term or provision of this Agreement shall be held to be invalid or unenforceable, the remaining terms and provisions hereof shall not be affected thereby. 18. SOURCE OF PAYMENTS. The Benefits under this Agreement shall be unfunded, and the Company’s obligation under this Agreement shall constitute an unsecured promise of severance pay. 19. MISCELLANEOUS. Paragraph headings herein are for convenience only and shall not affect the meaning or interpretation of the contents hereof. This Agreement contains the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings between the parties and all prior obligations of the Company with respect to the employment of Executive by the Company or the payment to Executive of compensation of any kind whatsoever, including without limitation, the Employment Agreement between the Company and Executive dated effective as of October 1, 2003 and the Termination and Change in Control Agreement between the Company and Executive dated effective as of September 1, 2003. No supplement or modification of this Agreement shall be binding unless in writing and signed by both parties hereto. This Agreement may be executed in counterparts, each of which shall be deemed an original and when taken together shall constitute one agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first hereinabove set forth.   /s/ Wendy F. DiCicco Wendy F. DiCicco KENSEY NASH CORPORATION By:   /s/ Joseph W. Kaufmann   Joseph W. Kaufmann Title: President and CEO -------------------------------------------------------------------------------- Exhibit A Benefits Health/prescription, dental, and vision insurance equal to that provided for all other full-time exempt Kensey Nash Corporation employees. Life insurance providing coverage equal to one year’s Base Salary or $200,000, whichever is less. Short-term disability insurance equal to that provided for all other full-time exempt Kensey Nash Corporation employees. Long-term disability benefits at 40% of Base Salary. Supplemental long-term disability insurance. Three weeks annual vacation accrued at 10 hours per month. Accumulated, unused vacation time for Executives of the Corporation is not vested and will not be paid to Executive either while employed or upon her Termination Date. Six days annual personal leave. Eleven holidays each year. 401K Plan. -------------------------------------------------------------------------------- Exhibit B Severance Fringe Benefits Health/prescription, dental, and vision insurance equal to that provided for all other full-time exempt Kensey Nash Corporation employees. Life insurance providing coverage equal to one year’s Base Salary or $200,000, whichever is less. Short-term disability insurance equal to that provided for all other full-time exempt Kensey Nash Corporation employees. Long-term disability benefits at 40% of Base Salary. Supplemental long-term disability insurance. -------------------------------------------------------------------------------- Exhibit C For purposes of this Agreement, the following terms are defined as set forth below: “Board” shall mean the Board of Directors of Kensey Nash Corporation. “Cause” for termination shall be deemed to exist upon (i) a determination by the Board that Executive has committed an act of fraud, embezzlement or other act of dishonesty which would reflect adversely on the integrity of the Company or if Executive is convicted of any criminal statute involving breach of fiduciary duty or moral turpitude; (ii) a reasonable determination by the Board that Executive has failed to discharge her duties in a reasonably satisfactory manner which failure is not cured by Executive within thirty (30) days after delivery of written notice to Executive specifying the nature of such failure; (iii) the death of Executive; (iv) a mental or physical disability of Executive which renders Executive, in the reasonable opinion of the Board, unable to effectively perform her duties hereunder for a substantially continuous period of one hundred eighty (180) days; or (v) the Executive’s voluntary termination of her employment hereunder other than as a result of a breach of the Company’s obligations hereunder. “Change in Control.” For the purpose of this Agreement, a “Change in Control” shall occur if:     (a) any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity, or any syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange Act (other than shareholders holding more than 20% of the Company’s voting securities as of the Effective Date), is or becomes the “beneficial owner” (as defined in Rule 13d-3 of the General Rules and Regulations under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the company’s then outstanding securities entitled to vote in the election of directors of the Company; or     (b) during any period of two consecutive years (not including any period prior to the Effective Date of this Plan) individuals who at the beginning of such period constituted the Board and any new directors, whose election by the Board or nomination for election by the stockholders of the Company was approved by a vote of at least three quarters of the directors then still in office who either were directors at the beginning of the period or whose election or nomination was previously so approved, cease for any reason to constitute at least a majority thereof; or     (c) all or substantially all of the assets of the Company are liquidated or distributed. “Competition” means, for the Payment Period, (i) employment by, being a consultant to, being an officer or director of, or being connected in any manner with, any entity or person in the business of the Company or any affiliate which competes in any market in which the Company does business, either directly or indirectly, (ii) disclosing, using, transferring or selling to any such entity any confidential or proprietary information of the Company or any affiliate, (iii) soliciting or attempting to solicit an employee or former employee of the Company for employment, (iv) diverting or attempting to divert any business or customer of the Company or any affiliate of the Company, or (v) refusing to cooperate with the Company or any affiliate of the Company by making himself available to assist the Company or any affiliate in, or testify on behalf of the Company or any affiliate of the Company in any action, suit, or proceeding, whether civil, criminal or administrative. “Estimated Bonus” means an amount equal to the average of the value of the cash bonuses and Restricted Stock received by the Executive for the last two full fiscal years for which Executive has received such cash bonuses and Restricted Stock, if any, prior to the Executive’s Termination Date. The value of the Restricted Stock shall equal the product of (i) the fair market value of one share of the common stock of the Company on the date of the grant of the Restricted Stock multiplied by (ii) the number of shares of Restricted Stock granted. -------------------------------------------------------------------------------- “Good Reason” means (i) reduction in the compensation (regular or bonus compensation formula) of the Executive as in effect as of the date of the Change in Control, (ii) substantial reduction in the Executive’s responsibilities as in effect as of the date of the Change in Control, (iii) any failure of the Company to obtain assumption of the obligation to perform this Agreement by any successor, assignee or distributee of a majority of the Company’s stock or assets (iv) a relocation of the Executive’s location of employment more than 50 miles from the location as of the date of the Change in Control, or (v) adoption or approval of a plan of liquidation, dissolution, or reorganization of the Company by the Board. “Grant Agreement” means an agreement between the Executive and the Company which grants the Executive a Stock Option, Restricted Stock or other equity award under an Incentive Plan. “Performance Period” shall mean the Company’s fiscal year beginning on July 1 and ending on June 30 the following year. “Stock Option” means a stock option granted under an Incentive Plan to the Executive. “Restricted Stock” means a restricted stock award granted under an Incentive Plan to the Executive. “Retirement” shall have the meaning as set forth in the applicable Incentive Plan or, if not defined in the applicable Incentive Plan, it shall mean the Executive’s termination of employment upon or after her attaining (i) age 65 or (ii) age 55 with the accrual of 10 years of service. “Termination Date” means the date that the Executive incurs a “separation from service” as such term is defined under Section 409A of the Code and any applicable IRS or Treasury guidance released thereunder. -------------------------------------------------------------------------------- Exhibit D Excise Tax Gross-up Payment (1) In the event that the Total Payments (as defined in Paragraph 3(g) of the Agreement) cause the Executive’s “parachute payments” within the meaning of Section 280G(b)(2) of the Code to equal or to exceed three times the Executive’s “base amount” within the meaning of Section 280G(b)(3) of the Code (the “Trebled Base Amount”) by an amount which is not greater than 10% of the Trebled Base Amount, the Total Payments shall be reduced (or eliminated) such that no portion of the Total Payments is subject to the Excise Tax (as defined in Paragraph 3(g) of the Agreement). Reductions shall be made first to those Total Payments arising under the terms of this Agreement. (2) In the event that the Total Payments cause the parachute payments to exceed 110% of the Trebled Base Amount, the Company shall pay to the Executive at the time specified below, an additional amount determined as set forth below (the “Gross-up Payment”). The Gross-up Payment shall be made with respect to the amount which equals 100% of the Executive’s “excess parachute payments” subject to the Excise Tax. The Gross-up Payment shall be an amount such that the net amount retained by Executive with respect to the Total Payments after reduction for any Excise Tax on the Total Payments and any federal, state and local income or employment tax and Excise Tax payable by the Executive on the Gross-up Payment hereunder (provided that such amount is actually paid when due) shall be equal to the amount of the Total Payments that the Executive would retain if the Total Payments did not constitute parachute payments. Such Gross-up Payment shall be estimated by the Company in consultation with independent legal counsel, compensation consultants or auditors of nationally recognized standing (“Independent Advisors”) selected by the Company and reasonably acceptable to the Executive within six (6) months of the Termination Date. Such estimation by the Company shall be a conclusive determination of the amount payable by the Company as a Gross-up Payment under this Agreement. (3) For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of any Excise Tax: (a) The Total Payments shall be treated as “parachute payments” within the meaning of Section 280G(b)(2) of the Code, and all “excess parachute payments” within the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax, unless, and except that to the extent that, in the written opinion of Independent Advisors selected by the Company and reasonably acceptable to Executive, the Total Payments (in whole or in part) do not constitute parachute payments, or such excess parachute payments (in whole or in part) represent reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code or are otherwise not subject to the Excise Tax; (b) The amount of the Total Payments which shall be treated as subject to the Excise Tax shall be equal to the lesser of (i) the total amount of the Total Payments or (ii) the total amount of excess parachute payments within the meaning of Section 280G(b)(1) of the Code (after applying Section 3(g)(iii)(a) above); and (c) The value of any non-cash benefits or any deferred payment or benefit shall be determined by the Independent Advisors in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. (4) The Gross-up Payment provided for above or any payment made under this Exhibit D shall be paid six (6) months after the Termination Date. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder in the Gross-up Payment, Executive shall repay to the Company at the time that the amount of such reduction in Excise Tax is finally determined (but, if previously paid to the taxing authorities, not prior to the time the amount of such reduction is refunded to Executive or otherwise realized as a benefit by Executive) the portion of the Gross-up Payment that would not have been paid if such Excise Tax had been applied to initially calculating the Gross-up Payment, plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time the Gross-up Payment is made, the Executive shall not be entitled to any additional payments by the Company. -------------------------------------------------------------------------------- Exhibit E GENERAL RELEASE AGREEMENT This General Release Agreement (the “Release Agreement”) is made by and between Kensey Nash Corporation, a Delaware corporation (the “Company”), and Wendy F. DiCicco (“Executive”) to ensure the protection of the Company and its business, and the protection of the Executive, and to fully settle and resolve any and all issues and disputes arising out of Executive’s employment with and separation from the Company. WHEREAS, Executive and the Company desire to avoid litigation and controversy and fully settle and compromise any and all claims, charges, actions, causes of action and disputed issues of law and fact that the Executive has, had, or may have against the Company, as of the date of this Release Agreement. NOW, THEREFORE, in consideration of the promises and the mutual covenants and agreements set forth below and in the employment agreement previously entered into by and between Executive and the Company (the “Employment Agreement”), the receipt and sufficiency of which are hereby acknowledged, Executive and the Company agree as follows: 1. Separation Date. Executive’s employment with the Company is terminated effective             , 20     (the “Separation Date”). Executive agrees to return all Company property to the Company no later than the Separation Date. Except as specifically provided below, Executive shall not be entitled to receive any compensation or other benefits of employment following the Separation Date. 2. Consideration of Company. In consideration for the releases and covenants by Executive in this Release Agreement, the Company agrees that following the expiration of the revocation period described in Paragraph 11 below, if Executive has not exercised her right of revocation, the Company will provide Executive with the following: [Amount to be determined in accordance with Paragraph 3 of the Employment Agreement at the time of Separation.] 3. Executive Release of Rights and Agreement Not to Sue. Executive (defined for purposes of this Paragraph 3 and Paragraphs 6-10 of the Employment Agreement as Executive and Executive’s agents, representatives, attorneys, assigns, heirs, executors, and administrators) fully and unconditionally releases the Company, its subsidiaries and affiliates, and any of their past or present employees, agents, insurers, attorneys, administrators, officers, directors, shareholders, divisions, predecessors, successors, employee benefit plans, and the sponsors, fiduciaries, or administrators of the such employee benefit plans (collectively, the “Released Parties”) from, and agrees not to bring any action, proceeding or suit against any of the Released Parties regarding, any and all liability, claims, demands, actions, causes of action, suits, grievances, debts, sums of money, agreements, promises, damages, back and front pay, costs, expenses, attorneys’ fees, and remedies of any type, including without limitation those arising or that may have arisen out of or in connection with Executive’s employment with or termination of employment from the Company, including but not limited to claims, actions or liability under: (1) Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Civil Rights Act of 1866, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Fair Labor Standards Act, the Family and Medical Leave Act, the Workers Adjustment and Retraining Notification Act, the Employee Retirement Income Security Act of 1974, the Pennsylvania Human Relations Act, and the Pennsylvania Wage Payment and Collection Law, in each case as such act may be amended; (2) any other federal, state or local statute, ordinance, or regulation regarding employment, termination of employment, or discrimination in employment; and (3) the common law of any state relating to employment contracts, wrongful discharge, defamation, wages or any other matter; provided, however, that said release and agreement not to sue shall not prohibit Executive from bringing an action, proceeding or suit arising out of the Company’s breach of any representation, warranty, or obligation set forth in this Release Agreement. 4. Preservation of Employee Agreement. Notwithstanding any other provision of this Release Agreement, Executive acknowledges and agrees that the provisions of the Employment Agreement, to which this Release Agreement is attached as Exhibit E, shall remain in full force and effect, and Executive agrees to continue to be bound by the terms therein, including, but not limited to, Paragraphs 6-10. -------------------------------------------------------------------------------- 5. No Reinstatement or Reemployment. Executive waives reinstatement and reemployment and agrees never to apply for employment or otherwise seek to be hired, rehired, employed, reemployed, or reinstated by the Company, its subsidiaries, or any of their affiliates. 6. No Disparagement or Encouragement of Claims. Except as required by lawful subpoena or other legal obligation, Executive agrees not to make any oral or written statement that disparages or places the Company and its affiliates (including any of their past or present officers, employees, products or services) in a false or negative light, or to encourage or assist any person or entity who may or who has filed a lawsuit, claim or complaint against the Released Parties (as defined in Paragraph 3 above). If Executive receives any subpoena or becomes subject to any legal obligation that implicates this Paragraph 6, Executive will provide prompt written notice of that fact to the Company with a copy to Katten Muchin Rosenman LLP at the addresses provided in Paragraph 13 of the Employment Agreement, and will enclose a copy of the subpoena and any other documents describing the legal obligation. 7. Non-Admission/Inadmissibility. This Release Agreement does not constitute an admission by the Company that any action it took with respect to Executive was wrongful, unlawful or in violation of any local, state, or federal act, statute, or constitution, or susceptible of inflicting any damages or injury on Executive, and the Company specifically denies any such wrongdoing or violation. This Release Agreement is entered into solely to resolve fully all matters related to or arising out of Executive’s employment with and termination from the Company, and its execution and implementation may not be used as evidence and shall not be admissible in a subsequent proceeding of any kind, except one alleging a breach of this Release Agreement. 8. Violation of Release Agreement. If Executive or the Company prevails in a legal or equitable action claiming that the other party has breached this Release Agreement, the prevailing party shall be entitled to recover from the other party the reasonable attorneys’ fees and costs incurred by the prevailing party in connection with such action. 9. Severability. The provisions of this Release Agreement shall be severable and the invalidity of any provision shall not affect the validity of the other provisions; provided, however, that upon a finding by a court of competent jurisdiction that any release or agreement in Paragraph 3 is illegal, void or unenforceable, the Executive agrees to execute promptly a release, waiver and/or covenant that is legal and enforceable to the extent permitted by law. 10. Governing Law and Jurisdiction. This Release Agreement shall be governed by and construed in accordance with the laws and judicial decisions of the State of Pennsylvania, without regard to its principles of conflicts of laws. 11. Revocation Period. Executive has the right to revoke her release of claims under the Age Discrimination in Employment Act described in Paragraph 3 (the “ADEA Release”) for up to seven days after Executive signs it. In order to do so, Executive must sign and send a written notice of her revocation decision to the Company with a copy to Katten Muchin Rosenman LLP at the addresses provided in Paragraph 13 of the Employment Agreement, and that written notice must be received by the Company no later than the eighth day after Executive signed this Release Agreement. If Executive revokes the ADEA Release, Executive will not be entitled to any of the consideration from the Company described in Paragraph 2 above. 12. Voluntary Execution of Release Agreement. Executive acknowledges that:     a. Executive has carefully read this Release Agreement and fully understands its meaning;     b. Executive had the opportunity to take up to twenty-one (21) days after receiving this Release Agreement to decide whether to sign it; --------------------------------------------------------------------------------   c. Executive understands that the Company is herein advising her, in writing, to consult with an attorney before signing it;     d. Executive is signing this Release Agreement, knowingly, voluntarily, and without any coercion or duress; and     e. everything Executive is receiving for signing this Release Agreement is described in the Release Agreement itself, and no other promises or representations have been made to cause Executive to sign it. 13. Entire Agreement. This Release Agreement contains the entire agreement and understanding between Executive and the Company concerning the matters described herein, and supersedes all prior agreements, discussions, negotiations, and understandings between the Company and Executive; provided, however, that the Employment Agreement to which this Release Agreement is attached as Exhibit E is specifically preserved in accordance with Paragraph 4 above. The terms of this Release Agreement cannot be changed except in a subsequent document signed by Executive and an authorized representative of the Company.   Kensey Nash Corporation By:       Dated:        Dated:     

EMPLOYMENT CONTRACT      SkyLynx Communications, Inc., (''Employer'' or “Company”), a Delaware corporation, located at 1502 Stickney Point Road, Sarasota, FL 34231, and K. Bryan Shobe, (''Employee''), of 1655 North Drive, Sarasota, FL 34239 in consideration of the mutual promises made herein, agree as follows: ARTICLE 1-EMPLOYMENT Term      Section 1.01 Employer employs Employee and Employee hereby accepts at will employment with Employer beginning on the completion of a pending merger between Employer and VETCO Hospitals, Inc. (“VETCO Hospitals” or “VETCO” and terminating on the third anniversary of the beginning date. Agreement Subject to Termination Section 1.02 This agreement may be terminated earlier as provided below. ARTICLE 2-EMPLOYEE'S DUTIES General Description      Section 2.01(a) Employee is hired by Employer as Chief Executive Officer of Employer and VETCO Hospitals. Employee shall serve in an executive capacity and shall perform such duties as are customarily associated with his then current title and as reasonably and lawfully assigned to the Employee by the Company’s Board of Directors (the “Board”) that are consistent with the duties of similarly-situated senior executives or are otherwise required under this Agreement. Subject to the terms of this Agreement, the Board has the right to assign and change the Employee’s duties at any time.      (b) Employee shall perform services at any office mutually agreed upon by Employer and Employee. Other Employment      Section 2.02 The Employee may not engage in any other professional activity providing the same or similar work for any other employer, company, corporation or other entity. Mutual Consent for Change of Duties      Section 2.03 The duties of Employee may be changed from time to time by the mutual consent of Employer and Employee without resulting in a rescission of this contract. Notwithstanding any such change, the employment of Employee shall be construed as continuing under this agreement as modified. ARTICLE 3-OBLIGATIONS OF EMPLOYER 1 -------------------------------------------------------------------------------- Office and Equipment      Section 3.01 Employer shall provide Employee with sufficient office equipment, office space, professional tools, software and equipment, and administrative support suitable to Employee's position and adequate for the performance of his duties, automobile mileage reimbursement, and other pre-approved expenses that may be necessary in the performance of your duties. Indemnification of Losses of Employee      Section 3.02 Employer shall indemnify Employee for all necessary expenditures or losses incurred by Employee in direct consequence of the discharge of his duties on Employer's behalf. ARTICLE 4-COMPENSATION OF EMPLOYEE      Section 4.01 Initial compensation for services rendered under this contract shall be an annualized base salary of $250,000, payable twice a month in installments of $10,416.67 prorated for any partial employment period. The base salary will increase at the rate of 6% each year beginning on January 1st of each successive year of this three (3) year contract.      In addition the following salary increases apply upon the VETCO Division of SkyLynx Communications, Inc. attaining the following milestones: 1.      The base salary increases to $275,000 when annualized sales of VETCO reach $10 million or $2.5 million quarterly.   2.      The base salary increases to $300,000 when annualized sales of VETCO reach $15 million or $3.75 million quarterly.   3.      The base salary increases to $325,000 when annualized sales of VETCO reach $20 million or $5.0 million quarterly.   4.      The base salary increases to $375,000 when annualized sales of VETCO reach $30 million or $7.5 million quarterly.   5.      The base salary increases to $450,000 when annualized sales of VETCO reach $50 million or $12.5 million quarterly.   In addition the following bonus program will apply to this agreement: 1.      A First Year Bonus of $30,000 will be paid to the Employee if after tax profits of at least $1.5 million are reached by the VETCO Division while headed by this Employee.   2.      A Second Year Bonus of $50,000 will be paid to the Employee if after tax profits of at least $3 million are reached by the VETCO Division while headed by this Employee.   3.      A Third Year Bonus of $75,000 will be paid to the Employee if after tax profits of at least $5 million are reached by the VETCO Division while headed by this Employee.   4.      A Fourth Year Bonus of $100,000 will be paid to the Employee if after tax profits of at least $8 million are reached by the VETCO Division while headed by this Employee.   Severance Pay      Section 4.02 In the event that Employee's services under this contract are terminated by Employer prior to the end of the employment term specified herein for reasons other than cause against Employee or Employee’s services are terminated by Employee for good reason (as 2 -------------------------------------------------------------------------------- defined in Section 8.05), Employee shall be entitled to, as severance pay, one years salary. If the services of the Employee are terminated for cause as per Section 8.04 no severance pay shall be paid. Other Benefits      Section 4.03 Employee shall be entitled to a monthly vehicle allowance of $1000 initially. Employee is responsible for all operating costs of said vehicle including gas, oil, repairs, maintenance and insurance. If used in the business of the Employer, the Employer must be named as an additional insured with notice prior to cancellation.      Section 4.04 Employee will receive the benefits of a group health insurance policy if one is available to other employees.      Section 4.05 Employee is entitled to twenty (20) days vacation with pay during the first year of this agreement. The board of directors will make annual determinations of a vacation policy for the Employer thereafter.      Section 4.06 Car allowance increases, stock grants, options and other benefits are within the purview of the Compensation Committee of the board of directors and the board itself. Employee is expected to participate is such benefits depending on the success and growth of the Employer. ARTICLE 5-EMPLOYEE BENEFITS Benefits      Section 5.01 Employee will be entitled to participate in all other employee benefits such as health insurance, stock option plans, twenty (20) days annual vacation which will accrue, sick and personal days as established by the Employer. ARTICLE 6-REIMBURSABLE EMPLOYEE EXPENSES Moving Expenses      Section 6.01 In the event that during the term of this agreement Employee is transferred by Employer to a new principal place of work at least 50 miles farther from his residence at the time of the transfer (''current residence'') or the current VETCO offices located in Huntington Beach, CA, which is than his principal place of work, at the time of the transfer, Employer shall reimburse Employee for all reasonable expenses incurred for:      (1) Moving the household goods and personal effects of Employee, Employee's spouse and minor children from the current residence to the new place of residence.      (2) The expenses of a one-way trip, including lodging, by Employee, Employee's spouse and minor children from the current residence to the new place of residence. ARTICLE 7-PROPERTY RIGHTS OF THE PARTIES Disclosure of Inventions and Discoveries 3 --------------------------------------------------------------------------------      Section 7.01 (a) Employee promises and agrees that he will promptly and fully inform Employer of and fully disclose to Employer all inventions, designs, improvements, discoveries, developments, formulas, patterns, devices, processes, software programs, technical data, customer and supplier lists, and compilations of information, records, and specifications, and other matters constituting trade secrets as defined by applicable State of Florida laws or under California Civil Code Section 3426.1, that he makes during the term of this agreement, whether individually or jointly in collaboration with others that pertain or relate to the actual or potential business of Employer or to any experimental work carried on by Employer, whether or not conceived during regular working hours.      (b) Employee shall make full disclosure to Employer immediately after creating or making any of the items described in (a), above, and shall thereafter keep Employer fully informed at all times of all progress in connection therewith. Ownership of Work Product      Section 7.02 (a) Employee agrees that any and all intellectual properties, including, but not limited to, all inventions, designs, improvements, discoveries, developments, formulas, patterns, devices, processes, software programs, technical data, customer and supplier lists, and compilations of information, records, and specifications, and other matters constituting trade secrets as defined by applicable State of Florida laws or under California Civil Code § 3426.1, that are conceived, developed, or written by Employee, either individually or jointly in collaboration with others, pursuant to this agreement, shall belong to and be the sole and exclusive property of Employer.      (b) Employee further agrees to submit any dispute regarding whether any such intellectual property was conceived, developed, or written pursuant to this agreement to a review process pursuant to Employer's rules and policies.      (c) Employee agrees that all rights in all intellectual properties prepared by him pursuant to this agreement, including patent rights and copyrights applicable to any of the intellectual properties described in Section 7.02(a) above, shall belong exclusively to Employer, shall constitute ''works made for hire,'' and shall be assigned promptly by Employee to Employer. Employee further agrees to assist Employer in obtaining patents on all such inventions, designs, improvements, and discoveries that are patentable or copyright registration on all such works of creation that are copyrightable, and shall execute all documents and do all things necessary to obtain patent or copyright registration, vest Employer with full and exclusive title, and protect against infringement by others.      (d) This Section shall not apply to intellectual properties or rights therein derived from Employee's activities or employment prior to the time he entered into an employer-employee relationship with Employer (''preexisting rights''). Employer agrees that those preexisting rights are and shall continue to be the exclusive property of Employee or his prior Employer and disclaims any claim of rights of any nature whatsoever thereto.      (e) This Section shall not apply to assign to Employer any of Employee's rights in any invention that Employee develops entirely on his or her own time without using Employer's equipment, supplies, facilities, or trade secret information, except for inventions that either (1) relate, at the time that the invention is conceived or reduced to practice, to Employer's business 4 -------------------------------------------------------------------------------- or to actual or demonstrably anticipated research or development of Employer; or (2) result from any work performed by Employee for Employer. Confidentiality of Trade Secret Data      Section 7.03 (a) Employee agrees that all information communicated to him with respect to the work conducted by or for Employer, whether or not that information was directly or intentionally communicated, is confidential. Employee also agrees that all information, conclusions, recommendations, reports, advice, or other documents generated by Employee pursuant to this agreement, whether maintained in hard copy or in an electronic medium, is confidential. Employee further acknowledges and agrees that all confidential data described herein is and constitutes trade secret information that belongs wholly to and is the exclusive property of Employer.      (b) Employee promises and agrees that he shall not disclose any confidential information of Employer or any third party, as long as that information is subject to a Confidential Disclosure Agreement, to any other person, orally, in writing or via electronic communication, unless specifically authorized in writing by Employer to do so. If Employer gives Employee written authorization to make any disclosures, Employee shall do so only within the limits and to the extent of that authorization.      (c) Employee shall use his best efforts to prevent inadvertent disclosure of any confidential information to any third party by using the same care and discretion that he uses with similar data he designates as confidential.      (d) Employee acknowledges and agrees that all information concerning the work conducted by Employer and any potential products of Employer is and constitutes an exceptionally valuable trade secret of Employer. That information includes, among other matters, the facts that any particular work or project is planned, under consideration, or in production, as well as any descriptions of any existing, pending, or proposed work.      (e) Notwithstanding anything in this Agreement to the contrary, confidential information of Employer shall not include any information that entered the public domain subsequent to the time it was communicated to Employee, through no fault of Employee. Use and Disclosure of Confidential Data      Section 7.04 Employee shall not use any confidential information or circulate it to any other person or persons, except in accordance with the performance of his duties under this Agreement or specifically authorized in advance by Employer and then only to the extent necessary for any of the following: (a) Conducting negotiations, discussions, and/or consultations with designated Employer representatives. (b)      Supplying Employer with goods or services at its order.   (c)      Preparing confidential estimates, bids or proposals, and invitations for bids or requests for proposals for submission to Employer. (d) Accomplishing any purpose Employer may later specify in writing. Copies of Confidential Information 5 --------------------------------------------------------------------------------      Section 7.05 Employee agrees that copying of confidential information shall be done only in accordance with Employer's policy on handling and reproducing confidential information as will be set forth in Employer's ''Employee Manual,'' a copy of which will be provided to Employee. Employee further agrees that copies of confidential information shall be treated with the same degree of confidentiality as the original information and shall be subject to the restrictions set forth in Paragraph 7.04 of this agreement. Return of Materials      Section 7.06 Employee shall return to Employer, promptly at Employer's request, all confidential materials. Any materials the return of which is specifically requested shall be returned promptly at the conclusion of the work on or consideration of work on, the project to which the materials relate. Unfair Competition      Section 7.07 Employee acknowledges and agrees that the sale or unauthorized use or disclosure, orally, in writing, or via electronic medium, of any of Employer's confidential information obtained by Employee during the course of his employment under this agreement, including information concerning Employer's current or any future and proposed work, services, or products, the facts that any such work, services, or products are planned, under consideration, or in production, as well as any descriptions thereof, constitute unfair competition. Employee promises and agrees not to engage in any unfair competition with Employer at any time, whether during or following the completion of his employment with Employer. Competitive Activities During Employment      Section 7.08 Employee promises and agrees that during the term of this Agreement, he shall not, directly or indirectly, either as an employee, employer, consultant, agent, principal, partner, stockholder, corporate officer, director, or in any other individual or representative capacity, engage or participate in any competitive activity relating to the subject matter of his employment with Employer except as specified in Section 2.02. ARTICLE 8-TERMINATION OF EMPLOYMENT Termination by Employer      Section 8.01 This agreement may be terminated by Employer for cause by giving immediate written notice of termination to Employee. Termination pursuant to this Section shall not prejudice any remedy that Employer may have either at law, in equity, or under this agreement. Effect of Employer's Merger, Transfer of Assets, or Dissolution      Section 8.02 (a) This agreement shall not be terminated by any merger or consolidation in which Employer is not the consolidated or surviving corporation, by the transfer of all or substantially all of the assets of Employer, or by the voluntary or involuntary dissolution of Employer.      (b) In the event of any merger or consolidation or transfer of assets, the surviving or resulting corporation or the transferee of Employer's assets shall be bound by and shall have the benefit of the provisions of this agreement. Employer shall take all actions necessary to insure that such a corporation or transferee is bound by the provisions of this agreement. 6 -------------------------------------------------------------------------------- Effect of Termination on Compensation      Section 8.03 In the event of the termination of this agreement prior to the completion of the term of employment specified herein, Employee shall be entitled to the compensation earned prior to the date of termination as provided for in this agreement computed pro rata up to and including that date. Definition of Cause      Section 8.04 “Cause,” for the purposes of this agreement includes, but is not limited to: (a)      Conviction of a felony, any act involving moral turpitude, any act that detracts from the ability of the Employee to provide the Employer with a full work week or a misdemeanor where imprisonment is imposed, or   (b)      Commission of any act of theft, fraud, dishonesty or falsification of any employment or Company records, or   (c)      Improper disclosure of the Company's confidential, classified, private, patent protected or proprietary information, or   (d)      Any breach of this Agreement, which breach is not cured within ten (10) days following written notice of such breach, or   (e)      Chronic and unexcused absenteeism, or   (f)      Misconduct in connection with the performance of any your duties, including without limitation, misappropriation of funds or property of the Company, securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of the Company, misrepresentation to the Company, or any violation of law or regulations on Company premises or to which the Company is subject.        In each such event listed in (b) through (f) above, the Company shall give the Employee notice thereof which shall specify in reasonable detail the circumstances constituting Cause, and there shall be no Cause with respect to any such circumstances if cured by the Employee within thirty (30) days after such notice. Termination by Employee      Section 8.05 This agreement may be terminated by Employee at any time by providing Company with a thirty (30) day written notice. If Employee terminates this Agreement for good reason, Employee shall be entitled to the severance benefits set forth in Section 4.02. For the purposes of this Agreement, good reason means (i) the Company’s failure to perform or observe any of the material terms or provisions of this Agreement or any other agreement with Employee after failure of the Company to cure such default within 10 days after written demand for performance has been given to the Company by the Employee and (ii) a material reduction in the scope of the Employee’s responsibilities and duties or assignment of the Employee of any duties inconsistent with the Employee’s position, authority, duties or responsibilities as contemplated by this Agreement 7 -------------------------------------------------------------------------------- ARTICLE 9-GENERAL PROVISIONS Notices      Section 9.01 Any notices to be given by either party to the other may be effected either by personal delivery in writing or by mail, registered or certified, postage prepaid with return receipt requested or by electronic mail with verified receipt. Mailed notices shall be addressed to the parties at the addresses appearing in the introductory paragraph of this agreement, but each party may change address by written notice in accordance with this section. Notices delivered personally shall be deemed communicated as of the date of actual receipt; mailed notices shall be deemed communicated as of the date on which they are mailed. Entire Agreement      Section 9.02 (a) This agreement supersedes any and all other agreements, either oral or in writing, between the parties with respect to the employment of Employee by Employer, and contains all of the covenants and agreements between the parties with respect to that employment in any manner whatsoever.      (b) Each party to this agreement acknowledges that no representations, inducements, promises, or agreements, orally or otherwise, other than those set forth herein, have been made by any party, or anyone acting on behalf of any party, and that no other agreement, statement, or promise not contained in this agreement shall be valid or binding.      (c) Any modification of this agreement will be effective only if it is in writing signed by the party to be charged. Attorneys' Fees and Costs      Section 9.03 If any legal action is necessary to enforce or interpret the terms of this agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs, and necessary disbursements in addition to any other relief to which the prevailing party may be entitled. This provision shall be construed as applicable to the entire contract. Partial Invalidity      Section 9.04 If any provision in this agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way. Law Governing Agreement      Section 9.05 This agreement shall be governed by and construed in accordance with the laws of the State of Florida. This Agreement shall become effective only upon the completion of a merger between VETCO Hospitals, Inc., a California corporation and SkyLynx Communications Inc.., a Delaware Corporation. Payment of Moneys Due Deceased Employee      Section 9.06 If Employee dies prior to the expiration of the term of employment, any moneys that may be due from Employer under this agreement as of the date of Employee's death shall be paid to Employee's executors, administrators, heirs, personal representatives, successors, and assigns. 8 -------------------------------------------------------------------------------- Executed on May 2, 2006 at Sarasota, Florida by Employer and Employee. EMPLOYER:    EMPLOYEE:  SkyLynx Communications, Inc.      By: /s/ Gary L. Brown                                         /s/ K. Bryan Shobe   Gary L. Brown, as CEO and not individually    K. Bryan Shobe  -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 9 --------------------------------------------------------------------------------

-------------------------------------------------------------------------------- LETTERHEAD OF ATLAS AMERICA, INC.   April 5, 2006 Mr. Richard Weber 31387 Edgewood Road Pepper Pike, OH 44124   Re: Agreement for Services Dear Rich: We at Atlas America, Inc. (“AAI”) are delighted that you have agreed to join us and be employed as President, Chief Operating Officer and a manager of a new management company which will be a Delaware limited liability company (the “Company”) formed by AAI. The Company will manage the entity established by AAI to conduct its exploration and production and direct placement businesses (“Atlas Energy LLC”). The terms and conditions under which you will be performing those services, intending to be legally bound, are as follows (the “Agreement”):   1.    Title and Position. You will serve as the President and Chief Operating Officer of the Company and will be on its board of managers (the “Office”).   2.    Services. You will serve the Company diligently, competently, and to the best of your ability during the period of employment. You will devote substantially all of your working time and attention to the business of the Company and its affiliates, and you will not undertake any other duties which conflict with your responsibilities to the Company. The Company and AAI shall provide you with sufficient support, capital and quality personnel to assist you in performing and discharging your duties. Initially, you will perform your duties from an office in the Cleveland, Ohio metropolitan area and the Company will hire a person to assist you. If you later determine that an office in another locality would be more appropriate for the performance of your duties, the Company will consider your possible relocation.   Your Office shall report (as the highest level officer of the Company and Atlas Energy LLC other than its Chief Executive Officer) only to the Chief Executive Officer and the Company’s board of managers (“Board”). You shall have all of the traditional functions, powers and authority as are customary for the President and Chief Operating Officer managing a group the size of the Company and Atlas Energy LLC. You will render such services as may reasonably be required of you to accomplish the business purposes of the Company, which shall include, but may not be limited to day to day oversight of the Company’s business and those of any subsidiaries, and such duties, which are appropriate to the office, as the Chief Executive Officer or the Board may assign to you from time to time.   3.    Term. The term of your employment shall commence on April 17, 2006 (the “Employment Effective Date”) and, unless sooner terminated pursuant to Section 5, shall continue for a period of two (2) years thereafter. The two (2) year period is hereafter referred to as the “Contract Period.” After the first year of the Contract Period, the term shall automatically renew daily so that on any day that this Agreement is in effect, the Contract Period shall have a remaining term of not less than one (1) year; provided, however, that such automatic extension shall cease upon the Company’s notice of its election to terminate this Agreement at the end of the one (1) year period then in effect, which such notice may not be given prior to the first anniversary of the date of this Agreement. Termination of your employment hereunder for any reason shall be referred to as a “Termination.”   --------------------------------------------------------------------------------   4.    Compensation. Your compensation and participation in equity compensation and benefits during the Contract Period shall be as follows:   (a)    Base Salary. During the Contract Period, you shall receive an annual base salary ("Annual Base Salary") of not less than Three Hundred Thousand Dollars ($300,000). The Annual Base Salary shall be payable in accordance with the Company's regular payroll practice for its senior executives, as in effect from time to time. During the Contract Period, the Annual Base Salary may be reviewed by the Board for possible increase; however, your Annual Base Salary shall not decrease.   (b)    Bonus. During the first year of the Contract Period, your bonus shall be at least Seven Hundred Thousand Dollars ($700,000) of which One Hundred Thousand Dollars ($100,000) shall be paid ratably over the year, with the remaining Six Hundred Thousand Dollars ($600,000) payable at the normal time for the payment of bonuses by the Company, but not later than March 31st of the subsequent year.   (c)    Equity Compensation. The Atlas Energy LLC Units, Atlas Energy LLC Options and AAI Options referenced herein are sometimes referred to individually as a “Security” or collectively as the “Securities.” All Securities, including units or shares issuable on exercise of options, shall be non-assessable and subject to the same rights, privileges, preferences and distributions as the same class of Securities held by other holders. The term “Issuer” shall mean Atlas Energy LLC in the case of Atlas Energy LLC Units and Atlas Energy LLC Options, and shall mean AAI in the case of the AAI Options and shares of common stock issuable on exercise thereof.   (i)    Atlas Energy LLC Units. At the time of the initial public offering (“IPO”) of Atlas Energy LLC, you will receive a grant of units of Atlas Energy LLC with a value of One Million Dollars ($1,000,000) (based on the IPO price), which units will be subject to forfeiture (the “Restriction”) in the event that you are no longer employed by the Company (“Atlas Energy LLC Units”). The Restriction on 25% of the units will terminate, and your interest in the units shall vest, on each of the first four anniversary dates of the Employment Effective Date. It is intended that you will have voting rights and distribution rights with respect to the Atlas Energy LLC Units immediately upon their issuance.   (ii)   Atlas Energy LLC Options. Also at the time of the IPO, you will receive options to acquire one percent of the number of units of Atlas Energy LLC outstanding immediately following the IPO (excluding your Atlas Energy LLC Units) (“Atlas Energy LLC Options”), with a strike price equal to the IPO price and an exercise term of ten (10) years. Such options will vest 25% per year on each of the first four anniversary dates of the Employment Effective Date.   (iii)   AAI Options. You will also immediately upon execution of this Agreement be granted options to purchase 50,000 shares of stock of AAI pursuant to the Atlas America, Inc. Stock Incentive Plan at the current fair market value of such shares and an exercise term of ten (10) years. For each year in which you remain employed by the Company, these options will vest 25% per year on each of the first four anniversary dates of the Employment Effective Date.   (iv)   Atlas Energy LLC IPO. If, on the first anniversary date of the Effective Date of your employment under this Agreement, the IPO of Atlas Energy LLC has not been effected and is not reasonably anticipated to be capable of timely completion, the intended restricted units and options with respect to Atlas Energy LLC units will be replaced by One Million Dollars ($1,000,000) (based on the then current price) of stock (with the Restriction) of AAI and AAI options to acquire an amount, not to exceed 0.5%, of the then outstanding number of AAI shares (excluding AAI shares granted to you). The amount referred to in the preceding sentence shall be determined by dividing the value of AAI’s exploration and production business by the value of all of its businesses and multiplying the result by 1%, with a cap of 0.5%. The AAI options issued pursuant to this paragraph shall have a strike price equal to the then fair market value of such shares with the same vesting schedule as would have existed for Atlas Energy LLC options had the IPO occurred on the date that AAI options are granted.   --------------------------------------------------------------------------------   (v)    Change of Control. All Securities shall vest 100% and the Restriction shall terminate automatically upon a Change of Control of Atlas Energy LLC. “Change of Control” shall mean for purposes of this Agreement, the occurrence of any of the following: (1) the acquisition of the beneficial ownership under the Securities Exchange Act of 1934, of 50% percent or more of AAI or Atlas Energy LLC’s voting securities or all or substantially all of the assets of either AAI or Atlas Energy LLC by a single person or entity or a group of affiliated persons or entities, other than an entity of which either Edward Cohen or Jonathan Cohen is an officer, manager, or director or participant; or (2) AAI or Atlas Energy LLC consummates a merger, consolidation, share exchange, division, split or other transaction (the “Transaction”) with an unaffiliated entity, at anytime after which the Company is not the manager of Atlas Energy LLC; (3) the shareholders of AAI or Atlas Energy LLC approve a plan of complete liquidation or winding up or enter an agreement for the sale or disposition in one transaction or a series of transactions, of all or substantially all of the assets, other than to an entity of which Edward Cohen or Jonathan Cohen is an officer, manager, director or participant; or (4) the bankruptcy of AAI, the Company or Atlas Energy LLC.   (vi)   Accelerated Vesting. The Restriction shall terminate in advance of the vesting described above upon whichever is the first to occur of (a) a Change in Control; or (b) Termination by you for Good Reason or by the Company other than for Cause. All Securities as to which the Restriction has terminated are fully (100%) vested Securities. Vested Securities shall not be subject to forfeiture under any circumstance, including but not limited to whether your term of employment is terminated by the Company or you, whether for Cause, Good Reason, without Cause, or on any other basis.   (vii)   Registration of Securities. AAI and Atlas Energy LLC (each an “Issurer”) each agrees to file with the U.S. Securities and Exchange Commission as soon as reasonably practicable, a Registration Statement on Form S-8 providing for, with respect to Atlas Energy, the resale of the Atlas Energy LLC Units, and the units of Atlas Energy LLC issuable upon exercise of the Atlas Energy LLC Options and, with respect to RAI, the shares of common stock issuable upon exercise of the AAI Options (collectively, the "Registrable Securities"). Each such Issuer shall cause its respective Registration Statement to remain effective until the earlier of (i) the date on which all of the Registrable Securities included in such Registration Statement have been sold pursuant to such Registration Statement or pursuant to Rule 144 and (ii) the expiration of the exercise period for all Securities included in such Registration Statement. The Issuer shall pay all registration expenses in connection with the registration of the Registrable Securities pursuant to this Agreement. Further, each Issuer agrees to register, list and qualify the Registrable Securities issued or issuable by it on a U.S. national securities exchange registered with the U.S. Securities and Exchange Commission and maintain in good standing at all times the registration, listing and qualification thereof, including the timely filing of all periodic and other reports. In the event that you seek to sell, assign, transfer or otherwise dispose of Securities on the basis of an exemption from registration under the Securities Act of 1933, as amended, and under the provisions of applicable state law, you shall provide to the Issuer of such Securities an opinion of your counsel reasonably acceptable to the effect that the transaction is exempt from registration, and such Issuer shall issue appropriate instructions to its transfer agent at no cost to you necessary to effectuate the sale.   --------------------------------------------------------------------------------   (viii)   Section 16 Compliance. Each Issuer shall take all actions necessary so that the grant of all Securities issued or issuable by it shall comply with the requirements of Exchange Act Rule 16b-3(d) necessary for each grant to qualify for the exemption available thereunder from potential liability under Section 16(b) of the Securities Exchange Act of 1934, to the extent applicable to you.   (ix)     Adjustments Upon Changes in Capitalization. In the event of changes in the outstanding securities of the Issuer by reason of distributions, dividends, splits, reverse splits, recapitalizations, mergers, consolidations, combinations or exchanges of units or shares, separations, reorganizations, liquidations, or changes in the number (other than in connection with the issuance of securities for fair market value or services) and classes of securities issued and outstanding, the number of Securities to be issued pursuant to the Atlas Energy LLC Units, the Atlas Energy LLC Options and the AAI Options shall be correspondingly adjusted, so that your proportionate interest in the Issuer, any successor thereto, or in the cash, assets or other securities into which the Securities are converted or exchanged, shall be maintained to the same extent, as near as may be practicable, as immediately before the occurrence of any such event.   (x)      Exercise of Options and Cashless Conversion. Any vested Atlas Energy LLC Options and the AAI Options may be exercised, in whole or in part, at any time or from time to time, by delivery to the Issuer of written notice of exercise, together with payment of a purchase price payable in cash or instructions to effectuate a cashless exercise. You shall have the right, but not the obligation, to elect to exercise the Atlas Energy LLC Options and the AAI Options by subtracting the exercise price from the closing bid price of the Issuer’s units or common stock as of the date of the Issuer’s receipt of your written notice of exercise, multiplying that amount by the number of option units or shares exercised and dividing by the closing bid price of the same date (the “Conversion Price”). That number of option units or shares equal to the difference between the number of option units or shares exercised and the Conversion Price shall be deemed surrendered by you upon conversion as the consideration therefor.   (xi)     Nature of AAI Options. The AAI Options are intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended, as incentive stock options, to the extent of the $100,000 annual exercise limitation or any greater successor limitation specified in the Code and regulations thereto.   (xii)            Non-Transferability of the Options. The Atlas Energy LLC Options and the AAI Options shall not be transferable except, in the case of your death, by will or the laws of descent and distribution or, during your lifetime, to your "family member" (as defined in Form S-8) through gift or domestic relations order as permitted by Form S-8 (as currently in effect or as it may be amended), nor shall such Securities be subject to attachment, execution or other similar process.   (xiii)   Award Agreements. The Atlas Energy LLC Options and the AAI Options shall be evidenced by an award agreement whose terms shall be consistent with this Agreement.   (d)    Benefits. During the Contract Period, you shall be entitled to receive the following additional benefits:   --------------------------------------------------------------------------------   (i)    Participation in Benefit Plans. During the Contract Period and, to the extent specifically provided for herein, thereafter: (1) you shall be entitled to participate in all applicable incentive, savings, and retirement plans, practices, policies, and programs of the Company to the extent they are generally available to other senior officers, directors or executives of the Company, and (2) you and/or your family, as the case may be, shall be eligible for participation in, and shall receive all benefits under, all applicable welfare benefit plans, practices, policies, and programs provided by the Company, including, without limitation, medical, prescription, dental, disability, sickness benefits, employee life insurance, accidental death, and travel insurance plans and programs, to the same extent as other senior officers, directors or executives of the Company. Notwithstanding anything in this Agreement to the contrary, all benefit plans shall be subject to continuation beyond expiration or Termination, regardless of the grounds, in accordance with the terms of such plans and applicable law.   (ii)    Expenses. The Company shall reimburse you for all reasonable and necessary expenses incurred by you in carrying out your duties under this Agreement. You shall present to the Company, from time to time, an itemized account of such expenses in such form as may be required by the Company.   5.    Termination. Anything herein contained to the contrary notwithstanding, your employment hereunder shall terminate as a result of any of the following events:   (a)    Your death;   (b)    Termination by the Company for Cause. "Cause" shall encompass any of the following: (i) you have committed any act of fraud in connection with your employment; (ii) you have been convicted of a crime other than a traffic offense; (iii) your failure to materially perform your duties under this Agreement (other than as a result of physical or mental illness or injury), after the Board delivers to you a written demand for substantial performance, with reasonable opportunity to cure, that specifically identifies the manner in which the Board believes that you have not substantially performed your duties; or (iv) your breach of Section 14 of this Agreement if such breach impacts your ability to fully perform your expected duties hereunder;   (c)    Termination by the Company without Cause, upon forty-five (45) days prior written notice to you;   (d)    You become disabled by reason of physical or mental disability for more than one hundred eighty (180) days in the aggregate or a period of ninety (90) consecutive days during any 365-day period and the Board determines, in good faith based upon medical evidence, that you, by reason of such physical or mental disability, are rendered unable to perform your duties and services hereunder (a "Disability"). You agree to provide your medical records and to submit to a medical examination so that the Board may make its determination. A termination of your employment by the Company for Disability shall be communicated to you by written notice and shall be effective on the 30th day after your receipt of such notice (the “Disability Effective Date”) unless you return to full time performance of your duties before the Disability Effective Date.   (e)    A Termination for Cause shall be effected in accordance with the following procedures. The Company shall give you written notice ("Notice of Termination for Cause") of its intention to terminate your employment for Cause, setting forth in reasonable detail the specific conduct constituting Cause and the specific provision(s) of this Agreement on which it relies;   --------------------------------------------------------------------------------   (f)    Termination for "Good Reason" upon thirty (30) days' prior written notice to the Company. "Good Reason" shall mean: any material breach of this Agreement by the Company that is not remedied by the Company promptly after receipt of written notice from you, a reduction of your Base Salary, a demotion from President and Chief Operating Officer of the Company, a material reduction in your duties, or your failure to be elected to the Board of the Company; provided, however, that Termination by you for Good Reason shall be effective only if such failure has not been cured within thirty (30) days after notice of such failure has been given to the Company. A termination of your employment for Good Reason shall be effectuated by giving the Company written notice ("Notice of Termination for Good Reason") of the termination within three (3) months of the event constituting Good Reason, setting forth in reasonable detail the specific conduct of the Company that constitutes Good Reason and the specific provision(s) of this Agreement on which you rely;   (g)    Your Termination for any reason other than those set forth in Section 5(f) (other than by your death or Disability) upon thirty (30) day's prior written notice to the Company.   (h)    Termination at the end of the Contract Period by reason of non-renewal.  The giving of notice not to continue the automatic extension, as provided in Section 3, shall constitute a termination without Cause, provided, however, that if the Company waives the covenant not to compete contained in Section 8 hereof, termination following giving of notice not to continue the automatic renewal received shall constitute a termination for Cause.   (i)    The "Date of Termination" means the date of your death, the Disability Effective Date, the date on which the termination of your employment by the Company for Cause or without Cause or by you for Good Reason is effective, or the date on which you give the Company notice of a Termination without Good Reason, as the case may be.   6.    Consideration Payable to You Upon Termination or in the Event of Death.   (a)    Death. If your employment is terminated by reason of your death during the Contract Period, the Company shall pay to your designated beneficiaries (or, if there is no such beneficiary, to your estate or legal representative), in one cash payment within sixty (60) days after the Date of Termination, the sum of the following amounts (the "Accrued Obligations"): (i) any portion of your Annual Base Salary through the Date of Termination that has been earned but not yet been paid; (ii) an amount representing the Bonus for the period that includes the Date of Termination, computed by assuming that the amount of all such Bonus would be equal to the maximum amount of such Bonus that the you earned the prior fiscal year, and multiplying that amount by a fraction, the numerator of which is the number of days worked in the current fiscal year through the Date of Termination, and the denominator of which is the total number of work days in the relevant current fiscal year; (iii) any accrued but unpaid Bonus and vacation pay; and (iv) notwithstanding herein anything to the contrary, your family (spouse and issue) shall have health insurance paid for by AAI or the Company for a one year period after the date of your death. Any compensation previously deferred by you (together with any accrued interest or earnings thereon) that has not yet been paid will be paid in accordance with the terms and conditions under which such amounts were initially deferred. In the event of termination under this paragraph, all other benefits, payments or compensation to be provided to you hereunder shall terminate and your rights in any unvested AAI stock options or Atlas Energy unit options shall be terminated, any units with Restrictions shall be forfeited and incentive plans shall be governed solely by the terms of the applicable plan.   --------------------------------------------------------------------------------   (b)    By the Company for Cause; By You Other than for Good Reason. If your employment is terminated by the Company for Cause during the Contract Period, the Company shall pay you the Annual Base Salary and vacation pay through the Date of Termination to the extent earned but not yet paid. If you voluntarily terminate employment during the Contract Period, other than for Good Reason, the Company shall pay you the Annual Base Salary through the Date of Termination to the extent earned but not yet paid. The amount of any compensation you previously deferred (together with any accrued interest or earnings thereon) will be paid under the terms and conditions under which such amounts were initially deferred. In the event of termination under this paragraph, all other benefits, payments or compensation to be provided to you hereunder shall terminate and your rights in incentive plans shall be governed solely by the terms of the applicable plan, except that all Securities that have vested as of the Date of Termination shall not be subject to forfeiture but then the exercise of any option shall be governed by the terms of the applicable plan.   (c)    By the Company Other than for Cause or Death; by you for Good Reason. If, during the Contract Period, the Company terminates your employment, other than for Cause or Death, or you terminate employment for Good Reason, the Company shall pay to you, amounts equal to compensation and benefits set forth in Sections 4 and 6 as if you had remained employed by the Company pursuant to this Agreement, all such sums to be payable at the time when the same would have become due and payable if Termination had not occurred; provided, that the Bonus portion shall be equal to the prorated Bonus paid to you in the fiscal year ending prior to Termination; provided, further, that you shall continue to receive for the period described above benefits described in Section 4(d) and, to the extent any benefits described in Section 4(d) cannot be provided pursuant to a plan or program maintained by the Company for its executives, the Company shall provide such benefits outside such plan or program at no additional cost (including without limitation tax cost) to you and your family; and provided, finally, that during any period when the you are eligible to receive benefits of the type described in clause (i) of Section 4(d) under another employer-provided plan, the benefits provided by the Company under this Section 6(c) may be made secondary to those provided under such other plan. In addition to the foregoing, the Restrictions on any Atlas Energy units or AAI stock outstanding on the Date of Termination shall terminate as of the Date of Termination and all options to acquire Atlas Energy units or AAI stock outstanding on the Date of Termination shall be fully vested and exercisable and shall remain in effect and exercisable through the end of their respective terms, without regard to the Termination of your employment. The payments and benefits provided pursuant to this Section 6(c) are intended to compensate you for a Termination by the Company other than for Cause or for the actions of the Company leading to a Termination by you for Good Reason, and shall be the sole and exclusive remedy therefore. If you are terminated by reason of Disability, you shall assign to Company any benefits received on account of Company provided disability insurance for the period on which this severance payment is based. You shall not be required to mitigate the amount of any payment provided for in this Section 6(c) by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for herein be reduced by any compensation or any retirement benefit heretofore or hereafter earned by you as the result of employment by any other person, firm or corporation.   --------------------------------------------------------------------------------   7.    Confidential Information; No Solicitation   (a)    All confidential information or trade secrets which you may obtain during the Contract Period relating to the business of the Company and its affiliates shall not be published, disclosed, or made accessible by you to any other person, firm, or corporation except in connection with the business, and for the benefit, of the Company, and its affiliates. For purposes of this Agreement, "Confidential Information" shall include, but not be limited to, (i) the identity of the Company's lessors, suppliers and customers, and (ii) the Company's hedging, geological and billing practices. The provisions of this Section 7(a) shall survive the termination of this Agreement, but shall not apply to any information which is or becomes publicly available otherwise than by any breach of this Section 7(a). Notwithstanding anything in this Section 7(a) to the contrary, you may publish, disclose, or make accessible Confidential Information to the extent required by law, judicial or administrative proceedings or the like.   (b)    You shall not, during the Contract Period and for two years thereafter for yourself or on behalf of any other person, firm, partnership, corporation, or other entity, directly or indirectly solicit or hire, or attempt to solicit or hire, any employee of the Company or its affiliates away from the Company or its affiliates.   8.    Covenant-Not-to-Compete. You shall not, during the Contract Period and during the Post Termination Restricted Period if applicable and as defined herein, for yourself, or on behalf of any other person, firm, partnership, corporation, or other entity, directly or indirectly engage in any aspect of any business involved in (i) oil or natural gas exploration, drilling or production or in (ii) the offering of ownership interests in any entity engaged in oil or natural gas exploration, drilling or production. For purposes of this Section 8, the Post Termination Restricted Period shall not apply in the event your employment is terminated under Section 5(c) or 5(f) and shall mean the greater of (a) twenty-four months or (b) a period equal to the balance of the Contract Period immediately following Termination. For purposes of clause (i) of this Section 8, "to engage" shall include your acting as an owner (of more than 5%), employee, director or officer of an entity so engaged.   9.    Remedies in Case of Breach of Certain Covenants or Termination. The Company and you agree that the damages that may result to the Company from misappropriation of Confidential Information or competition as prohibited by Sections 7 and 8 could be estimated only by conjecture and not by any accurate standard, and, therefore, any breach by you of the provisions of such sections, in addition to giving rise to monetary damages, will be subject to injunctive relief.   10.   Director and Officer Insurance. You shall be covered during the Contract Period and thereafter by Officer and Director liability insurance in amounts and on terms similar to other senior executives, directors and managers of AAI and the Company and in an amount appropriate for companies the size and in the business of AAI and the Company but in no event shall the required policy limit be in excess of twenty million dollars ($20,000,000), the amount of the current AAI policy. AAI or the Company shall pay for such Officer and Director liability insurance.   11.   Mitigation. You shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for herein be reduced by any compensation or any retirement benefit heretofore or hereafter earned by you as the result of employment by any other person, firm or corporation.   --------------------------------------------------------------------------------   12.   Gross-Up Payment.   (a)    Notwithstanding any provision in the Agreement to the contrary, in the event that it shall be determined that any payment or distribution by the Company to or for the benefit of you, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a “Payment”), would constitute an “excess parachute payment” within the meaning of Section 280G of the Code, the Company shall pay you an additional amount (the “Gross-Up Payment”) such that the net amount retained by you after deduction of any excise tax imposed under Section 4999 of the Code, and any federal, state and local income tax, FICA and Medicare withholding taxes and excise tax imposed upon the Gross-Up Payment, but before any federal, state or local income tax FICA and Medicare withholding taxes on the Payment itself, shall be equal to the Payment. For purposes of determining the amount of the Gross-Up Payment, unless you specify that other rates apply, you shall be deemed to pay federal income tax and employment taxes at the highest marginal rate of federal income and employment taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of your residence on your Date of Termination, net of the reduction in federal income taxes that may be obtained from the deduction of such state and local taxes (calculated by assuming that any reduction under Section 68 of the Code in the amount of itemized deductions allocable to you applies first to reduce that amount of such state and local income taxes that would otherwise be deductible by you).   (b)    In the event that the excise tax imposed by Section 4999 of the Code is subsequently determined to be less than the amount taken into account hereunder at the time of your Termination, you shall repay to the Company, at the time that the amount of such reduction in excise tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the excise tax, federal, state and local income taxes and FICA and Medicare withholding taxes imposed on the Gross-Up Payment being repaid by you to the extent that such repayment results in a reduction in excise tax, FICA and Medicare withholding taxes and/or a federal, state or local income tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the excise tax is determined to exceed the amount taken into account hereunder at the time of your Termination (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment to you in respect to such excess (plus any interest, penalties or additions payable by you with respect to such excess) at the time that the amount of such excess is finally determined.   (c)    Notwithstanding the foregoing, in the event you suffer any adverse tax consequences resulting from the previous inclusion of the payment received pursuant to Section 11(a) as ordinary income, and your inability to claim as a deduction the repayment of all or a portion of the Gross-Up Payment, you will be able to retain such amount of the Gross-Up Payment, as reasonably determined by the Accountants (as hereinafter defined) to compensate you for such adverse tax consequences.   (d)    Subject to any determination made by the Internal Revenue Service (the “IRS”), all determinations as to whether a Gross-Up Payment is required and the amount of Gross-Up Payment and the assumptions to be used in arriving at the determination shall be made by the Company’s independent certified public accountants, appointed prior to any change in ownership (as defined under Code §280G(b)(2)), and/or tax counsel selected by such accountants (the “Accountants”) in accordance with the principles of §280G of the Code. All fees and expenses of the Accountants will be borne by the Company. Subject to any determination made by the IRS, determinations of the Accountants under this Agreement with respect to (1) the initial amount of any Gross-Up Payment and (2) any subsequent adjustment of such payment shall be binding on the Company and you.   --------------------------------------------------------------------------------   13.    Survival. Any provisions of this Agreement that impose continuing obligations on the parties, including, but not limited to, the provisions of Sections 6, 7, 8, 9, 10, 11 and 12, shall survive any expiration or Termination for any reason, whether or not expressly stated as surviving such expiration or Termination in this Section or in any other Section of this Agreement. Further, all obligations that are accrued but unpaid or unperformed as of the expiration or Termination, including but not limited to the payment per Section 4(d) of reimbursable expenses incurred as of such date, shall survive any expiration or Termination for any reason.   14.    Representations and Warranties. You represent and warrant to the Company that you are under no contractual or other restriction or obligation which would prevent you from performing your duties hereunder or which would interfere with the rights of the Company to engage in its businesses.   15.    Severability. In case any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal, or unenforceable in any respect such validity, illegality or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision(s) had never been contained herein, provided that such invalid, illegal or unenforceable provision(s) shall first be curtailed, limited or eliminated only to the extent necessary to remove such invalidity, illegality or unenforceability with respect to the applicable law as it shall then be applied.   16.    Modification of Agreement. This Agreement shall not be modified by any oral agreement, either expressed or implied, and all modifications hereof shall be in writing and signed by the parties hereto.   17.    Waiver. The waiver of any right under this Agreement by any of the parties hereto shall not be construed as a waiver of the same right at a future time or as a waiver of any other rights under this Agreement.   18.    Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the Commonwealth of Pennsylvania, without giving affect to the principles of conflicts of laws.   19.    Assignment.   (a)    This Agreement is personal to you and, without the prior written consent of the Company, shall not be assignable by you. This Agreement shall inure to the benefit of and be enforceable by your heirs, personal representatives, and legal representatives.   (b)    This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns, and the Company may assign this Agreement to any affiliate of AAI, including Atlas Energy LLC.   --------------------------------------------------------------------------------   20.    Notices. Any notice to be given pursuant to this Agreement shall be sufficient if in writing and mailed by certified or registered mail, postage-prepaid, to the addresses listed below:   If to Company: Atlas [                 ] 311 Rouser Road Moon Township, PA 15108 With a Copy to: Ledgewood, a professional corporation 1900 Market Street, Suite 750 Philadelphia, PA 19103 Attn: Richard J. Abt, Esquire  If to You: Richard Weber  31387 Edgewood Road Pepper Pike, OH 44124 With a Copy to: Kerr, Russell and Weber, PLC 500 Woodward Avenue, Suite 2500 Detroit, MI 48226 Attn: Michael D. Gibson, Esquire 21.   Entire Agreement. This Agreement constitutes the entire agreement between AAI, the Company and Atlas and you with respect to the subject matter hereof and supersedes any and all other previous or contemporaneous communications, representations, understandings, agreements, negotiations and discussions, either oral or written, among such parties with respect to the subject matter hereof. There are no written or oral agreements, understandings, or representations, directly or indirectly related to the subject matter of this Agreement, that are not set forth herein.   22.   Counterparts/Facsimile Signatures. This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same Agreement. For purposes of this Agreement, a facsimile or PDF signature shall be valid and enforceable as an original.   --------------------------------------------------------------------------------   23.    Atlas America, Inc. Performance. Atlas America, Inc. hereby unconditionally guarantees to you the full and prompt payment and performance of all obligations hereunder to be performed by the Company and/or Atlas Energy LLC and agrees that you shall have recourse against Atlas America, Inc. in the event that the Company or Atlas Energy LLC fails to pay any amounts or perform any obligations hereunder as they become due or obligatory.   24.    Payment of Your Attorneys’ Fees. The Company agrees to pay your reasonable attorneys’ fees and related expenses incurred in connection with the review, drafting and negotiation of this Agreement.   Please acknowledge your acceptance of and agreement to the terms of this letter agreement by signing a copy of this letter where indicated and returning it to me.     Sincerely,         ATLAS AMERICA, INC.               By:       Edward E. Cohen     Chief Executive Officer and President   ACCEPTED AND AGREED:     Richard Weber       --------------------------------------------------------------------------------

Exhibit 10.02 Memorandum of Understanding Regarding Office Lease Agreement Between Valero Corporate Services Company, as Landlord, and Valero Logistics Operations, L.P., as Tenant This Memorandum of Understanding, by and between Valero Corporate Services Company, a Delaware corporation, and Valero Logistics Operations, L.P., a Delaware limited partnership, will serve to document the agreement of such parties on the principal terms of an Office Lease Agreement (the “Lease Agreement”) to be executed by the parties. The parties agree to more fully memorialize these agreements in the Lease Agreement no later than March 31, 2006, or such other date as may be mutually agreed to by the parties. Until such Lease Agreement is executed and delivered on behalf of the parties, the terms of this Memorandum of Understanding shall be binding on the parties. Principal Terms of Lease Agreement:   Landlord: Valero Corporate Services Company   Tenant: Valero Logistics Operations, L.P. Leased Premises: All of a floor (approximately 63,803 square feet, floor to-be-determined) of the to-be-constructed office building (the “Building”) totaling approximately 259,455 square feet at Valero corporate headquarters (the “Project”), in San Antonio, Bexar County, Texas, located on that certain parcel of land (the “Land”) replatted as Lot 6, Block 2, NCB 14746, recorded in Book 9568, Page 191, Plat Records of Bexar County, Texas.   Effective Date: January 1, 2006   Initial Term: 25 years from Rent Commencement Date (defined below)   Renewal Option(s): One (1) option, for a period of 10 years Rent Commencement Date: The earlier of (i) the Substantial Completion Date (defined below) or (ii) the date of Tenant’s beneficial occupancy of the Leased Premises for the conduct of its business therein. For purposes hereof, the “Substantial Completion Date” means the date on which the initial leasehold improvements to the Leased Premises are completed in all material respects in substantial compliance with the final plans and permits and the Leased Premises are ready for occupancy.   Use: General office use, and related administrative and ancillary purposes   Base Rent: Initial Term:   1 -------------------------------------------------------------------------------- For first 5 years: $1,598,000 per year; For the next 5 years, Base Rent shall be adjusted based on changes in the CPI Index; Thereafter, at the beginning of each 5 year period for the remainder of the Initial Term, Base Rent shall be adjusted to reflect the actual market rent for comparable office space. The Base Rent includes Tenant’s proportionate share (based on a fraction, the numerator of which is the rentable square footage of the Leased Premises, and the denominator of which is the rentable square footage of the Building and the other buildings at the Project) of (i) Landlord’s operating expenses, such as HVAC, janitorial services, and the other Landlord Services (defined below), (ii) the real property ad valorem taxes assessed or imposed on the Project, and (iii) Landlord’s insurance costs relating to the Project. Renewal Period: At the beginning of the renewal period (if applicable), and again after the expiration of the first 5 years of the renewal period, the Base Rent shall be adjusted to reflect the actual market rent for comparable office space. Change of Control Provision: In the event of a change of control (“Change of Control”) of Valero L.P. or Valero GP Holdings, LLC, Landlord may, in its sole discretion, declare default by Tenant under the lease, for which Landlord will have all remedies available to it under the lease, including the right to evict Tenant with 6 months prior notice (such 6 month notice period shall only apply if the Change of Control is the sole Tenant default). Remedies upon Tenant Default: Lease shall contain standard Landlord remedies upon Tenant default, including (without limitation) acceleration of rent. Relocation of Landlord’s Headquarters: If Landlord’s corporate headquarters are relocated to any other location, Landlord may terminate the Lease on 12 months prior written notice. Initial Tenant Improvements/Alteration Rights: Landlord shall be responsible, at its sole cost and expense, for initial tenant improvements/finish-out of Leased Premises, based on plans approved by Landlord and Tenant; after the Commencement Date, Tenant may make non-structural changes to the Leased Premises without Landlord’s consent (structural changes shall require Landlord’s prior written consent, in its sole discretion). Furnishings & Moving Expenses: Landlord shall provide Tenant with all furnishings being used by Tenant in Landlord’s other buildings as of the Rent Commencement Date.   2 -------------------------------------------------------------------------------- All furnishings required by Tenant after the Rent Commencement Date shall be at Tenant’s sole cost and expense. Landlord shall move Tenant into the Leased Premises at its sole cost and expense. No Representations or Warranties: The Leased Premises shall be leased on an “AS IS”, “WITH ALL FAULTS” basis, with no express or implied representations or warranties provided by Landlord; provided that, to the extent that any express warranties from third-party contractors relating to the initial tenant improvements to the Leased Premises are partially assignable to Tenant, Landlord shall partially assign such warranties to Tenant. Landlord Services/Maintenance Responsibilities; Tenant Maintenance Responsibilities: Landlord shall be responsible for providing (i) maintenance and repair of the roof, exterior walls, foundations and other structural elements of the Building; (ii) the following with respect to the Leased Premises: janitorial services, elevator service, electrical services, HVAC, replacement of lamps and ballasts in ceiling, water and sewer service for the restrooms, and routine plumbing repairs; (iii) grounds and landscaping maintenance; and (iv) parking lot maintenance (collectively, “Landlord Services”). Tenant shall be responsible for providing all other maintenance and repairs to the Leased Premises. License to Use Certain Amenities: As long as Landlord is providing the Campus Amenities (defined below) to its employees at the Project, then Tenant’s employees at the Leased Premises shall have a license to use the Campus Amenities, within the areas at the Project or on Landlord’s adjacent campus designated by Landlord in its sole discretion, at no additional cost to Tenant other than any costs charged to Landlord’s employees therefor. Notwithstanding the foregoing, Landlord may terminate the license (or any portion thereof, in Landlord’s sole discretion) described in this paragraph at any time upon thirty (30) days written notice to Tenant after a Change of Control. For purposes hereof, the term “Campus Amenities” means the following: cafeteria services provided by Aramark Food Services, Inc. (or other entity designated by Landlord in its sole discretion); fitness center, walking/jogging trails, and basketball and tennis courts owned by Landlord at the Project; fitness services provided by MediFit Corporate Services, Inc. (or other entity designated by Landlord in its sole discretion); massage therapy provided by any person or entity designated by Landlord in its sole discretion; and any other similar kinds of services that may be provided by Landlord at the Project to Landlord’s employees at the Project in the future, as may be designated by Landlord in its sole discretion. Tenant’s Right to Assign or Sublease: Tenant may not assign any of its interest in the lease or sublet all or any portion of the Leased Premises without Landlord’s prior written consent, in Landlord’s sole discretion. Security: Subject to the provisions below, Landlord shall provide security services for the Project, including the parking garage and the Leased Premises.   3 -------------------------------------------------------------------------------- Indemnity: The lease will contain typical indemnities (contained in standard office leases) from Tenant in favor of Landlord; provided that Tenant shall release, indemnify and hold harmless Landlord from and against any and all claims of Tenant’s employees arising from the security, health, and/or fitness services (each of which is described above) at the Project or the exercise of any of the rights under the license described above by Tenant’s employees, including, without limitation, any such claim caused by or resulting from Landlord’s negligence. The lease will include the necessary provisions to comply with the express negligence standards of the laws of the State of Texas. Insurance: The lease will describe the insurance coverage (as typically required by Landlord) that Tenant shall provide at its sole cost and expense, with Landlord named as an additional insured. Taxes: Tenant shall be responsible for payment of all taxes and assessments levied or assessed upon Tenant’s fixtures, furniture and personal property located in or about the Leased Premises. Parking: Tenant shall be entitled to a pro-rata share of the parking spaces located in the parking garage to be constructed adjacent to the Building, including a pro-rata share of the reserved spaces, based on its proportionate share (made up of a fraction, the numerator of which is the rentable square footage of the Leased Premises in the Building, and the denominator of which is the rentable square footage in the Building), all at no additional cost. Brokerage Commissions: None. The lease shall contain a mutual indemnity for any claim for brokerage commissions in connection with the lease arising by, through or under the indemnifying party. The parties agree that this Memorandum of Understanding shall be binding upon their respective successors and assigns, and that either party may assign its rights and obligations hereunder to one or more affiliates without the other party’s prior written consent. This Memorandum of Understanding may be amended only by an instrument in writing signed by both parties. This Memorandum of Understanding shall be superseded by the Lease Agreement upon the complete execution of the Lease Agreement. THIS MEMORANDUM OF UNDERSTANDING SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. THIS MEMORANDUM OF UNDERSTANDING WAS PREPARED BY BOTH PARTIES HERETO AND NOT BY ONE PARTY TO THE EXCLUSION OF THE OTHER PARTY. [signatures contained on next page]   4 -------------------------------------------------------------------------------- The parties, by the signature of the duly authorized officers below, agree to terms set forth above, effective as of January 1, 2006.   “Landlord” VALERO CORPORATE SERVICES COMPANY By:   /s/ Mike Ciskowski   Mike Ciskowski, Executive Vice President “Tenant” VALERO LOGISTICS OPERATIONS, L.P. By:   Valero GP, Inc., its General Partner   By:   /s/ Curtis V. Anastasio     CurtisV. Anastasio, President   5

__________ EQUITY TRANSFER AGREEMENT Among each of : CHIMEX HONGKONG INCORPORATED LIMITED and VASCORE SCIENTIFIC CO., LTD. And: MIV THERAPEUTICS, INC. And: VASCORE MEDICAL (SUZHOU) CO., LTD. MIV Therapeutics, Inc. #1 - 8765 Ash Street, Vancouver, British Columbia, Canada, V6P 6T3 __________   --------------------------------------------------------------------------------            EQUITY TRANSFER AGREEMENT THIS EQUITY TRANSFER AGREEMENT is made and dated for reference as at June 15, 2006, as fully executed on this 5th day of September, 2006. AMONG EACH OF: CHIMEX HONGKONG INCORPORATED LIMITED , of E-Building, #35 Xingnan Road, Wuzhong District, Suzhou, China ("Chimex"); and VASCORE SCIENTIFIC CO., LTD. , of E-Building, #35 Xingnan Road, Wuzhong District, Suzhou, China ("Vascore Scientific"); (Chimex and Vascore Scientific being, collectively, the "Transferors"); AND: MIV THERAPEUTICS, INC. , of #1 - 8765 Ash Street, Vancouver, British Columbia, Canada, V6P 6T3 (the "Transferee"); AND: VASCORE MEDICAL (SUZHOU) CO., LTD. , of E-Building, #35 Xingnan Road, Wuzhong District, Suzhou, China (the "Company"); (the Transferors, the Transferee and the Company, being, collectively, the "Parties"). WHEREAS : (A)               The Company is a body corporate subsisting under and registered pursuant to the laws of the People's Republic of China ("China") as a wholly foreign owned enterprise and is presently engaged, in part, in the business of designing, manufacturing and marketing coated and non-coated vascular stents and accessories (collectively, the "Company's Business"); (B)               The Transferors are joint owners of 100% of the equity interests in the Company together with their associated and respective shareholders' loans in connection with the same (collectively, the "Equity Interests"); the allocation of which Equity Interests being set forth in Schedule A which is attached hereto; and --------------------------------------------------------------------------------            - 2 - (C)               The Transferors wish to sell and transfer, and the Transferee wishes to purchase and acquire, all of the Equity Interests from the Transferors upon the terms and conditions as set forth hereinbelow and subject to the prior ratification and approval of such terms and conditions by the Board of Directors, and if applicable, shareholders of the Parties, each of the Transferors and such regulatory authorities as may have jurisdiction over the Parties (collectively, the "Regulatory Authorities"); NOW THEREFORE , in connection with the foregoing the Parties hereby acknowledge and agree as follows: ARTICLE 1 TRANSFER OF ALL OF THE EQUITY INTERESTS Transfer 1.1               Subject to the terms and conditions hereof and based upon the representations and warranties contained in Article 2 and Article 3 hereinbelow, and the prior satisfaction of the conditions precedent which are set forth in Article 4 hereinbelow, the Transferors agree to assign, sell and transfer at the closing date (the "Closing Date") all of each Transferor's respective right, entitlement and interest in and to the Equity Interests to the Transferee and the Transferee agrees to purchase and acquire all of the Equity Interests from the Transferors on the terms and subject to the conditions contained in this Agreement. Transfer Price Predicated Upon Valuation and Release of Shares 1.2               Subject to the prior receipt by the Transferee of an acceptable "Valuation" (as referenced in section 1.3 hereinbelow), the total transfer price (the "Transfer Price") for all of the Equity Interests will be paid by the Transferee's payment of U.S. $1,000,000 (collectively, the "Cash Payments") together with the issuance and delivery of an aggregate of not less than 4,000,000 restricted common shares in the capital of the Transferee (each a "Share"), at a deemed issuance price of U.S. $1.00 per Share and for aggregate deemed consideration to the Transferee of not less than U.S. $4,000,000 (collectively, the "Share Issuances"; and the Cash Payments and the Share Issuances being, collectively, the "Transfer Price" herein, and the deemed value of the Transfer Price, that being U.S. $5,000,000, being the "Transfer Price Value" herein), all as confirmed by the Valuation, in the following manner and to the order and to the direction of the Transferors at the closing (the "Closing") on or before the Closing Date as follows: Cash Payments (a)       the Cash Payments will be made to the order and direction of the Transferors in the following manner: (i)       an initial Cash Payment of U.S. $500,000 will be made upon the execution of this Agreement and held in escrow for release by the Transferee to the order and direction of the Transferors immediately upon the Company's receipt of regulatory approval (from, in particular, the Chinese government) to the terms and conditions of this Agreement; and --------------------------------------------------------------------------------            - 3 - (ii)       a final Cash Payment of U.S. $500,000 will be made by the Transferee to the order and direction of the Transferors immediately upon the Closing of this Agreement; and Share Issuances (b)       the Share Issuances will be made to the order and direction of the Transferors in the following manner: (i)       an initial 1,800,000 of the Shares will be issued immediately upon the execution of this Agreement (collectively, the "Initial Shares") and held in escrow and released to the Transferors in the manner provided for immediately hereinbelow (the "Escrow"); it being expressly acknowledged and agreed that 1,500,000 of the Initial Shares will be issued to the order and direction of Mr. Liao, Hongbin, with the balance of the Initial Shares being issued pro rata among all Transferors based on the percentages of Equity Interests they hold; and (ii)       the balance of 2,200,000 of the Shares will be issued and delivered to the order and direction of the Transferors pro rata among all Transferors based on the percentages of Equity Interests they hold immediately upon the Closing of this Agreement. In this regard the Parties hereby acknowledge and agree that, in order to ensure the ongoing commitment of present management of the Company, once this Agreement is executed, to further the development of the Company's Business interests in line with the Transferee's then current business interests prior to the Closing of this Agreement, the Initial Shares, while issued upon the execution of this Agreement, will be held in Escrow by a mutually acceptable escrow agent and will only be delivered to the order and to the direction of the Transferors upon the attainment by Company management of the following joint venture milestones (collectively, the "Escrow Milestones") during the continuance of this Agreement prior to Closing as follows: (A)       the Company's prior receipt of regulatory approval (from, in particular, the Chinese government) of the terms and conditions of this Agreement; (B)       the finalization of a sound development platform between the Company's and the Transferee's then stent delivery joint venture system (collectively, the "Joint Venture System"); which final Joint Venture System shall be subject to the sole and absolute satisfaction of the Transferee, acting reasonably; and the cost of which Joint Venture System will be borne solely by the Transferee; and --------------------------------------------------------------------------------            - 4 -   (C)       the attainment by the Company of a permit from the appropriate Regulatory Authorities in China to the commencement of animal trials for the newly developed Joint Venture System (the "Joint Venture System Clinical Trials Permit"); which final Joint Venture System Clinical Trials Permit, and the terms and conditions thereof, shall be subject to the sole and absolute satisfaction of the Transferee, acting reasonably; and the cost of which Joint Venture System Clinical Trials Permit will be borne solely by the Transferee; failing any of which Escrow Milestones during the continuance of this Agreement the Transferee may, in its sole and absolute discretion, either cancel the Initial Shares in Escrow and terminate this Agreement or extend the Escrow upon such reasonable terms and conditions as the Parties may then agree upon in writing. Adjustment to Transfer Price Predicated Upon Valuation and Adjustment Thereof 1.3               The Parties hereby acknowledge and agree that, as soon as reasonably possible after the execution of this Agreement and prior to satisfaction of each of the conditions precedent contained in Article 4 hereinbelow, the Transferee shall seek and obtain a written Valuation respecting the underlying value of the Company (the "Valuation Value"); and which Valuation will be prepared by reference, in part, to the Company's Audited Financial Statements (as defined and determined hereinbelow) which are to be prepared in accordance with generally accepted accounting principles in the United States consistently applied; and which Valuation shall confirm the Valuation Value of the Equity Interests to the Transferee herein. In that regard, and should the Valuation Value determined under the Valuation be, in fact, greater than the agreed upon and minimum Transfer Price Value of U.S. $5,000,000 for the original Cash Payments and Shares as set forth in section 1.2 hereinabove, then the number of Shares forming the resulting Transfer Price herein shall then be automatically increased so as to be comprised of that number of Shares as result from dividing the Valuation Value (less the Cash Payments) by U.S. $1.00 per Share. In that regard, and should the Valuation Value determined under the Valuation be, in fact, lesser than the agreed upon and minimum Transfer Price Value as set forth in section 1.2 hereinabove, then, and only with the further agreement of each of the Parties hereto, the number of Shares forming part of the resulting Transfer Price herein shall then be decreased so as to be comprised of that number of Shares as result from dividing the Valuation Value (less the Cash Payments) by U.S. $1.00 per Share. Resale Restrictions and Legending of Share Certificates 1.4               The Transferors hereby acknowledge and agree that the Transferee makes no representations as to any resale or other restriction affecting the Shares and that it is presently contemplated that the Shares will be issued by the Transferee to the Transferors in reliance upon the registration and prospectus exemptions contained in certain sections of the United States Securities Act of 1933 (the "Securities Act") or "Regulation S" promulgated under the Securities Act which will impose a trading restriction in the United States on the Shares for a period of at least 12 months from the Closing Date. In addition, the Transferors hereby also acknowledge and agree that the within obligation of the Transferee to issue the Shares pursuant to sections 1.2 and 1.3 hereinabove will be subject to the Transferee being satisfied that an exemption from applicable registration and prospectus requirements is available under the Securities Act and all applicable securities laws, in respect of each particular Transferor, the Equity Interests and the Shares, and the Transferee shall be relieved of any obligation whatsoever to purchase any Equity Interests of the Transferors and to issue Shares in respect of any of the Transferors where the Transferee reasonably determines that a suitable exemption is not available to it. --------------------------------------------------------------------------------            - 5 -                         The Transferors hereby also acknowledge and understand that neither the sale of the Shares which the Transferors are acquiring nor any of the Shares themselves have been registered under the Securities Act or any state securities laws, and, furthermore, that the Shares must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available. The Transferors also acknowledge and understand that the certificate(s) representing the Shares will be stamped with the following legend (or substantially equivalent language) restricting transfer in the following manner if such restriction is required by the Regulatory Authorities: "The securities represented by this certificate have not been registered under the United States Securities Act of 1933, as amended, or the laws of any state, and have been issued pursuant to an exemption from registration pertaining to such securities and pursuant to a representation by the security holder named hereon that said securities have been acquired for purposes of investment and not for purposes of distribution. These securities may not be offered, sold, transferred, pledged or hypothecated in the absence of registration, or the availability of an exemption from such registration. Furthermore, no offer, sale, transfer, pledge or hypothecation is to take place without the prior written approval of counsel to the company being affixed to this certificate. The stock transfer agent has been ordered to effectuate transfers only in accordance with the above instructions."; and the Transferors hereby consent to the Transferee making a notation on its records or giving instructions to any transfer agent of the Transferee in order to implement the restrictions on transfer set forth and described hereinabove.                       The Transferors also acknowledge and understand that: (a)       the Shares are restricted securities within the meaning of "Rule 144" promulgated under the Securities Act; (b)       the exemption from registration under Rule 144 will not be available in any event for at least one year from the date of issuance of the Shares to the Transferors, and even then will not be available unless (i) a public trading market then exists for the common stock of the Transferee, (ii) adequate information concerning the Transferee is then available to the public and (iii) other terms and conditions of Rule 144 are complied with; and (c)       any sale of the Shares may be made by the Transferors only in limited amounts in accordance with such terms and conditions. --------------------------------------------------------------------------------            - 6 -   Acquisition Option to Acquire the Company's Marketing Affiliate 1.5               In consideration of the Parties' within agreement to purchase and sell the Equity Interests and to enter into the terms and conditions of this Agreement, prior to the Closing of this Agreement the Company and the Transferors hereby agree to use their reasonable commercial efforts to seek and obtain an exclusive option for the Transferee from the Company's existing marketing company affiliate (the "Marketing Affiliate") for the Transferee to acquire 100% of the equity interests of the Marketing Affiliate on such terms and conditions as the Transferee and the Marketing Affiliate may agree, acting reasonably (collectively, the "Acquisition Option"); it being acknowledged and agreed by the Parties hereto that it is presently anticipated that the Acquisition Option Purchase Price of the Marketing Affiliate will be approximately U.S. $15,000,000; and, furthermore, that said Acquisition Option Purchase Price will be deliverable in either cash and/or common shares of the Transferee and for an Acquisition Option term that will commence with the Closing of this Agreement and run for a period of at least six months from the due and complete Closing hereunder. Costs 1.6               The Parties hereto shall bear their own costs in relation to the negotiation, execution and Closing of this Agreement and the matters contemplated thereby, including any legal fees, accounting, regulatory and filing fees and expenses. Standstill Provisions 1.7               In consideration of the Parties' within agreement to purchase and sell the Equity Interests and to enter into the terms and conditions of this Agreement, each of the Parties hereby undertake for themselves, and for each of their respective agents and advisors, that they will not until the earlier of the Closing Date or the termination of this Agreement approach or consider any other potential transferees, or make, invite, entertain or accept any offer or proposal for the proposed sale of any interest in and to any of the Equity Interests or the assets or the business interests of the Company, as the case may be, or, for that matter, disclose any of the terms of this Agreement, without the Parties' prior written consent. In this regard each of the Parties hereby acknowledges that the foregoing restrictions are important to the respective businesses of the Parties and that a breach by any of the Parties of any of the covenants herein contained would result in irreparable harm and significant damage to each affected Party that would not be adequately compensated for by monetary award. Accordingly, the Parties hereby agree that, in the event of any such breach, in addition to being entitled as a matter of right to apply to a Court of competent equitable jurisdiction for relief by way of restraining order, injunction, decree or otherwise as may be appropriate to ensure compliance with the provisions hereof, any such Party will also be liable to the other Parties, as liquidated damages, for an amount equal to the amount received and earned by such Party as a result of and with respect to any such breach. The Parties hereby also acknowledge and agree that if any of the aforesaid restrictions, activities, obligations or periods are considered by a Court of competent jurisdiction as being unreasonable, they agree that said Court shall have authority to limit such restrictions, activities or periods as the Court deems proper in the circumstances. --------------------------------------------------------------------------------            - 7 - ARTICLE 2 WARRANTIES, REPRESENTATIONS AND COVENANTS BY THE COMPANY AND BY THE TRANSFERORS Warranties, Representations and Covenants by the Company and by the Transferors 2.1               In order to induce the Transferee to enter into and consummate this Agreement, each of the Company and the Transferors hereby warrants to, represents to and covenants with the Transferee herein as at the Closing Date, that, to the best of the knowledge, information and belief of each of the Company and the Transferors, after making due inquiry and where appropriate and applicable (and for the purposes of the following warranties, representations and covenants "Company" shall mean the Company and any subsidiary of the Company, if any, as the context so requires): (a)       the Company and the Transferors, if applicable, are duly incorporated under the laws of their respective jurisdictions of incorporation, are validly existing and are in good standing with respect to all statutory filings required by the applicable corporate laws, and the Company and the Transferors have the requisite power, authority and capacity to own and use all of their respective business assets and to carry on the Company's Business as presently conducted by them; (b)       save and except as set forth in the "Company Disclosure Schedule" attached hereto as Schedule "A", the Company owns and possesses and has good and marketable title to and possession of all of its business assets free and clear of all actual or threatened liens, charges, options, encumbrances, voting agreements, voting trusts, demands, limitations and restrictions of any nature whatsoever; (c)       save and except as set forth in the Company Disclosure Schedule, the Company holds all licenses and permits required to carry on the Company's Business as presently conducted by them for the conduct in the ordinary course of its operations of the Company's Business and for the uses to which its business assets have been put and are in good standing, and such conduct and uses are in compliance with all laws, zoning and other by-laws, building and other restrictions, rules, regulations and ordinances applicable to the Company and its business assets, and neither the execution and delivery of this Agreement nor the completion of the transactions contemplated hereby will give any person the right to terminate or cancel any said license or permit or affect such compliance; (d)       the registered capital of the Company is as set forth in the Company Disclosure Schedule and, as at the Closing Date, all of the registered capital of the Company will be fully paid and non-assessable as at Closing; (e)       there is and will be at Closing no other registered capital of the Company other than as represented by the Equity Interests of the Transferors herein; (f)       the Transferors have good and marketable title to and are the legal, registered and beneficial owners of all of the Equity Interests; --------------------------------------------------------------------------------            - 8 -   (g)       the Equity Interests are, or will be at the Closing, validly registered and fully paid and non-assessable and are free and clear of all actual or threatened liens, charges, options, encumbrances, voting agreements, voting trusts, demands, limitations and restrictions of any nature whatsoever; (h)       there are no claims of any nature whatsoever affecting the rights of the Transferors to transfer the Equity Interests to the Transferee and, without limiting the generality of the foregoing, there are no claims or potential claims under any relevant family relations legislation or other equivalent legislation affecting the Equity Interests; (i)       the Transferors have the power and capacity to own and dispose of the Equity Interests; (j)       this Agreement, once approved by the appropriate Regulatory Authorities (and, in particular, the Chinese government), will constitute a legal, valid and binding obligation of each of the Company and the Transferors, enforceable against each of the Company and the Transferors in accordance with its respective terms, except as enforcement may be limited by laws of general application affecting the rights of creditors; (k)       save and except as contemplated herein, as at the date herof the Company has not committed itself to provide any person, firm or corporation with any agreement, option or right, consensual or arising by law, present or future, contingent or absolute, or capable of becoming an agreement, option or right: (i)       to require it to increase its registered capital; (ii)      to require it to purchase, redeem or otherwise acquire any of the registered capital; or (iii)     to purchase or otherwise acquire any of its registered capital; (l)       no other person, firm or corporation has any agreement, option or right capable of becoming an agreement for the purchase of any of the Equity Interests; (m)     save and except as set forth in the Company Disclosure Schedule, and save and except as will be set forth in the Company's audited financial statements from inception and to and including the Company's most recently completed financial reporting period (the "Company's Audited Financial Statements") which will be provided prior to Closing, there are no material liabilities, contingent or otherwise, existing on the date hereof in respect of which the Company may be liable on or after the completion of the transactions contemplated by this Agreement other than: (i)       liabilities disclosed or referred to in this Agreement; and --------------------------------------------------------------------------------            - 9 -   (ii)     liabilities incurred in the ordinary course of the Company's Business, none of which are materially adverse to the business, operations, affairs or financial conditions of the Company; (n)       save and except as set forth in the Company Disclosure Schedule, from the execution of this Agreement to and up to and including the Closing Date there has been prepared and will be prepared and filed on a timely basis all national and local income tax returns, elections and designations, and all other governmental returns, notices and reports of which the Company has, or ought reasonably to have had, knowledge required to be or reasonably capable of being filed up to and including the Closing Date, with respect to the operations of the Company, and no such returns, elections, designations, notices or reports contain or will contain any material misstatement or omit any material statement that should have been included, and each such return, election, designation, notice or report, including accompanying schedules and statements, is and will be true, correct and complete in all material respects; (o)       save and except as set forth in the Company Disclosure Schedule, the Company has been assessed for all national, provincial and municipal income tax for all years to and including its most recent taxation year, and from the execution of this Agreement to and up to and including the Closing Date the Company will have paid in full or accrued in accounts all amounts (including, but not limited to, sales, use and consumption taxes and taxes measured on income and all installments of taxes) due and payable to all national, provincial and municipal taxation authorities up to and including the Closing Date; (p)       save and except as set forth in the Company Disclosure Schedule, there is not now, and there will not be by the Closing Date, any proceeding, claim or, to the best of the knowledge, information and belief of the Transferors and the Company, after having made due inquiry, any investigation by any national, provincial or municipal taxation authority, or any matters under discussion or dispute with such taxation authorities, in respect of taxes, governmental charges, assessments or reassessments in connection with the Company, and the Transferors and the Company are not aware of any contingent tax liabilities or any grounds that could result in an assessment, reassessment, charge or potentially adverse determination by any national, provincial or municipal taxation authority as against the Company; (q)       the Company is not, nor until or at the Closing Date will it be, in breach of any provision or condition of, nor has it done or omitted to do anything that, with or without the giving of notice or lapse or both, would constitute a breach of any provision or condition of, or give rise to any right to terminate or cancel or accelerate the maturity of any payment under, any deed of trust, contract, certificate, consent, permit, license or other instrument to which it is a party, by which it is bound or from which it derives benefit, any judgment, decree, order, rule or regulation of any Court or governmental authority to which it is subject, or any statute or regulation applicable to it, to an extent that, in the aggregate, has a material adverse affect on it; --------------------------------------------------------------------------------            - 10 -   (r)       adequate provision has been made and will be made for taxes payable by the Company for the current period for which a tax return is not yet required to be filed and, to the best of the knowledge, information and belief of the Transferors and the Company, after having made due inquiry, there are no contingent tax liabilities of the Company or any grounds which would prompt a re-assessment of the Company and including, without limitation, the aggressive treatment of income and expenses in the filing of earlier tax returns by the Company; (s)       all amounts required to be withheld for taxes by the Company from payments made to any present or former shareholder, officer, director, non-resident creditor, employee, associate or consultant has been withheld and paid on a timely basis to the proper governmental body pursuant to applicable legislation; (t)       save and except as set forth in the Company Disclosure Schedule, the Company has no equipment, other than the personal property or fixtures in the possession or custody of the Company which, as of the date hereof, is leased or is held under license or similar arrangement; (u)       the Company maintains, and has maintained, insurance in force against loss on the Company's assets, against such risks, in such amounts and to such limits, as is in accordance with prudent business practices prevailing in its line of business and having regard to the location, age and character of its properties and the Company's assets, and has complied fully with all requirements of such insurance, including the prompt giving of any notice of any claim or possible claim thereunder, and all such insurance has been and is with insurers which the Company believes to be responsible; (v)       the Company's Audited Financial Statements will be true and correct in every respect and present fairly the financial position of the Company as at its most recently completed financial period and the results of its operations for the period then ended in accordance with generally accepted accounting principles in the United States on a basis consistently applied; (w)      except as otherwise provided for herein, the Transferors and the Company have not retained, employed or introduced any broker, finder or other person who would be entitled to a brokerage commission or finder's fee arising out of the transactions contemplated hereby; (x)       all material transactions of the Company and including, without limitation, all directors' and shareholders' resolutions, have been promptly and properly recorded or filed in or with its books and records; (y)       the Transferors and the Company have the full authority and capacity required to enter into this Agreement and to perform their respective obligations hereunder; --------------------------------------------------------------------------------            - 11 -   (z)       prior to Closing the Company will have obtained all authorizations and approvals or waivers that may be necessary or desirable in connection with the transactions contemplated in this Agreement, and other actions by, and have made all filings with, any and all Regulatory Authorities, if applicable, from whom any such authorization, approval or other action is required to be obtained or to be made in connection with the transactions contemplated herein, and all such authorizations, approvals and other actions will be in full force and effect, and all such filings will have been accepted by the Company which will be in compliance with, and have not committed any breach of, any securities laws, regulations or policies of any Regulatory Authority to which the Company may be subject; (aa)     no dividend or other distribution by the Company will be declared, paid or authorized up to and including the Closing Date, and the Company has not conferred, and has not committed itself to confer upon, or pay to or to the benefit of, any entity, any benefit having monetary value, any bonus or any salary increases except in the normal course of its business; (bb)     save and except as set forth in the Company Disclosure Schedule, there is no basis for and there are no actions, suits, judgments, investigations or proceedings outstanding or pending or, to the best of the knowledge, information and belief of each of the Company and the Transferors, after making due inquiry, threatened against or affecting the Company at law or in equity or before or by any national, provincial, municipal or other governmental department, commission, board, bureau or agency; (cc)     save and except as set forth in the Company Disclosure Schedule, the Company is not in breach of any laws, ordinances, statutes, regulations, by-laws, orders or decrees to which it is subject or which apply to it; (dd)     save and except as set forth in the Company Disclosure Schedule, the Company has not experienced, nor are the Company and the Transferors aware of, any occurrence or event which has had, or might reasonably be expected to have, a materially adverse affect on the Company's Business or on the results of its operations; (e)     save and except as set forth in the Company Disclosure Schedule, the Company is not, nor until or at the Closing Date will it be, in breach of any provision or condition of, nor has it done or omitted anything that, with or without the giving of notice or lapse or both, would constitute a breach of any provision or condition of, or give rise to any right to terminate or cancel or accelerate the maturity of any payment under, any deed of trust, contract, certificate, consent, permit, license or other instrument to which it is a party, by which it is bound or from which it derives benefit, any judgment, decree, order, rule or regulation of any Court or governmental authority to which it is subject, or any statute or regulation applicable to it, to an extent that, in the aggregate, has a material adverse affect on it; --------------------------------------------------------------------------------            - 12 -   (ff)     the Company has not committed to making and until the Closing Date will not make or commit itself to: (i)       guarantee, or agree to guarantee, any indebtedness or other obligation of any person or corporation; or (ii)      waive or surrender any right of material value; (gg)     until the Closing Date the Company will: (i)       maintain its assets in a manner consistent with and in compliance with applicable law; and (ii)      not enter into any material transaction or assume or incur any material liability outside the normal course of its business without the prior written consent of the Transferee; (hh)     the Company and the Transferors acknowledge that the Shares will be issued under certain exemptions from the registration and prospectus filing requirements otherwise applicable under the Securities Act and that, as a result, the Transferors may be restricted from using most of the remedies that would otherwise be available to them and will not receive information that would otherwise be required to be provided to them, and the Transferee is relieved from certain obligations that would otherwise apply to it, in either case, under applicable securities legislation; (ii)      the Company and the Transferors acknowledge and agree that the Shares have not been and will not be qualified or registered under the any federal or state securities laws of the United States and, as such, the Transferors may be restricted from selling or transferring such Shares under applicable law; (jj)      the Company and the Transferors acknowledge and agree that, during the continuance of this Agreement, they shall use their reasonable commercial efforts to attain and satisfy each of the following Escrow Milestones together with the following and proposed condition precedent to the Closing of this Agreement: (i)       the Company's prior receipt of regulatory approval from all Regulatory Authorities (and including, in particular, from the Chinese government) to the terms and conditions of this Agreement; (ii)       the finalization of a sound Joint Venture System; which final Joint Venture System shall be subject to the sole and absolute satisfaction of the Transferee, acting reasonably; (iii)     the attainment by the Company of a Joint Venture System Clinical Trials Permit from the appropriate regulatory authorities in China for the commencement of animal trials for the newly developed Joint Venture System; which final Joint Venture System Clinical Trials Permit, and the terms and conditions thereof, shall be subject to the sole and absolute satisfaction of the Transferee, acting reasonably; and --------------------------------------------------------------------------------            - 13 -   (iv)      the attainment by the Company of a license from the State Food and Drug Administration of China for the Joint Venture System (the "Joint Venture System License"); which final Joint Venture System License, and the terms and conditions thereof, shall be subject to the sole and absolute satisfaction of the Transferee, acting reasonably; and the cost of which Joint Venture System License will be borne solely by the Transferee; (kk)     the making of this Agreement, the completion of the transactions contemplated hereby and the performance of and compliance with the terms hereof does not and will not: (i)       conflict with or result in a breach of or violate any of the terms, conditions or provisions of the constating documents of the Company or the Transferors; (ii)      conflict with or result in a breach of or violate any of the terms, conditions or provisions of any law, judgment, order, injunction, decree, regulation or ruling of any court or governmental authority, domestic or foreign, to which either the Company or any of the Transferors is subject, or constitute or result in a default under any agreement, contract or commitment to which either the Company or any of the Transferors is a party; (iii)     give to any party the right of termination, cancellation or acceleration in or with respect to any agreement, contract or commitment to which the Company or the Transferors is a party; (iv)      give to any government or governmental authority, or any municipality or any subdivision thereof, including any governmental department, commission, bureau, board or administration agency, any right of termination, cancellation or suspension of, or constitute a breach of or result in a default under, any permit, license, control or authority issued to the Company or any of the Transferors which is necessary or desirable in connection with the conduct and operations of the Company's Business and the ownership or leasing of its respective business assets; or (v)       constitute a default by the Company or any of the Transferors, or any event which, with the giving of notice or lapse of time or both, might constitute an event of default, under any agreement, contract, indenture or other instrument relating to any indebtedness of the Company or any of the Transferors which would give any party to that agreement, contract, indenture or other instrument the right to accelerate the maturity for the payment of any amount payable under that agreement, contract, indenture or other instrument; and --------------------------------------------------------------------------------            - 14 - (ll)       it is not aware of any fact or circumstance which has not been disclosed to the Transferee which should be disclosed in order to prevent the representations, warranties and covenants contained in this section from being misleading or which would likely affect the decision of the Transferee to enter into this Agreement. ARTICLE 3 WARRANTIES, REPRESENTATIONS AND COVENANTS BY THE TRANSFEREE Warranties, Representations and Covenants by the Transferee 3.1               In order to induce each of the Company and the Transferors to enter into and consummate this Agreement, the Transferee hereby warrants to, represents to and covenants with each of the Company and the Transferors that, to the best of the knowledge, information and belief of the Transferee herein, after making due inquiry (and for the purposes of the following warranties, representations and covenants "Transferee" shall mean the Transferee and any subsidiary of the Transferee, if any, as the context so requires): (a)       the Transferee is duly incorporated under the laws of its jurisdiction of incorporation, is validly existing and is in good standing with respect to all statutory filings required by the applicable corporate laws; (b)       the Transferee has the requisite power, authority and capacity to own and use all of its business assets and to carry on its business as presently conducted by it; (c)       save and except as set forth in the "Transferee Disclosure Schedule" attached hereto as Schedule "B", the Transferee owns and possesses and has good and marketable title to and possession of all of its business assets free and clear of all actual or threatened liens, charges, options, encumbrances, voting agreements, voting trusts, demands, limitations and restrictions of any nature whatsoever; (d)       save and except as set forth in the Transferee Disclosure Schedule, the Transferee holds all licenses and permits required for the conduct in the ordinary course of the operations of its business and for the uses to which its business assets have been put and are in good standing, and such conduct and uses are in compliance with all laws, zoning and other by-laws, building and other restrictions, rules, regulations and ordinances applicable to the Transferee, and neither the execution and delivery of this Agreement nor the completion of the transactions contemplated hereby will give any person the right to terminate or cancel any said license or permit or affect such compliance; (e)       this Agreement, once approved by the appropriate Regulatory Authorities (and, in particular, the Chinese government), will constitute a legal, valid and binding obligation of the Transferee, enforceable against the Transferee in accordance with its respective terms, except as enforcement may be limited by laws of general application affecting the rights of creditors; --------------------------------------------------------------------------------            - 15 -   (f)       the authorized and issued share capital of the Transferee will be as set forth in the Transferee Disclosure Schedule; (g)       all of the issued and outstanding shares of the Transferee are listed and posted for trading on the NASD Over-the-Counter Bulletin Board (the "OTCBB"), and the Transferee is not in material default of any of its listing requirements of the OTCBB or any rules or policies of the United States Securities and Exchange Commission (the "Commission"); (h)       all registration statements, reports and proxy statements filed by the Transferee with the Commission, and all registration statements, reports and proxy statements required to be filed by the Transferee with the Commission, have been filed by the Transferee under the United States Securities Act of 1934 (the "1934 Act"), were filed in all material respects in accordance with the requirements of the 1934 Act and the rules and regulations thereunder and no such registration statements, reports or proxy statements contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; (i)       other than for the Escrow respecting the Initial Shares and the hold periods or other restrictions imposed under applicable securities legislation, the Transferee will allot and issue the Shares on or prior to the Closing Date in accordance with sections 1.2 and 1.3 hereinabove as fully paid and non-assessable in the capital of the Transferee free and clear of all actual or threatened liens, charges, options, encumbrances, voting agreements, voting trusts, demands, limitations and restrictions of any nature whatsoever; (j)       save and except as set forth in the Transferee Disclosure Schedule, there are no material liabilities, contingent or otherwise, existing on the date hereof in respect of which the Transferee may be liable on or after the completion of the transactions contemplated by this Agreement other than: (i)       liabilities disclosed or referred to in this Agreement; and (ii)      liabilities incurred in the ordinary course of business, none of which are materially adverse to the business, operations, affairs or financial conditions of the Transferee; (k)       save and except as set forth in the Transferee Disclosure Schedule, there is no basis for and there are no actions, suits, judgments, investigations or proceedings outstanding or pending or, to the best of the knowledge, information and belief of the Transferee, after making due inquiry, threatened against or affecting the Transferee at law or in equity or before or by any national, provincial, municipal or other governmental department, commission, board, bureau or agency; --------------------------------------------------------------------------------            - 16 -   (l)       save and except as set forth in the Transferee Disclosure Schedule, the Transferee is not in breach of any laws, ordinances, statutes, regulations, by-laws, orders or decrees to which it is subject or which apply to it; (m)     save and except as set forth in the Transferee Disclosure Schedule, the Transferee has not experienced, nor is the Transferee aware of, any occurrence or event which has had, or might reasonably be expected to have, a materially adverse affect on the Transferee's business or on the results of its operations; (n)      up to and including the Closing Date there has been and will be prepared and filed on a timely basis all federal and provincial income tax returns, elections and designations, and all other governmental returns, notices and reports of which the Transferee had or ought reasonably to have had knowledge, required to be or reasonably capable of being filed up to the Closing Date, with respect to the operations of the Transferee, and no such returns, elections, designations, notices or reports contain any material misstatement or omit any material statement that should have been included, and each such return, election, designation, notice or report, including accompanying schedules and statements, is true, correct and complete in all material respects; (o)       save and except as set forth in the Transferee Disclosure Schedule, the Transferee is not, nor until or at the Closing Date will it be, in breach of any provision or condition of, nor has it done or omitted anything that, with or without the giving of notice or lapse or both, would constitute a breach of any provision or condition of, or give rise to any right to terminate or cancel or accelerate the maturity of any payment under, any deed of trust, contract, certificate, consent, permit, license or other instrument to which it is a party, by which it is bound or from which it derives benefit, any judgment, decree, order, rule or regulation of any court or governmental authority to which it is subject, or any statute or regulation applicable to it, to an extent that, in the aggregate, has a material adverse affect on it; (p)       until the Closing Date the Transferee will: (i)       maintain its assets in a manner consistent with and in compliance with applicable law; and (ii)      not enter into any material transaction or assume or incur any material liability outside the normal course of its business (except as required by the terms of this Agreement); (q)       the shares in the capital of the Transferee are not subject to or affected by any actual or, to the best of the knowledge, information and belief of the Transferee, after making due inquiry, pending or threatened cease trading, compliance or denial of use of exemptions orders of, or action, investigation or proceeding by or before, any securities regulatory authority, court, administrative agency or other tribunal; --------------------------------------------------------------------------------            - 17 -   (r)       the making of this Agreement, the completion of the transactions contemplated hereby and the performance of and compliance with the terms hereof does not and will not: (i)       conflict with or result in a breach of or violate any of the terms, conditions or provisions of the constating documents of the Transferee; (ii)      conflict with or result in a breach of or violate any of the terms, conditions or provisions of any law, judgment, order, injunction, decree, regulation or ruling of any court or governmental authority, domestic or foreign, to which the Transferee is subject, or constitute or result in a default under any agreement, contract or commitment to which the Transferee is a party; (iii)     give to any party the right of termination, cancellation or acceleration in or with respect to any agreement, contract or commitment to which the Transferee is a party; (iv)      give to any government or governmental authority, or any municipality or any subdivision thereof, including any governmental department, commission, bureau, board or administration agency, any right of termination, cancellation or suspension of, or constitute a breach of or result in a default under, any permit, license, control or authority issued to the Transferee which is necessary or desirable in connection with the conduct and operations of its business and the ownership or leasing of its business assets; or (v)       constitute a default by the Transferee or any event which, with the giving of notice or lapse of time or both, might constitute an event of default, under any agreement, contract, indenture or other instrument relating to any indebtedness of the Transferee which would give any party to that agreement, contract, indenture or other instrument the right to accelerate the maturity for the payment of any amount payable under that agreement, contract, indenture or other instrument; and (s)       it is not aware of any fact or circumstance which has not been disclosed to the Company and the Transferors which should be disclosed in order to prevent the representations, warranties and covenants contained in this section from being misleading or which would likely affect the decision of the Company and the Transferors to enter into this Agreement. ARTICLE 4 CONDITIONS PRECEDENT TO CLOSING Transferee's Conditions Precedent 4.1               All of the obligations of the Transferee under this Agreement are further subject to at least the following conditions for the exclusive benefit of the Transferee fulfilled in all material aspects in the reasonable opinion of the Transferee or to be waived by the Transferee as soon as possible but, unless specifically indicated as otherwise, not later than five calendar days prior to the Closing Date: --------------------------------------------------------------------------------            - 18 -   (a)       the Company and the Transferors shall have complied with all warranties, representations, covenants and agreements herein agreed to be performed or caused to be performed by the Company and the Transferors on or before the Closing Date; (b)       the Company and the Transferors shall have obtained all authorizations, approvals and other actions by, and have made all filings with, any Regulatory Authority (and, in particular, the Chinese government) from whom any such authorization, approval or other action is required to be obtained or to be made in connection with the transactions contemplated herein, and all such authorizations, approvals and other actions are in full force and effect and all such filings have been accepted and the Company and the Transferors are in compliance with, and have not committed any breach of, any securities laws, regulations or policies of any securities regulatory authority to which the Company or the Transferors may be subject; (c)       the Company's Audited Financial Statements will be subject to the prior review and approval of the Transferee's auditors so as to ensure that they are true and correct in every respect and present fairly the financial position of the Company as at its most recently completed financial period and the results of its operations for the period then ended in accordance with generally accepted accounting principles in the United States on a basis consistently applied; (d)       all matters which, in the opinion of counsel for the Transferee, are material in connection with the transactions contemplated by this Agreement shall be subject to the favourable opinion of such counsel, and all relevant records and information shall be supplied to such counsel for that purpose; (e)       no material loss or destruction of or damage to the Company, any of its assets, any of the Company's Business or the Equity Interests shall have occurred; (f)       no action or proceeding at law or in equity shall be pending or threatened by any person, company, firm, governmental authority, regulatory body or agency to enjoin or prohibit: (i)       the purchase or transfer of any of the Equity Interests contemplated by this Agreement or the right of the Company or the Transferors to dispose of any of the Equity Interests; or (ii)      the right of the Company to conduct its operations and carry on, in the normal course, its Company's Business and operations as it has carried on in the past; --------------------------------------------------------------------------------            - 19 -   (g)       the delivery to the Transferee by the Company and the Transferors, on a confidential basis, of all remaining material documentation and information and including, without limitation, an updated Company Disclosure Schedule, and: (i)       a copy of all material contracts, agreements, reports and information of any nature respecting the Company, its assets and the Company's Business; and (ii)      details of any lawsuits, claims or potential claims relating to either the Company, its assets, the Company's Business or the Equity Interests of which either the Company or any of the Transferors is aware and the Transferee is unaware; (h)       the Company and the Transferors will cause the Company, for a period of at least 90 calendar days prior to the Closing Date, during normal business hours, to: (i)       make available for inspection by the counsel, auditors and representatives of the Transferee, at such location as is appropriate, the Company's books, records, contracts, documents, correspondence and other written materials, and afford such persons every reasonable opportunity to make copies thereof and take extracts therefrom at the sole cost of the Transferee, provided such persons do not unduly interfere in the operations of the Company; (ii)      authorize and permit such persons at the risk and the sole cost of the Transferee, and only if such persons do not unduly interfere in the operations of the Company, to attend at all of its places of business and operations to observe the conduct of its Company's Business and operations, inspect its assets and make physical counts of its inventories, shipments and deliveries; and (iii)     require the Company's management personnel to respond to all reasonable inquiries concerning the Company's Business, its assets or the conduct of its business relating to its liabilities and obligations; (i)       the delivery to the Transferee by the Company and the Transferors of an opinion of the counsel for the Company and the Transferors, in a form satisfactory to the Transferee's counsel, dated as at the Closing Date, to the effect that: (i)       the Company is a corporation duly incorporated under the laws of its jurisdiction of incorporation, is validly existing and is in good standing with respect to all statutory filings required by the applicable corporate laws; (ii)      the Company has the power, authority and capacity to own and use all of its assets and to carry on its Company's Business as presently conducted by it; --------------------------------------------------------------------------------            - 20 -   (iii)     the Company, as the legal and beneficial owner of all of its assets, holds all of the assets free and clear of all liens, charges and claims of others; (iv)      the registered capital of the Company is as warranted by the Company and the Transferors, and, at Closing, all of registered capital will be duly registered, fully paid and non-assessable; (v)       all necessary steps and corporate proceedings have been taken by the Company and the Transferors to permit the Equity Interests to be duly and validly transferred to and registered in the name of the Transferee as at the Closing Date; (vi)      based on actual knowledge and belief, such counsel knows of no claims, judgments, actions, suits, litigation, proceedings or investigations, actual, pending or threatened, against either the Company or the Transferors which might materially affect either the Company, its assets or the Company's Business or which could result in any material liability to either of the Company, its assets or the Company's Business; and (vii)     as to all other legal matters of a like nature pertaining to the Transferors, the Company, its assets, the Company's Business and to the transactions contemplated hereby as the Transferee or the Transferee's counsel may reasonably require; and (j)       the completion by the Transferee and by the Transferee's professional advisors of a thorough due diligence and operations review of both the Company's Business and the operations of the Company together with the transferability of the Equity Interests as contemplated by this Agreement. Company's and Transferors' Conditions Precedent 4.2               All of the obligations of the Company and the Transferors under this Agreement are further subject to at least the following conditions for the exclusive benefit of the Company and the Transferors fulfilled in all material aspects in the reasonable opinion of the Company and the Transferors or to be waived by the Company and the Transferors as soon as possible but, unless specifically indicated as otherwise, not later than five calendar days prior to the Closing Date: (a)       the Transferee shall have complied with all warranties, representations, covenants and agreements herein agreed to be performed or caused to be performed by the Transferee on or before the Closing Date; (b)       all matters which, in the opinion of counsel for the Company and the Transferors, are material in connection with the transactions contemplated by this Agreement shall be subject to the favourable opinion of such counsel, and all relevant records and information shall be supplied to such counsel for that purpose; (c)       no material loss or destruction of or damage to the Transferee shall have occurred; --------------------------------------------------------------------------------            - 21 -   (d)       the Transferee will, for a period of at least 90 calendar days prior to the Closing Date, during normal business hours: (i)       make available for inspection by the solicitors, auditors and representatives of the Company and the Transferors, at such location as is appropriate, all of the Transferee's books, records, contracts, documents, correspondence and other written materials, and afford such persons every reasonable opportunity to make copies thereof and take extracts therefrom at the sole cost of the Company and the Transferors, provided such persons do not unduly interfere in the operations of the Transferee; (ii)      authorize and permit such persons at the risk and the sole cost of the Company and the Transferors, and only if such persons do not unduly interfere in the operations of the Transferee, to attend at all of its places of business and operations to observe the conduct of its business and operations, inspect its properties and assets and make physical counts of its inventories, shipments and deliveries; and (iii)     require the Transferee's management personnel to respond to all reasonable inquiries concerning the Transferee's business assets or the conduct of its business relating to its liabilities and obligations; and (e)       the completion by the Company and the Transferors and by the Company's and the Transferors' professional advisors, of a thorough due diligence and operations review of both the business and operations of the Transferee. Parties' Conditions Precedent 4.3               The Closing of this Agreement and the rights, obligations and duties of the Parties arising upon and prior to the Closing Date shall also be conditional upon and subject to: (a)       the specific ratification of the terms and conditions of this Agreement by each of the Board of Directors of the Transferee, the Company and each of the Transferors, if applicable, within 21 business days of the due and complete execution of this Agreement by each of the Parties hereto (collectively, the "Ratification"); (b)       the completion by each of the Transferee and the Company of an initial due diligence and operations review of the other Party's respective business and operations within 90 calendar days of the prior satisfaction of the Ratification (the "Initial Due Diligence"; (c)       the amendment to and ratification by the Transferee of the Articles of Association of the Company; (d)       the receipt by the Transferee of a written Valuation respecting the underlying Valuation Value of the Company, and which Valuation will be prepared by reference, in part, to the Company's Audited Financial Statements; the results of such Valuation and the effect on the resulting number of Shares forming the Transfer Price hereunder being acceptable, in writing, by the Parties hereto; --------------------------------------------------------------------------------            - 22 -   (e)      if required under applicable corporate and securities laws, the receipt of all necessary approvals from any Regulatory Authority (and, in particular, the Chinese government) having jurisdiction over the transactions contemplated by this Agreement on or before November 30, 2006; (f)       the attainment by the Company of each of the Escrow Milestones subject, at all times, to the sole and absolute satisfaction of the Transferee, acting reasonably, on or before June 30, 2007; (g)       if required under applicable corporate and securities laws, shareholders of the Transferee passing an ordinary resolution or, where required, a special resolution, approving the terms and conditions of this Agreement and all of the transactions contemplated hereby, and the Transferee sending all required notice to the Transferee's shareholders in connection therewith, or, in the alternative and if allowable in accordance with applicable corporate and securities laws, shareholders of the Transferee holding over 50% of the issued shares of the Transferee providing written consent resolutions evidencing their approval to the terms and conditions of this Agreement and all of the transactions contemplated hereby together with certification of any required notice to all shareholders of the Transferee of such written consent resolutions; and (h)       the Board of Directors of the Transferee and/or the shareholders of the Transferee, if required, approving of the within payment of the Cash Payments together with the Share Issuances by the Transferee to the order and direction of the Transferors of all of the referenced Cash Payments and Shares in accordance with sections 1.2 and 1.3 hereinabove, together with such other matters as may be agreed to as between the Parties hereto prior the completion of the transactions contemplated by this Agreement. Company's and Transferors' Additional Document Covenants 4.4               The Company and the Transferors will also deliver, or cause to be delivered to the Transferee within 90 calendar days prior to the Closing Date, an independent assessment report and business plan and/or valuation respecting the Company's Business and assets together with such corporate and asset status reports and/or opinions respecting the Company's Business and assets, as may be required by either the Transferee or any Regulatory Authority, prepared, at a minimum, in accordance with the applicable rules and reporting guidelines of the appropriate Regulatory Authorities. --------------------------------------------------------------------------------            - 23 - ARTICLE 5 CLOSING AND EVENTS OF CLOSING Closing and Closing Date 5.1               The Closing of the within purchase of the Equity Interests, together with all of the transactions contemplated by this Agreement, shall occur on the day which is 60 calendar days following the satisfaction of all of the conditions precedent which are set out in Article 4 hereinabove, or on such earlier or later Closing Date as may be agreed to in advance and in writing by each of the Parties hereto, and will be closed at the offices of counsel for the Transferee, Lang Michener LLP, Lawyers - Patent & Trade Mark Agents, located at 1500 Royal Centre, 1055 West Georgia Street, Vancouver, British Columbia, Canada, V6E 4N7, at 2:00 p.m. (P.S.T.) on the Closing Date. Latest Closing Date 5.2               If the Closing Date has not occurred by August 31, 2007 this Agreement will be terminated and unenforceable unless the Parties hereto agree in writing to grant an extension of the Closing Date. Documents to be Delivered by the Company and the Transferors Prior to the Closing Date 5.3               Not later than five calendar days prior to the Closing Date, and in addition to the documentation which is required by the agreements and conditions precedent which are set forth hereinabove, the Company and the Transferors shall also execute and deliver or cause to be delivered all such other documents, resolutions and instruments as may be necessary, in the opinion of counsel for the Transferee, acting reasonably, to transfer all of the Equity Interests to the Transferee free and clear of all liens, charges and encumbrances, and in particular including, but not being limited to: (a)       all documentation as may be necessary and as may be required by counsel for the Transferee, acting reasonably, to ensure that all of the Equity Interests have been transferred, assigned and are registerable in the name of and for the benefit of the Transferee under all applicable corporate and securities laws; (b)       a certificate of approval representing the Equity Interests registered in the name of the Transferee; (c)       a certified copy of the resolutions of the Board of Directors of the Company (and of each of the Transferors, if applicable) approving the terms and conditions of this Agreement and authorizing the transfer by the Transferors to the Transferee of the Equity Interests; (d)       a copy of all corporate records and books of account of the Company and its subsidiaries and including, without limiting the generality of the foregoing, a copy of all minute books and annual reports of the Company and its subsidiaries; (e)       amended and restated Articles of Association of the Company; --------------------------------------------------------------------------------            - 24 -   (f)       all necessary consents and approvals (including, without limitation, from all applicable Regulatory Authorities) in writing to the completion of the transactions contemplated herein; (g)       a certificate of an officer of the Company, dated as of the Closing Date, acceptable in form to counsel for the Transferee, acting reasonably, certifying that the warranties, representations, covenants and agreements of the Company and the Transferors, respectively, contained in this Agreement are true and correct in all respects and will be true and correct as of the Closing Date as if made by the Company and the Transferors on the Closing Date; (h)       the Company's Audited Financial Statements; (i)       evidence of and confirmation in writing that each of the Escrow Milestones has been satisfied; (j)       an opinion of counsel to the Company and the Transferors, dated as at the Closing Date, and addressed to the Transferee and its counsel, in form and substance satisfactory to the Transferee's counsel, acting reasonably, and including the following: (i)       the due incorporation, existence and standing of each of the Company and its qualification to carry on business; (ii)      the registered capital of the Company; (iii)     that all registered capital has been duly registered, is fully paid and non-assessable; (iv)      all necessary steps and proceedings have been taken in connection with the execution, delivery and performance of this Agreement and the transactions contemplated herein; and (v)      that the Equity Interests have been duly registered in the name of the Transferee in compliance with all applicable corporate and securities laws; and (k)       all such other documents and instruments as the Transferee's counsel may reasonably require. Documents to be Delivered by the Transferee Prior to the Closing Date 5.4               Not later than five calendar days prior to the Closing Date, and in addition to the documentation which is required by the agreements and conditions precedent which are set forth hereinabove, the Transferee shall also execute and deliver or cause to be delivered all such documents, resolutions and instruments as are necessary, in the opinion of counsel for the Company and the Transferors, acting reasonably, to issue to the order and to the direction of the Transferors the balance of the Transfer Price Cash Payment and Shares free and clear of all liens, charges and encumbrances, however, subject to the normal U.S. resale provisions applicable thereto, and in particular including, but not being limited to: --------------------------------------------------------------------------------            - 25 -   (a)       a certified copy of an ordinary resolution of the shareholders of the Transferee approving the terms and conditions of this Agreement and the transactions contemplated hereby and thereby or, in the alternative, shareholders of the Transferee holding over 50% of the issued shares of the Transferee providing written consent resolutions evidencing their approval to the terms and conditions of this Agreement and all of the transactions contemplated thereunder together with certification of any required notice to all shareholders of the Transferee of such written consent resolutions; (b)       a certified copy of the resolutions of the directors of the Transferee providing for the approval of all of the transactions contemplated hereby and including, without limitation, each of the matters provided for in section "4.3" hereinabove; (c)       confirmation of the prior release of the Initial Shares from Escrow; (d)       the final Transfer Price Cash Payment to the order and direction of the Transferors; (e)       share certificate(s), subject to the normal U.S. resale provisions applicable thereto, representing the balance of the Transfer Price Share Issuance Shares issued and registered to the order and to the direction of the Transferors as notified by the Transferors to the Transferee prior to Closing in accordance with sections 1.2 and 1.3 hereinabove; (f)       all necessary consents and approvals (including, without limitation, from all applicable Regulatory Authorities) in writing in relation to the completion of the transactions contemplated herein; (g)       a certificate of an officer of the Transferee, dated as of the Closing Date, acceptable in form to counsel for the Company and the Transferors, acting reasonably, certifying that the warranties, representations, covenants and agreements of the Transferee contained in this Agreement are true and correct and will be true and correct as of the Closing Date as if made by the Transferee on the Closing Date; (h)       the Valuation; (i)       an opinion of counsel to the Transferee, dated as at the Closing Date, and addressed to the Company, the Transferors and their counsel, in form and substance satisfactory to the Company's and the Transferors' counsel, acting reasonably, and including the following: (i)       the due incorporation, existence and standing of the Transferee and its qualification to carry on business; --------------------------------------------------------------------------------            - 26 -   (ii)      the authorized and issued capital of the Transferee (relying on a certificate of the registrar and transfer agent of the Transferee as to the number and class of securities issued); (iii)     all necessary steps and proceedings have been taken in connection with the execution, delivery and performance of this Agreement and the transactions contemplated herein; and (iv)      the due issuance of the Shares as fully paid and non-assessable and having been issued in accordance with an applicable registration and prospectus exemption available under the Securities Act; and (j)       all such other documents and instruments as the Company's and the Transferors' counsel may reasonably require. ARTICLE 6 DUE DILIGENCE AND NON-DISCLOSURE Due Diligence 6.1               Each of the Parties shall forthwith conduct such further due diligence examination of the other Parties as it deems appropriate. Confidentiality 6.2               Each Party may in a reasonable manner carry out such investigations and due diligence as to the other Parties, at all times subject to the confidentiality provisions hereinbelow, as each Party deems necessary. In that regard the Parties agree that each shall have full and complete access to the Transferee's and the Company's books, records, financial statements and other documents, articles of incorporation, by-laws, minutes of Board of Directors' meetings and its committees, investment agreements, material contracts and as well such other documents and materials as the Transferors or the Transferee, or their respective counsel, may deem reasonable and necessary to conduct an adequate due diligence investigation of each such Party, its respective operations and financial condition prior to the Closing Date. Non-disclosure 6.3               Subject to the provisions hereinbelow, the Parties, for themselves, their officers, directors, shareholders, consultants, employees and agents agree that they each will not disseminate or disclose, or knowingly allow, permit or cause others to disseminate or disclose to third parties who are not subject to express or implied covenants of confidentiality, without the other Parties' express written consent, either: (i) the fact or existence of this Agreement or discussions and/or negotiations between them involving, inter alia, possible business transactions; (ii) the possible substance or content of those discussions; (iii) the possible terms and conditions of any proposed transaction; (iv) any statements or representations (whether verbal or written) made by either Party in the course of or in connection with those discussions; or (v) any written material generated by or on behalf of any Party and such contacts, other than such disclosure as may be required under applicable securities legislation or regulations, pursuant to any order of a Court or on a "need to know" basis to each of the Parties respective professional advisors. --------------------------------------------------------------------------------            - 27 -   Public Announcements 6.4               Notwithstanding the provisions of this Article, the Parties agree to make such public announcements of this Agreement promptly upon its execution in accordance with the requirements of applicable securities legislation and regulations. ARTICLE 7 ASSIGNMENT AND VARIATIONS Assignment 7.1               Save and except as provided herein, no Party may sell, assign, pledge or mortgage or otherwise encumber all or any part of its interest herein without the prior written consent of all of the other Parties hereto. Amendment 7.2               This Agreement and any provision thereof may only be amended in writing and only by duly authorized signatories of each of the respective Parties hereto. Variation in the Terms of this Agreement Upon Review 7.3               It is hereby acknowledged and agreed by each of the Parties hereto that where any variation in the terms and/or conditions of this Agreement is reasonably required by any of the Regulatory Authorities as a condition of their respective regulatory approval to any of the terms and conditions of this Agreement, any such reasonable variation, having first been notified to all Parties, will be deemed to be accepted by each of the Parties hereto and form part of the terms and conditions of this Agreement. If any such Party, acting reasonably, deems any such notified variation unreasonable, that Party may, in its sole and absolute discretion, and within a period of not greater than 10 calendar days from its original notification and at its cost, make such further applications or submissions to the relevant Regulatory Authority as it considers necessary in order to seek an amendment to any such variation; provided, however, that the final determination by any such Regulatory Authority to any such application or submission by such objecting Party will be deemed binding upon such Party who must then provide notification to all other Parties as provided for hereinabove. --------------------------------------------------------------------------------            - 28 - ARTICLE 8 FORCE MAJEURE Events 8.1               If any Party hereto is at any time prevented or delayed in complying with any provisions of this Agreement by reason of strikes, walk-outs, labour shortages, power shortages, fires, wars, acts of God, earthquakes, storms, floods, explosions, accidents, protests or demonstrations by environmental lobbyists or native rights groups, delays in transportation, breakdown of machinery, inability to obtain necessary materials in the open market, unavailability of equipment, governmental regulations restricting normal operations, shipping delays or any other reason or reasons beyond the control of that Party, then the time limited for the performance by that Party of its respective obligations hereunder shall be extended by a period of time equal in length to the period of each such prevention or delay. Notice 8.2               A Party shall, within seven calendar days, give notice to the other Parties of each event of force majeure under section "8.1" hereinabove and, upon cessation of such event, shall furnish the other Parties with notice of that event together with particulars of the number of days by which the obligations of that Party hereunder have been extended by virtue of such event of force majeure and all preceding events of force majeure. ARTICLE 9 ARBITRATION Matters for Arbitration 9.1               The Parties agree that all questions or matters in dispute with respect to this Agreement shall be submitted to arbitration pursuant to the terms hereof. Notice 9.2               It shall be a condition precedent to the right of any Party to submit any matter to arbitration pursuant to the provisions hereof that any Party intending to refer any matter to arbitration shall have given not less than two calendar days' prior written notice of its intention to do so to the other Parties together with particulars of the matter in dispute. On the expiration of such two calendar days the Party who gave such notice may proceed to refer the dispute to arbitration as provided in section "9.3" hereinbelow. --------------------------------------------------------------------------------            - 29 - Appointments 9.3               The Party desiring arbitration shall appoint one arbitrator, and shall notify the other Parties of such appointment, and the other Parties shall, within ten calendar days after receiving such notice, appoint an arbitrator, and the two arbitrators so named, before proceeding to act, shall, within five calendar days of the appointment of the last appointed arbitrator, unanimously agree on the appointment of a third arbitrator, to act with them and be chairperson of the arbitration herein provided for. If the other Parties shall fail to appoint an arbitrator within ten calendar days after receiving notice of the appointment of the first arbitrator, and if the two arbitrators appointed by the Parties shall be unable to agree on the appointment of the chairperson, the chairperson shall be appointed under the provisions of the British Columbia Commercial Arbitration Act (the "Arbitration Act"). Except as specifically otherwise provided in this section, the arbitration herein provided for shall be conducted in accordance with such Arbitration Act. The chairperson, or in the case where only one arbitrator is appointed, the single arbitrator, shall fix a time and place in Vancouver, British Columbia, Canada, for the purpose of hearing the evidence and representations of the Parties, and the single arbitrator, or the arbitrators, as the case may be, shall preside over the arbitration and determine all questions of procedure not provided for under such Arbitration Act or this section. After hearing any evidence and representations that the Parties may submit, the single arbitrator, or the arbitrators, as the case may be, shall make an award and reduce the same to writing, and deliver one copy thereof to each of the Parties. The expense of the arbitration shall be paid as specified in the award. Award 9.4               The Parties agree that the award of a majority of the arbitrators, or in the case of a single arbitrator, of such arbitrator, shall be final and binding upon each of them. ARTICLE 10 TERMINATION Default 10.1             The Parties hereto agree that if any Party hereto is in default with respect to any of the provisions of this Agreement (herein called the "Defaulting Party"), the non-defaulting Party (herein called the "Non-Defaulting Party") shall give notice to the Defaulting Party designating such default, and within 14 calendar days after its receipt of such notice, the Defaulting Party shall either: (a)       cure such default, or commence proceedings to cure such default and prosecute the same to completion without undue delay; or (b)       give the Non-Defaulting Party notice that it denies that such default has occurred and that it is submitting the question to arbitration as herein provided. Arbitration 10.2             If arbitration is sought, a Party shall not be deemed in default until the matter shall have been determined finally by appropriate arbitration under the provisions of Article 9 hereinabove. Curing the Default 10.3             If: --------------------------------------------------------------------------------            - 30 -   (a)       the default is not so cured or the Defaulting Party does not commence or diligently proceed to cure the default; (b)       arbitration is not so sought; or (c)       the Defaulting Party is found in arbitration proceedings to be in default, and fails to cure it within five calendar days after the rendering of the arbitration award, the Non-Defaulting Party may, by written notice given to the Defaulting Party at any time while the default continues, terminate the interest of the Defaulting Party in and to this Agreement. Termination 10.4             In addition to the foregoing it is hereby acknowledged and agreed by the Parties hereto that this Agreement will be terminated in the event that: (a)       the entire Ratification is not received within 21 business days of the due and completion execution of this Agreement by each of the Parties hereto; (b)       the Valuation respecting the underlying Valuation Value of the Company is lesser than the agreed upon and minimum Transfer Price Value for the original Transfer Price as set forth in section 1.2 hereinabove and, consequent thereon, the Parties are unable to agree in writing to the reduction in the number of Shares forming the Transfer Price hereunder; (c)       all necessary approvals from any Regulatory Authority having jurisdiction over the transactions contemplated by this Agreement is not obtained on or before November 30, 2006; (d)       the Company does not attain each of the Escrow Milestones subject, at all times, to the sole and absolute satisfaction of the Transferee, acting reasonably, on or before June 30, 2007; (e)       either of the Parties hereto has not either satisfied or waived each of their respective conditions precedent prior to Closing in accordance with the provisions of Article 4 hereinabove; (f)       each of the conditions specified in section "4.3" hereinabove have not been satisfied in the manner and within the time periods as specified therein; (g)       either of the Parties hereto has failed to deliver or caused to be delivered any of their respective documents required to be delivered by Article 5 and Article 6 hereinabove prior to the Closing Date in accordance with the provisions of Article 5 and Article 6; (h)       the final Closing has not occurred on or before August 31, 2007 in accordance with section "5.2" hereinabove; or --------------------------------------------------------------------------------            - 31 -   (i)       by agreement, in writing, of each of the Company, the Transferors and the Transferee; and in such event, unless waived by each Party hereto in advance and in writing, this Agreement will be terminated and be of no further force and effect other than the obligations under Article 6 hereinabove. ARTICLE 11 NOTICE Notice 11.1             Each notice, demand or other communication required or permitted to be given under this Agreement shall be in writing and shall be sent by prepaid registered mail deposited in a post office addressed to the Party entitled to receive the same, or delivered to such Party, at the address for such Party specified above. The date of receipt of such notice, demand or other communication shall be the date of delivery thereof if delivered, or, if given by registered mail as aforesaid, shall be deemed conclusively to be the third calendar day after the same shall have been so mailed, or 15 calendar days in the case of an addressee with an address for service in a country other than a country in which the Party giving the notice, demand or other communication resides, except in the case of interruption of postal services for any reason whatsoever, in which case the date of receipt shall be the date on which the notice, demand or other communication is actually received by the addressee. Change of Address 11.2             Either Party may at any time and from time to time notify the other Parties in writing of a change of address and the new address to which notice shall be given to it thereafter until further change. ARTICLE 12 GENERAL PROVISIONS Entire Agreement 12.1             This Agreement constitutes the entire agreement to date between the Parties hereto and supersedes every previous agreement, communication, expectation, negotiation, representation or understanding, whether oral or written, express or implied, statutory or otherwise, between the Parties with respect to the subject matter of this Agreement and, in particular, the Agreement in Principle signed by or on behalf of the Parties on June 15, 2006. Enurement 12.2             This Agreement will enure to the benefit of and will be binding upon the Parties, their respective heirs, executors, administrators and assigns. --------------------------------------------------------------------------------            - 32 -   Time of the Essence 12.3             Time will be of the essence of this Agreement. Representation and Costs 12.4             It is hereby acknowledged by each of the Parties hereto that Lang Michener LLP, Lawyers - Patent & Trade Mark Agents, acts solely for the Transferee, and, correspondingly, that each of the Transferor and the Company has been required by each of Lang Michener LLP and the Transferee to obtain independent legal advice with respect to their respective reviews and execution of this Agreement. Each Party to this Agreement will also bear and pay its own costs, legal and otherwise, in connection with its respective preparation, review and execution of this Agreement and, in particular, that the costs involved in the preparation of this Agreement, and all documentation necessarily incidental thereto, by Lang Michener LLP shall be at the cost of the Transferee. Applicable Law 12.5             This Agreement will be governed by and construed and enforced in accordance with the laws prevailing in the Province of British Columbia, the federal laws of Canada applicable therein, and the applicable laws and regulations of China. Further Assurances 12.6             The Parties hereto hereby, jointly and severally, covenant and agree to forthwith, upon request, execute and deliver, or cause to be executed and delivered, such further and other deeds, documents, assurances and instructions as may be required by the Parties hereto or their respective counsel in order to carry out the true nature and intent of this Agreement. Severability and Construction 12.7             Each Article, section, paragraph, term and provision of this Agreement, and any portion thereof, shall be considered severable, and if, for any reason, any portion of this Agreement is determined to be invalid, contrary to or in conflict with any applicable present or future law, rule or regulation in a final unappealable ruling issued by any court, agency or tribunal with valid jurisdiction in a proceeding to any of the Parties hereto is a party, that ruling shall not impair the operation of, or have any other effect upon, such other portions of this Agreement as may remain otherwise intelligible (all of which shall remain binding on the Parties and continue to be given full force and agreement as of the date upon which the ruling becomes final). Captions 12.8             The captions, section numbers and Article numbers appearing in this Agreement are inserted for convenience of reference only and shall in no way define, limit, construe or describe the scope or intent of this Agreement nor in any way affect this Agreement. --------------------------------------------------------------------------------            - 33 -   Currency 12.9             Unless otherwise stipulated, all references to money amounts hereunder shall be in lawful money of the United States. Counterparts 12.10           This Agreement may be signed by the Parties hereto in as many counterparts as may be necessary, and via facsimile if necessary, each of which so signed being deemed to be an original and such counterparts together constituting one and the same instrument and, notwithstanding the date of execution, being deemed to bear the effective execution date as set forth on the front page of this Agreement. No Partnership or Agency 12.11           The Parties have not created a partnership and nothing contained in this Agreement shall in any manner whatsoever constitute any Party the partner, agent or legal representative of any other Party, nor create any fiduciary relationship between them for any purpose whatsoever. No Party shall have any authority to act for, or to assume any obligations or responsibility on behalf of, any other party except as may be, from time to time, agreed upon in writing between the Parties or as otherwise expressly provided. Consents and Waivers 12.12           No consent or waiver expressed or implied by either Party in respect of any breach or default by the other in the performance by such other of its obligations hereunder shall: (a)       be valid unless it is in writing and stated to be a consent or waiver pursuant to this section; (b)       be relied upon as a consent to or waiver of any other breach or default of the same or any other obligation; (c)       constitute a general waiver under this Agreement; or (d)       eliminate or modify the need for a specific consent or waiver pursuant to this section in any other or subsequent instance. Language 12.13           This Agreement is drawn up in both the English and Chinese languages, and both versions shall have equal force and effect. Effectiveness 12.14           This Agreement will become effective upon approval by the Regulatory Authorities (in particular, the Chinese government). --------------------------------------------------------------------------------            - 34 -   IN WITNESS WHEREOF this Agreement has been executed by the Parties as of the day and year first above written. [image39.gif] --------------------------------------------------------------------------------   SCHEDULE "A" Company Disclosure Schedule Registered capital, paid up capital and shareholders' loans as of August 8, 2006: Transferors Registered Capital Paid Up Capital Shareholder's Loans Percentage of Registered Capital Chimex HongKong Incorporated Limited U.S. $710,000 U.S. $710,000 Nil 48.3% Vascore Scientific Co., Ltd. U.S. $760,000 U.S.$760,000 U.S. $750,000 51.7% Totals: U.S. $1,470,000 U.S. $1,470,000 U.S. $750,000 100%                See the balance of the Company Disclosure Schedule provided herewith. -------------------------------------------------------------------------------- SCHEDULE "B" Transferee Disclosure Schedule See the Transferee Disclosure Schedule provided herewith.

Exhibit 10.13 Execution Version AMENDMENT NO. 1 TO GUARANTY AGREEMENT THIS AMENDMENT NO. 1 TO GUARANTY AGREEMENT (this “Amendment Agreement”) is made and entered into as of October 14, 2005 by EACH OF THE UNDERSIGNED MATERIAL SUBSIDIARIES OF THE BORROWER (each a “Guarantor” and collectively the “Guarantors”) and BANK OF AMERICA, N.A., as the administrative agent for the Lenders (in such capacity, the “Administrative Agent”). W I T N E S S E T H: WHEREAS, the Administrative Agent, the lenders party thereto (collectively, the “Prior Lenders” and individually each an “Prior Lender”) and Precision Castparts Corp., an Oregon corporation (the “Borrower”), entered into that certain Credit Agreement dated as of December 9, 2003 (as amended, restated, amended and restated, extended, supplemented, modified or replaced from time to time, the “Existing Credit Agreement”), pursuant to which the Prior Lenders agreed to make and have made available to the Borrower a revolving credit facility, including a letter of credit subfacility and a swing line subfacility, and a term loan facility in an initial aggregate principal amount of up to $700,000,000; and WHEREAS, each Guarantor is a direct or indirect Domestic Subsidiary of the Borrower and has materially benefited directly or indirectly from the loans made available and letters of credit issued under the Credit Agreement, and will materially and directly benefit from the loans made available and to be made available, and the letters of credit issued and to be issued under, the Amended and Restated Credit Agreement (defined below); and WHEREAS, each of the Guarantors entered into that certain Guaranty Agreement dated as of December 9, 2003 (as hereby amended and as from time to time hereafter amended, restated, amended and restated, extended, supplemented, modified or replaced, the “Guaranty”) made to the Administrative Agent, for the benefit of the Secured Parties (as defined in the Guaranty), whereby each Guarantor guaranteed to the Administrative Agent for the benefit of the Secured Parties the payment and performance in full of the Borrower’s Liabilities (as defined in the Guaranty); and WHEREAS, the Borrower has notified the Administrative Agent that the Borrower desires to amend and restate the Credit Agreement as of the date hereof in order to, among other things, (i) convert the entire facility into a revolving credit facility, (ii) extend the maturity date of the revolving credit facility, (iii) increase the maximum aggregate principal amount of the revolving credit facility to $1,000,000,000 (subject to an increase option) and (iv) make certain other amendments to the Credit Agreement (collectively, the amending actions to the Credit Agreement are referred to as the “Credit Agreement Amendments”), all on the terms and subject to the conditions set forth in that certain Amended and Restated Credit Agreement dated as of October 14, 2005 among the Borrower, the Administrative Agent, certain of the Prior Lenders and certain other lenders party thereto (collectively, the Prior Lenders and other lenders party thereto are referred to herein as the “Lenders” and such Amended and Restated Credit -------------------------------------------------------------------------------- Agreement, as from time to time amended, restated, amended and restated, revised, modified or supplemented, is referred to herein as the “Amended and Restated Credit Agreement”; capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to such terms in the Amended and Restated Credit Agreement); and WHEREAS, a material part of the consideration given in connection with and as an inducement to the execution and delivery of the Amended and Restated Credit Agreement by the Administrative Agent and the Lenders was the obligation of the Borrower to cause each Guarantor to continue its obligations under the Guaranty, as amended by this Amendment Agreement, and to enter into this Amendment Agreement, and the Administrative Agent and the Lenders are unwilling to enter into the Amended and Restated Credit Agreement unless each of the Guarantors agrees to continue to guarantee the Borrower’s Liabilities, and in connection therewith that the Guarantors enter into this Amendment Agreement; NOW, THEREFORE, in consideration of the premises and further valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows: 1. Amendments to Guaranty. Subject to the terms and conditions set forth herein, the Guaranty is hereby amended as follows: (a) All references to “Credit Agreement” in the Guaranty shall hereafter refer to the Amended and Restated Credit Agreement. (b) Section 9 of the Guaranty is hereby amended to restate the last sentence of subsection (c) in its entirety to read as follows: For purposes of this Guaranty Agreement, “Facility Termination Date” means the date as of which all of the following shall have occurred: (i) the Borrower shall have permanently terminated the credit facilities under the Loan Documents by final payment in full of all Outstanding Amounts, together with all accrued and unpaid interest and fees thereon, other than (A) the undrawn portion of Letters of Credit and (B) all letter of credit fees relating thereto accruing after such date (which fees shall be payable solely for the account of the L/C Issuer and shall be computed (based on interest rates and the Applicable Rate then in effect) on such undrawn amounts to the respective expiry dates of the Letters of Credit), in each case as have been fully Cash Collateralized or as to which other arrangements with respect thereto satisfactory to the Administrative Agent and the L/C Issuer shall have been made; (ii) all Revolving Credit Commitments shall have terminated or expired; (iii) the obligations and liabilities of the Borrower and each other Loan Party under all Related Swap Contracts shall have been fully, finally and irrevocably paid and satisfied in full and the Related Swap Contract shall have expired or been terminated, or other arrangements satisfactory to the counterparties shall have been made with respect thereto; and (iv) the Borrower and each other Loan Party shall have fully, finally and irrevocably paid and satisfied in full all of their respective obligations and liabilities arising under the Loan Documents, including with respect to the Borrower and the Obligations   - 2 - -------------------------------------------------------------------------------- (except for future obligations consisting of continuing indemnities and other contingent Obligations of the Borrower or any Loan Party that may be owing to the Administrative Agent or any Related Party of the Administrative Agent or any Lender pursuant to the Loan Documents and expressly survive termination of the Credit Agreement). (c) Section 16 of the Guaranty is hereby amended to restate the first sentence of such Section in its entirety to read as follows: The rules of interpretation contained in Sections 1.03 and 1.06 of the Credit Agreement shall be applicable to this Guaranty Agreement and each Guaranty Joinder Agreement and are hereby incorporated by reference. (d) Section 18 of the Guaranty is hereby amended to replace the reference to “Section 10.07” with a reference to “Section 10.06”. (e) Section 19 of the Guaranty is hereby amended to restate the last sentence of such Section in its entirety to read as follows: Each Secured Party not a party to the Credit Agreement who obtains the benefit of this Guaranty Agreement by virtue of the provisions of this Section shall be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of the Credit Agreement, and that with respect to the actions and omissions of the Administrative Agent hereunder or otherwise relating hereto that do or may affect such Secured Party, the Administrative Agent and each Related Party of the Administrative Agent shall be entitled to all the rights, benefits and immunities conferred under Article IX of the Credit Agreement. (f) Section 21 of the Guaranty is hereby amended by deleting the last sentence of such Section. 2. Full Force and Effect of Guaranty; Consent of the Guarantors. Each Guarantor hereby consents, acknowledges and agrees to the Credit Agreement Amendments and to the amendments set forth in this Amendment Agreement, and hereby confirms and ratifies in all respects the Guaranty (as amended hereby) to which such Guarantor is a party (including without limitation the continuation of such Guarantor payment and performance obligations thereunder upon and after the effectiveness of this Amendment Agreement, the Credit Agreement Amendments and the amendments contemplated hereby and thereby) and the enforceability of such Guaranty against such Guarantor in accordance with its terms. 3. Representations and Warranties. (a) Each Guarantor hereby certifies that after giving effect to this Amendment Agreement, the representations and warranties of the Guarantors contained in Section 11 of the Guaranty are true and correct on and as of the date hereof, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such date.   - 3 - -------------------------------------------------------------------------------- (b) Each Guarantor hereby represents and warrants that this Amendment Agreement has been duly authorized, executed and delivered by each Guarantor and constitutes a legal, valid and binding obligation of such parties, except as may be limited by general principles of equity or by the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors’ rights generally. (c) The Guarantors party hereto constitute all of the Material Subsidiaries of the Borrower required to be Guarantors pursuant to the terms of the Amended and Restated Credit Agreement as of the date hereof. 4. Conditions to Effectiveness. The effectiveness of this Amendment Agreement and the amendments to the Guaranty provided herein are subject to the satisfaction of the following conditions precedent: (a) receipt by the Administrative Agent of originals, telecopies or electronic copies in secure document format (such as .pdf) (followed promptly by originals) of this Amendment Agreement, duly executed by each Guarantor and the Administrative Agent; (b) receipt by the Administrative Agent of executed counterparts of the Amended and Restated Credit Agreement by the Borrower, the Administrative Agent and each Lender party thereto, and the Administrative Agent’s satisfaction that the conditions precedent contained in Section 4.01 of the Amended and Restated Credit Agreement have been satisfied; and (c) such other documents, instruments and certificates as reasonably requested by the Administrative Agent. Upon satisfaction of the conditions set forth in this Section 4, this Amendment Agreement shall be effective as of the date hereof. 5. Entire Agreement. This Amendment Agreement, together with all the Loan Documents (collectively, the “Relevant Documents”), sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relating to such subject matter. No promise, condition, representation or warranty, express or implied, not set forth in the Relevant Documents shall bind any party hereto, and no such party has relied on any such promise, condition, representation or warranty. Each of the parties hereto acknowledges that, except as otherwise expressly stated in the Relevant Documents, no representations, warranties or commitments, express or implied, have been made by any party to the other in relation to the subject matter hereof or thereof. 6. Counterparts. This Amendment Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Amendment Agreement by telecopy or electronic copy in secure document format (such as .pdf) shall be effective as delivery.   - 4 - -------------------------------------------------------------------------------- 7. Governing Law. This Amendment Agreement shall in all respects be governed by, and construed in accordance with, the laws of the State of New York. 8. Enforceability. Should any one or more of the provisions of this Amendment Agreement be determined to be illegal or unenforceable as to one or more of the parties hereto, all other provisions nevertheless shall remain effective and binding on the parties hereto. 9. References. All references in any of the Loan Documents to the “Guaranty” or the “Guaranty Agreement” shall mean the Guaranty, as amended hereby. 10. Successors and Assigns. This Amendment Agreement shall be binding upon and inure to the benefit of each Guarantor, the Lenders, the L/C Issuer and the Administrative Agent and their respective successors, assigns and legal representatives; provided, however, that no Guarantor, without the prior consent of the Administrative Agent, may assign any rights, powers, duties or obligations hereunder. [Signature pages follow.]   - 5 - -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1 to Guaranty Agreement to be duly executed by their duly authorized officers, all as of the day and year first above written.   ADMINISTRATIVE AGENT: BANK OF AMERICA, N.A., By:     Name:   Anthea Del Bianco Title:   Vice President Precision Castparts Corp. Amendment No. 1 to Guaranty Agreement Signature Pages -------------------------------------------------------------------------------- GUARANTORS: PCC STRUCTURALS, INC. PCC AIRFOILS LLC. PCC SPECIALTY PRODUCTS, INC. J&L FIBER SERVICES, INC. ADVANCED FORMING TECHNOLOGY, INC. WYMAN-GORDON COMPANY PRECISION FOUNDERS INC. WYMAN-GORDON FORGINGS (CLEVELAND), INC. WYMAN-GORDON FORGINGS LP     By WGF I LLC, its General Partner WYMAN-GORDON INVESTMENT CASTINGS, INC. SPS TECHNOLOGIES, LCC PCC COMPOSITES, INC. CARMET INVESTORS, INC. CARMET COMPANY WG WASHINGTON STREET LLC WGF I LLC WGF II LLC WG FORGINGS 3 LLC WG FORGINGS 2 LLC INTERNATIONAL EXTRUDED PRODUCTS, LLC CANNON-MUSKEGON CORPORATION GREENVILLE METALS, INC. GREER STOP NUT, INC. HOWELL PENNCRAFT, INC. M. ARGUESO & CO., INC. METALAC FASTENERS, INC. NSS TECHNOLOGIES, INC. SPS INTERNATIONAL INVESTMENT COMPANY SPS TECHNOLOGIES WATERFORD COMPANY UNBRAKO, LLC AVIBANK MFG., INC. By:     Name:   Geoffrey A. Hawkes Title:   Vice President-Treasurer and Assistant Secretary Precision Castparts Corp. Amendment No. 1 to Guaranty Agreement Signature Pages

  Exhibit 10.1 Amendment No.3, Consent and Waiver to and under Credit Agreement           This Amendment No.3, Consent and Waiver, dated as of September 21, 2006 (this “Amendment”), to and under the Credit Agreement, dated as of March 20, 2006 (as amended, including by this Amendment, the “Credit Agreement”), among Affiliated Computer Services, Inc., a Delaware corporation (the “Company”), ACS Commercial Solutions, Inc., a Nevada corporation, ACS Education Services, Inc., a Delaware corporation, ACS Enterprise Solutions, Inc., a Delaware corporation, ACS HR Solutions, LLC, a Pennsylvania limited liability company, ACS Outsourcing Solutions, Inc., a Michigan corporation, ACS State & Local Solutions, Inc., a New York corporation, ACS State Healthcare, LLC, a Delaware limited liability company, ACS TradeOne Marketing, Inc., a Delaware corporation, Buck Consultants, LLC, a Delaware limited liability company, ACS Worldwide Lending Limited, a limited company organized under the laws of England and Wales, and each other Subsidiary Borrower party thereto from time to time, the Lenders and Issuers party thereto from time to time, and Citicorp USA, Inc. (“Citicorp”), as administrative agent (in such capacity, the “Administrative Agent”). Unless otherwise specified herein, all capitalized terms used in this Amendment shall have the meanings ascribed to them in the Credit Agreement. W I T N E S S E T H           WHEREAS, in connection with the investigation relating to the Company’s historical stock option practices prior to the Effective Date (as defined below) as disclosed in the Company’s press release dated August 7, 2006 (the “Options Matter”), the Company has requested a waiver of certain covenants under the Credit Agreement and certain amendments to the Credit Agreement as herein set forth;           WHEREAS, the Company, each of the Lenders signatory to an acknowledgment and consent, in the form set forth as Exhibit A (an “Acknowledgment and Consent”), and the Administrative Agent have agreed to such waiver and amendments on the terms and subject to the conditions herein provided.           NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:           SECTION 1. Consent and Waiver.           (a) As of the Effective Date, the Administrative Agent and each Lender signatory to an Acknowledgment and Consent hereby (i) consent to (A) the delivery of the Financial Statements required by Section 6.1(a) (Quarterly Reports) and the related Compliance Certificate required by Section 6.1(c) (Compliance Certificate) for the Fiscal Quarter ended June 30, 2006 and the Fiscal Quarter ending on September 30, 2006, on or prior to December 31, 2006, and (B) the delivery of the Financial Statements and related accountant’s report required by Section 6.1(b) (Annual Reports) and the related Compliance Certificate required by Section 6.1(c) (Compliance Certificate) for the Fiscal Year ended June 30, 2006, on or prior to December 31, 2006 and (ii) waive any Default or Event of   --------------------------------------------------------------------------------   Default (x) arising from the Company’s failure to comply with Section 6.1(a) (Quarterly Reports), Section 6.1(b) (Annual Reports) or Section 6.1(c) (Compliance Certificate) (all such financial statements, reports and certificates being the “Delayed Reports”); provided that, in each case, the failure to deliver each of the Delayed Reports within the applicable time period provided by the Credit Agreement shall have resulted directly or indirectly from the Options Matter.           (b) The Administrative Agent and each Lender signatory to an Acknowledgment and Consent hereby waive any Default or Event of Default under Section 9.1(c) (Events of Default) solely to the extent that the representation or warranties made or deemed to have been made pursuant to Section 4.4(a) (Financial Statements), Section 4.9 (Full Disclosure), Section 6.1(a) (Quarterly Reports) or Section 6.1(e) (Business Plan) shall prove to have been incorrect when made or deemed to have been made as a result of a restatement, adjustment or other modification of the Financial Statements delivered to the Administrative Agent prior to the Effective Date; provided that such restatement, adjustment or other modification shall have resulted directly or indirectly from the Options Matter.           (c) The Administrative Agent and each Lender signatory to an Acknowledgment and Consent hereby waive any Default or Event of Default under Section 9.1(e) (Events of Default), arising from the Company’s or any other Group Member’s failure to comply with similar reporting covenants under any other Indebtedness (including any requirement to file any report with the SEC or to furnish such report to the holders of such Indebtedness) (collectively, “Similar Reporting Covenants”); provided that (i) such failure to comply shall have resulted directly or indirectly from the Options Matter and (ii) the Company and/or such other Group Member, as applicable, shall have delivered all reports and all other statements required by each such Similar Reporting Covenant on or prior to December 31, 2006.           (d) Except as expressly provided in clauses (a), (b) and (c) above, nothing contained in this Amendment shall be construed as a waiver of any Default or Event of Default under the Credit Agreement or any other Loan Document.           (e) Notwithstanding the Applicable Margin with respect to Revolving Loans or Applicable Unused Commitment Fee Rate that would otherwise be in effect, from and after the Effective Date and through the earlier of (x) December 29, 2006 and (y) the date that any of the Delayed Reports have been delivered to the Administrative Agent in accordance with the requirements set forth in the Credit Agreement (as amended by this Amendment) (the “Modification Termination Date”), (i) “Applicable Margin” shall mean with respect to Revolving Loans maintained as (1) Base Rate Loans, a rate equal to 0.25% per annum and (2) Eurocurrency Rate Loans, a rate equal to 1.25% per annum and (ii) “Applicable Unused Commitment Fee Rate” shall mean 0.375% per annum. Commencing on the Modification Termination Date, “Applicable Margin” and “Applicable Unused Commitment Fee Rate” shall each revert to the definition set forth in the Credit Agreement without giving effect to this Section 1(e) and from and after the Modification Termination Date, this Amendment shall cease to be of further force and effect with respect to any Delayed Report that has been delivered.           (f) Promptly, but in any event within 10 Business Days after delivery of the Financial Statements for the Fiscal Year ended June 30, 2006, the Company shall furnish to the Administrative Agent an update of the Projections delivered by it in accordance with Section 6.1(e) (Business Plan). 2 --------------------------------------------------------------------------------             SECTION 2. Amendments. Subject to the terms and conditions set forth herein, effective as of the Effective Date, the Credit Agreement (together with the Exhibits and Schedules thereto) is hereby amended as follows:           (a) Section 1.1 (Defined Terms) of the Credit Agreement is hereby amended:           (i) by inserting the following definitions among the existing definitions set forth in such Section in alphabetical order:      “Local Time” means, with respect to any Borrowing, notices, determinations, fundings and payments under or in connection with (a) the Term Loan Facility or the Primary Revolving Credit Facility, New York time and (b) the Multicurrency Revolving Credit Facility, London time.      “Target Date” means a day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer System (TARGET) is operating.           (ii) by deleting the definitions of “Business Day” and “Dollar Equivalent” in their entirety and replacing them, respectively, with the following:      “Business Day” means a day of the year on which banks are not required or authorized to close in New York City and, if the applicable Business Day relates to notices, determinations, fundings and payments in connection with (a) the Eurocurrency Rate or any Eurocurrency Rate Loans, a day on which dealings in Dollar deposits are also carried on in the London interbank market, (b) the Multicurrency Revolving Credit Facility, such day that is also a day of the year on which banks are not required to or authorized to close in London, (c) a Borrowing denominated in Euros, such day that is also a Target Date and (c) a Borrowing denominated in Available Currency other than Dollars or Euros, such day that is also a day of the year on which banks are not required or authorized to close in the principal financial center of such Available Currency.      “Dollar Equivalent” of any amount means, at the time of determination thereof, (a) if such amount is expressed in Dollars, such amount, (b) if such amount is expressed in an Available Currency, the equivalent of such amount in Dollars determined by using the rate of exchange quoted by Citibank in New York, New York at 11:00 a.m. (Local Time) or, if such amount is determined under or in connection with the Multicurrency Revolving Credit Facility, Citibank in London, at 11:00 a.m. (Local Time), on the date of determination (or, if such date is not a Business Day, the last Business Day prior thereto) to prime banks in New York, or London, as applicable, for the spot purchase in the New York, or London, as applicable, foreign exchange market of such amount of Dollars with such Available Currency and (c) if such amount is denominated in any other currency, the equivalent of such amount in Dollars as determined by the Administrative Agent using any method of determination it deems appropriate.           (b) A new Section 1.5(h) (Certain Terms) is hereby inserted immediately after Section 1.5(g) to read as follows:                (h) All references in this Agreement to “New York time” shall be deemed to make reference to the applicable Local Time. 3 --------------------------------------------------------------------------------        (c) Section 2.13(b) (Payments and Computations) is hereby deleted in its entirety and replaced with the following:                (b) All computations of interest and of fees shall be made by the Administrative Agent on the basis of a year of, in the case of Eurocurrency Rate Loans, 360 days (or, if it is so determined by the Administrative Agent, in the case of Eurocurrency Rate Loans under the Multicurrency Revolving Credit Facility, 365 days) and, in the case of Base Rate Loans, 365 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest and fees are payable. Each determination by the Administrative Agent of a rate of interest hereunder shall be conclusive and binding for all purposes, absent manifest error.      (d) Section 4.13(b) (Use of Proceeds) is hereby deleted in its entirety and replaced with the following:                (b) The proceeds of the Revolving Loans and the Letters of Credit are being used by each Revolving Credit Borrower (and, to the extent distributed to them by such Borrower, each Group Member) solely (i) to refinance all Indebtedness and other obligations outstanding under the Existing Credit Agreement, (ii) for the payment of transaction costs, fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby, (iii) for working capital and general corporate purposes for itself or any of its Subsidiaries and (iv) to finance Permitted Acquisitions; provided, however, that the Revolving Credit Borrowers may use the Revolving Loans from time to time to make payments permitted under Section 8.5(e) (Restricted Payments) and to pay costs, fees and expenses incurred in connection therewith, in each case, to the extent, before and after giving effect to all such payments on any date, (A) the aggregate principal amount of all such Revolving Loans outstanding at any time used to make payments permitted under Section 8.5(e) shall not exceed $350,000,000 (or at any time prior to or on December 31, 2006, $500,000,000), (B) the aggregate principal amount of all such Revolving Loans outstanding at any time used to make payments permitted under Section 8.5(e)(i) shall not exceed $350,000,000 and (C) the sum of (1) the Available Credit and (2) the aggregate amount of cash and Cash Equivalents (free and clear of all Liens other than Customary Permitted Liens and Liens in favor of the Administrative Agent for the benefit of the Secured Parties) in excess of $50,000,000 included in the Consolidated balance sheet of the Group Members as of such date shall not be less than $300,000,000 (or at any time prior to or on December 31, 2006, $200,000,000).      (e) Section 11.8(a)(iv) (Notices, Etc.) is hereby deleted in its entirety and replaced with the following:                (iv) if to the Administrative Agent or the Dollar Swing Lender: Citicorp USA, Inc. 388 Greenwich Street, 21st Floor New York, New York 10013 Attention: James M. Walsh Telecopy no: (212) 816-8112 E-Mail Address: [email protected] 4 --------------------------------------------------------------------------------   with a copy to: Citibank International PLC. Citigroup Centre, Fifth Floor 25 Canada Square, Canary Wharf London E14 5LB Attention: Loans Agency Telecopy no: 44 208 636 3824 E-Mail Address: [email protected] with a copy to: Weil, Gotshal & Manges, LLP 767 Fifth Avenue, New York, New York 10153-0119 Attention: Daniel S. Dokos, Esq. Telecopy no: (212) 310-8007 E-Mail Address: [email protected]      (f) As permitted by the proviso to Section 11.1(a) (Amendments, Waivers, Etc.) of the Credit Agreement with respect to the curing of any ambiguity, omission, defect or inconsistency, the Administrative Agent and the Company hereby consent to the following modifications to Section 6.1. (Financial Statements), each such modification effective as of the Closing Date:      (i) Section 6.1(a) (Quarterly Reports) shall be modified to read as follows:                (a) Quarterly Reports. Within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, financial information regarding the Group Members consisting of Consolidated unaudited balance sheets as of the close of such quarter and the related statements of income and cash flow for such quarter and that portion of the Fiscal Year ending as of the close of such quarter, setting forth in comparative form the figures for the corresponding period in the prior year, in each case certified by a Responsible Officer of the Company as fairly presenting the Consolidated financial position of the Group Members as at the dates indicated and the results of their operations and cash flow for the periods indicated in accordance with GAAP (subject to the absence of footnote disclosure and normal year-end adjustments).      (ii) Section 6.1(g) (Intercompany Loan Balances) shall be modified to read as follows:      (g) Intercompany Loan Balances. Together with each delivery of any Financial Statement pursuant to clause (a) or (b) above, a summary of the outstanding balance of all intercompany Indebtedness as of the last day of the Fiscal Quarter covered by such Financial Statement, certified by a Responsible Officer of the Company.           SECTION 3. Conditions to Effectiveness. This Amendment shall become effective as of September 28, 2006 (the “Effective Date”) upon the satisfaction of each of the following conditions precedent: 5 --------------------------------------------------------------------------------             (a) the Administrative Agent shall have received counterparts of this Amendment executed by each Borrower and the Administrative Agent;           (b) the Administrative Agent shall have received an Acknowledgment and Consent duly executed by each Lender constituting the Requisite Lenders;           (c) (i) The Lenders shall have received payment of all fees as required by Section 4 hereof and (ii) the Administrative Agent shall have received payment of all fees, costs and expenses, including, without limitation, all fees, costs and expenses of the Administrative Agent (including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Administrative Agent) in connection with this Amendment, the Credit Agreement and each other Loan Document, as required by Section 5 hereof.           SECTION 4. Fees. As consideration for the execution of this Amendment, the Company, on behalf of each Borrower, agrees to pay to the Administrative Agent, for the account of each Lender from which the Administrative Agent shall have received (by facsimile or otherwise) an executed Acknowledgment and Consent with respect to this Amendment by 5 p.m. (New York time) on September 21, 2006, a fee equal to 0.1% of the sum of (A) such Lender’s Revolving Credit Commitment then in effect and (B) the principal amount of such Lender’s Term Loans then outstanding.           SECTION 5. Costs and Expenses. As provided in Section 11.3(a) (Costs and Expenses) of the Credit Agreement, each Borrower jointly and severally agrees to reimburse the Administrative Agent for all reasonable fees, costs and expenses, including the reasonable fees, costs and expenses of counsel or other advisors for advice, assistance or other representation in connection with this Amendment, to the extent invoiced to the Borrowers no less than one Business Day prior to the Effective Date.           SECTION 6. Construction with the Loan Documents.           (a) On and after this Amendment becoming effective in accordance with Section 3, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import, and each reference in the other Loan Documents to the Credit Agreement, shall mean and be a reference to the Credit Agreement as amended or otherwise modified hereby, and this Amendment and the Credit Agreement shall be read together and construed as a single instrument. The table of contents, signature pages and list of Exhibits and Schedules of the Credit Agreement shall be deemed modified to reflect the changes made by this Amendment.           (b) Except as expressly amended or otherwise modified hereby, all of the terms and provisions of the Credit Agreement and all other Loan Documents are and shall remain in full force and effect and are hereby ratified and confirmed, including the respective guarantees and security interests granted pursuant to the respective Loan Documents.           (c) The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Lenders, the Issuers or the Agents under any of the Loan Documents, nor constitute a waiver or amendment of any provision of any of the Loan Documents or for any purpose except as expressly set forth herein.           (d) This Amendment is a Loan Document. 6 --------------------------------------------------------------------------------             (e) This Amendment shall not extinguish or otherwise constitute a novation of the Obligations outstanding under the Credit Agreement or discharge or release the Lien or priority of any Loan Document or any other security therefor or any guarantee thereof. The Credit Agreement and each of the other Loan Documents shall remain in full force and effect, except as modified hereby or thereby in connection herewith or therewith.           SECTION 7. Representations And Warranties. Each Borrower hereby represents and warrants, on and as of the date hereof, both prior and after giving effect to this Amendment, that (i) it has taken all necessary actions to authorize the execution, delivery, and performance of this Amendment, (ii) this Amendment has been duly executed and delivered by such Borrower, (iii) this Amendment is the legal, valid and binding obligation of such Borrower, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles, (iv) each of the representations and warranties made by it in the Credit Agreement, as amended hereby, and the other Loan Documents, shall be true and correct in all material respects (other than representations and warranties in any such Loan Document which expressly speak as of an earlier date, which shall have been true and correct in all material respects as of such earlier date) and (v) no Default or Event of Default has occurred and is continuing (other than any Default or Event of Default expressly waived by Section 1(a), (b) or (c) of this Amendment).           SECTION 8. Governing Law. This Amendment and the rights and obligations of the parties hereto shall be governed by, and construed and interpreted in accordance with, the law of the State of New York.           SECTION 9. Execution in Counterparts. This Amendment may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are attached to the same document. Delivery of an executed counterpart by telecopy shall be effective as delivery of a manually executed counterpart of this Amendment.           SECTION 10. Integration. This Amendment, together with the other Loan Documents, incorporates all negotiations of the parties hereto with respect to the subject matter hereof and is the final expression and agreement of the parties hereto with respect to the subject matter hereof. [Signature pages follow] 7 --------------------------------------------------------------------------------             IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.             Affiliated Computer Services, Inc., ACS Commercial Solutions, Inc., ACS Education Services, Inc., ACS Enterprise Solutions, Inc., ACS HR Solutions, LLC, ACS Outsourcing Solutions, Inc., ACS State & Local Solutions, Inc., ACS State Healthcare, LLC, ACS TradeOne Marketing, Inc.,       as Borrowers       By:   /s/ Nancy P. Vineyard         Name:   Nancy P. Vineyard        Title:   Treasurer        ACS Worldwide Lending Limited,       as Borrower                                 By:   /s/ Nancy P. Vineyard         Name:   Nancy P. Vineyard        Title:   Treasurer        --------------------------------------------------------------------------------               Buck Consultants, LLC,       as Borrower       By:   /s/ Gary Stephen         Name:   Gary Stephen        Title:   Treasurer      --------------------------------------------------------------------------------                         Citicorp USA, Inc.,       as Administrative Agent       By:   /s/ John Judge         Name:   John Judge        Title:   Vice President        --------------------------------------------------------------------------------   Exhibit A to Amendment No. 3, Consent and Waiver to and under Credit Agreement Acknowledgement And Consent To:   Citicorp USA, Inc., as Administrative Agent 338 Greenwich Street, 21st Floor New York, New York 10013 Attention: James M. Walsh Re:   Affiliated Computer Services, Inc. — Amendment No.3, Consent and Waiver           Reference is made to the Credit Agreement, dated as of March 20, 2006 (as amended), among Affiliated Computer Services, Inc., a Delaware corporation (the “Company”), ACS Commercial Solutions, Inc., a Nevada corporation, ACS Education Services, Inc., a Delaware corporation, ACS Enterprise Solutions, Inc., a Delaware corporation, ACS HR Solutions, LLC, a Pennsylvania limited liability company, ACS Outsourcing Solutions, Inc., a Michigan corporation, ACS State & Local Solutions, Inc., a New York corporation, ACS State Healthcare, LLC, a Delaware limited liability company, ACS TradeOne Marketing, Inc., a Delaware corporation, Buck Consultants, LLC, a Delaware limited liability company, ACS Worldwide Lending Limited, a limited company organized under the laws of England and Wales, and each other Subsidiary Borrower party thereto from time to time, the Lenders and Issuers party thereto from time to time, and Citicorp USA, Inc. (“Citicorp”), as administrative agent (in such capacity, the “Administrative Agent”). Unless otherwise specified herein, all capitalized terms used in this Acknowledgment and Consent shall have the meanings ascribed to such terms in the Credit Agreement.           The Company has requested that the Lenders amend the Credit Agreement and consent to a waiver under the Credit Agreement on the terms described in Amendment No.3, Consent and Waiver to and under Credit Agreement (the “Amendment”), the form of which is attached hereto.           Pursuant to Section 11.1(a) (Amendments, Waivers, Etc.) of the Credit Agreement, the undersigned Lender hereby consents to the terms of the Amendment and authorizes the Administrative Agent to execute and deliver the Amendment on its behalf.             Very truly yours,       [Name of Lender]     By:           Name:           Title:         Dated as of September __, 2006  

  Exhibit 10.21 AMENDMENT NUMBER SEVEN to the Second Amended and Restated Master Loan and Security Agreement dated as of June 27, 2005 by and among NEW CENTURY MORTGAGE CORPORATION NC CAPITAL CORPORATION NEW CENTURY FINANCIAL CORPORATION and CITIGROUP GLOBAL MARKETS REALTY CORP.           This AMENDMENT NUMBER SEVEN (this “Amendment Number Seven”) is made this 7th day of July, 2006, among NEW CENTURY MORTGAGE CORPORATION, having an address at 18400 Von Karman, Suite 1000, Irvine, California 92612 (“NC Mortgage”), NC CAPITAL CORPORATION, having an address at 18400 Von Karman, Suite 1000, Irvine, California 92612 (“NC Capital”), NEW CENTURY FINANCIAL CORPORATION, having an address at 18400 Von Karman, Suite 1000, Irvine, California 92612 (“NC Financial”) and CITIGROUP GLOBAL MARKETS REALTY CORP., having an address at 390 Greenwich Street, New York, New York 10013 (“Citigroup”) to the SECOND AMENDED & RESTATED MASTER LOAN AND SECURITY AGREEMENT, dated as of June 27, 2005, among NC Mortgage, NC Capital, NC Financial and Citigroup, as amended (the “Agreement”). RECITALS           WHEREAS, the parties have agreed to amend the Agreement to extend the Maturity Date as more expressly set forth below;           WHEREAS, the parties have agreed to amend the Agreement to temporarily increase Maximum Credit as more expressly set forth below.           WHEREAS, as of the date of this Amendment Number Seven, each of NC Mortgage, NC Capital and NC Financial represents to Citigroup that it is in compliance with all of the representations and warranties and all of the affirmative and negative covenants set forth in the Agreement and the Loan Documents.           NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and of the mutual covenants herein contained, the parties hereto hereby agree as follows:           SECTION 1. Effective as of July 10, 2006, the Agreement shall be amended as follows:           (a) Section 1.01 of the Agreement is hereby amended by substituting “July 31, 2006” for “July 10, 2006” in the definition of “Maturity Date” thereof.           (b) Section 1.01 of the Agreement shall be amended by deleting the definition of Maximum Credit in its entirety and replacing it with the following:   --------------------------------------------------------------------------------   “Maximum Credit” shall mean, from the period beginning with July 10, 2006 to and including July 31, 2006, $250,000,000, and thereafter, $150,000,000.           SECTION 2. Fees and Expenses. NC Capital agrees to pay to Citigroup all fees and out of pocket expenses incurred by Citigroup in connection with this Amendment Number Seven (including all reasonable fees and out of pocket costs and expenses of Citigroup’s legal counsel incurred in connection with this Amendment Number Seven), in accordance with Section 11.03(b) of the Agreement.           SECTION 3. Defined Terms. Any terms capitalized but not otherwise defined herein shall have the respective meanings set forth in the Agreement.           SECTION 4. Representations. In order to induce Citigroup to execute and deliver this Amendment Number Seven, NC Capital, NC Mortgage and NC Financial hereby represent to Citigroup that as of the date hereof, after giving effect to this Amendment Number Seven, each of NC Capital, NC Mortgage and NC Financial is in full compliance with all of the terms and conditions of the Agreement and no Event of Default or material adverse change has occurred under the Agreement.           SECTION 5. Limited Effect. This Amendment Number Seven shall become effective upon the execution hereof by the parties hereto. Except as expressly amended and modified by this Amendment Number Seven, the Agreement shall continue in full force and effect in accordance with its terms. Reference to this Amendment Number Seven need not be made in the Agreement or any other instrument or document executed in connection therewith, or in any certificate, letter or communication issued or made pursuant to, or with respect to, the Agreement, any reference in any of such items to the Agreement being sufficient to refer to the Agreement as amended hereby.           SECTION 6. GOVERNING LAW. THIS AMENDMENT NUMBER SEVEN SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS DOCTRINE APPLIED IN SUCH STATE (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).           SECTION 7. Counterparts. This Amendment Number Seven may be executed by each of the parties hereto on any number of separate counterparts, each of which shall be an original and all of which taken together shall constitute one and the same instrument. [SIGNATURE PAGE FOLLOWS]   --------------------------------------------------------------------------------             IN WITNESS WHEREOF, Citigroup, NC Capital, NC Mortgage and NC Financial have caused this Amendment Number Seven to be executed and delivered by their duly authorized officers as of the day and year first above written.                   CITIGROUP GLOBAL MARKETS REALTY CORP.                     By:   /s/ Bobbie Theivakumaran                       Name: Bobbie Theivakumaran         Title:   Authorized Agent                       NC CAPITAL CORPORATION                   By:   /s/ Kevin Cloyd                       Name: Kevin Cloyd         Title:   President                       NEW CENTURY MORTGAGE CORPORATION                   By:   /s/ Kevin Cloyd                       Name: Kevin Cloyd         Title:   Executive Vice President                       NEW CENTURY FINANCIAL CORPORATION                   By:   /s/ Kevin Cloyd                       Name: Kevin Cloyd         Title:   Executive Vice President                       By:   /s/ Brad A. Morrice                       Name: Brad A. Morrice         Title:   President and CEO      

  Exhibit 10.17 CINCINNATI FINANCIAL CORPORATION Supplemental Retirement Plan Amended and Restated Effective January 1, 2005   --------------------------------------------------------------------------------   TABLE OF CONTENTS               Page   Article 1 ESTABLISHMENT OF THE PLAN     1             1.1 Establishment     1   1.2 Purpose     1             Article 2 DEFINITIONS     2             2.1 Actuarially Adjusted     2   2.2 Average Monthly Earnings     2   2.3 Beneficiary     2   2.4 Board of Directors     2   2.5 CFC Retirement Plan     2   2.6 Code     2   2.7 Committee     2   2.8 Disabled     2   2.9 Disability Retirement Date     3   2.10 Employer     3   2.11 Early Retirement Date     3   2.12 Earnings     3   2.13 Key Employee     3   2.14 Normal Retirement Date     3   2.15 Participant     4   2.16 Plan     4   2.17 Plan Year     4   2.18 Retirement Date     4   2.19 Separation from Service     4   2.20 Social Security Integration Level     4   2.21 Supplemental Benefit     4   2.22 Year of Service     4             Article 3 ELIGIBILITY FOR BENEFITS     5             3.1 Commencement of Retirement Benefits     5   3.2 Vesting     5   3.3 Lost Payees     5   3.4 Non-Compete Provision/Discharge for Cause     5             Article 4 BENEFITS PAYABLE UNDER THE PLAN     6             4.1 Normal Retirement Benefit     6   4.2 Early Retirement Benefit     6   4.3 Deferred Retirement Benefit     7   4.4 Disability Retirement Benefit     7   4.5 Death Benefits     7   i --------------------------------------------------------------------------------                 Page   Article 5 PAYMENT OF SUPPLEMENTAL BENEFITS     9             5.1 Form of Benefit     9   5.2 Date of Payment     9   5.3 Key Employees     10   5.4 Domestic Relations Orders     10   5.5 Code §409A Failures     10   5.6 Discretionary Delay In Benefit Payments     10   5.7 Tax Withholding     11             Article 6 CLAIMS     12             6.1 Initial Claims Procedure     12   6.2 Claim Review Procedure     13   6.3 Required Exhaustion of Administrative Remedies     15             Article 7 PLAN ADMINISTRATION     17             7.1 Plan Administration     17             Article 8 MISCELLANEOUS PROVISIONS     18             8.1 Termination and Amendment     18   8.2 Entire Agreement     18   8.3 Financing     18   8.4 Non-Transferability     19   8.5 Severability     19   8.6 Gender and Number     19   8.7 Headings and Captions     19   8.8 No Rights Conferred     19   8.9 No Guarantee of Tax Consequences     19   8.10 Applicable Law     19             Appendix A     A-1             Appendix B     B-1             Appendix C     C-1   ii --------------------------------------------------------------------------------   ARTICLE 1 ESTABLISHMENT OF THE PLAN 1.1   Establishment. Cincinnati Financial Corporation originally established the Cincinnati Financial Corporation Supplemental Retirement Plan (the “Plan”) effective January 1, 1989 as an unfunded supplemental retirement plan for eligible executives. The Plan is intended to qualify as a “top-hat plan” for purposes of the Employee Retirement Income Security Act of 1974, as amended. Additionally, the Plan is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations issued thereunder, as such authorities are interpreted by the Committee.   1.2   Purpose. The purpose of the Plan is to provide eligible executives with benefits in addition to those provided under the Cincinnati Financial Corporation Retirement Plan (the “CFC Retirement Plan”). - 1 - --------------------------------------------------------------------------------   ARTICLE 2 DEFINITIONS 2.1   “Actuarially Adjusted” means, for purposes of determining the deferred retirement benefit under Section 4.3, the adjustment based on the mortality table and interest rate used to determine a lump sum benefit under the CFC Retirement Plan as of the date of a Participant’s Retirement Date. For purposes of determining the death benefit under Section 4.5, “Actuarially Adjusted” means the adjustment based on the mortality table and interest rate used by the CFC Retirement Plan to determine optional forms of benefit payments.   2.2   “Average Monthly Earnings” shall have the same meaning as such term has in the CFC Retirement Plan.   2.3   “Beneficiary” means the individual (if any) that is entitled to receive death benefits under the CFC Retirement Plan. If no individual is entitled to receive death benefits under the CFC Retirement Plan, there is no Beneficiary for the purposes of the Plan and no individual is entitled to Death Benefits under the Plan.   2.4   “Board of Directors” means the Board of Directors of Cincinnati Financial Corporation.   2.5   “CFC Retirement Plan” means the Cincinnati Financial Corporation Retirement Plan, as may be amended from time to time.   2.6   “Code” means the Internal Revenue Code of 1986, as amended.   2.7   “Committee” means the committee appointed by the Board of Directors to administer the Plan.   2.8   “Disabled” means a Participant is: (a) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (b) by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a - 2 - --------------------------------------------------------------------------------       continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Employer.   2.9   “Disability Retirement Date” means the date on which a Participant becomes Disabled.   2.10   “Employer” means Cincinnati Financial Corporation, and any affiliated company which adopts the Plan in the manner designated by Cincinnati Financial Corporation, or any successor or assign of any of them.   2.11   “Early Retirement Date” means the date before the Participant’s Normal Retirement Date on which the Participant is first eligible to receive monthly benefit payments from the CFC Retirement Plan.   2.12   “Earnings” shall have the same meaning as such term has in the CFC Retirement Plan, except that any limitation imposed by Code §401(a)(17) shall not apply.   2.13   “Key Employee” means an employee of the Employer (or a related employer under Code §414) who, as of the annual identification date, is: (a) an officer of the Employer (or a related employer under Code §414) having annual compensation greater than $ 130,000 (as adjusted for inflation pursuant to Code §416(i), and limited to 50 employees); (b) a more than 5% owner of the Employer (or a related employer under Code §414); or (c) a more than 1% owner of the Employer (or a related employer under Code §414) who has annual compensation from the Employer (or a related employer under Code §414) greater than $150,000, as determined by the Committee and consistent with the Committee’s interpretation of Code §409A and the regulations issued thereunder. An individual described above shall be considered a Key Employee for the 12-month period beginning on the 1st day of the 4th month following the annual identification date.Unless otherwise provided by the Committee, the annual identification date shall be December 31st.   2.14   “Normal Retirement Date” means the 1st day of the month on or after the Participant’s 65th birthday. - 3 - --------------------------------------------------------------------------------   2.15   “Participant” means any employee or former employee of the Employer designated by the Committee as a participating member of the Plan as specified in Appendix A. The Committee has the sole and absolute discretion of determining whether an individual is a Participant. No retroactive characterization of an individual’s status for any other purpose shall make an individual a Participant for purposes of the Plan unless specifically determined by the Committee for the purposes of the Plan.   2.16   “Plan” means the Cincinnati Financial Corporation Supplemental Retirement Plan described in this instrument, as may be amended from time to time.   2.17   “Plan Year” means January 1 to December 31.   2.18   “Retirement Date” means, prior to January 1, 2007, the date on which a Participant first commences receipt of benefit payments under the CFC Retirement Plan. Beginning on, or after, January 1, 2007, “Retirement Date” means the date on which a Participant has a Separation from Service and on which the earliest of the following events occur: (a) the Participant attains age 65; (b) the Participant attains age 60 and has completed 5 or more Years of Service; or (c) the Participant’s Disability Retirement Date.   2.19   “Separation from Service” means a Participant’s separation from service (defined by Code §409A and the regulations thereunder as interpreted by the Committee) with the Employer (and all related employers under Code §414) for reasons other than being discharged for cause.   2.20   “Social Security Integration Level” means 1/12th of the average of the following: (a) for each Year of Service before January 1, 1976, $6,000; and (b) for each Year of Service after January 1, 1976, the lesser of the taxable wage base under the Federal Insurance Contribution Act in effect at the beginning of a Plan Year and the Participant’s Earnings for that Plan Year.   2.21   “Supplemental Benefit” means the benefit determined pursuant to Article 4.   2.22   “Year of Service” shall have the same meaning as such term has in the CFC Retirement Plan. - 4 - --------------------------------------------------------------------------------   ARTICLE 3 ELIGIBILITY FOR BENEFITS 3.1   Commencement of Retirement Benefits. Subject to the Plan’s vesting provisions, each Participant is eligible to retire and receive a Supplemental Benefit payable as of the Participant’s Retirement Date.   3.2   Vesting. Participants shall be fully vested in their Supplemental Benefits accrued as of December 31, 2005 unless otherwise provided in Sections 3.3 or 3.4. For Supplemental Benefits accrued after December 31, 2005, Participants shall be vested to the same extent they are vested in their accrued benefits under the CFC Retirement Plan unless otherwise provided in Sections 3.3 or 3.4.   3.3   Lost Payees. Benefits payable under the Plan shall be forfeited if the Committee is unable to locate an individual to whom payment is due; provided, however, that, in the discretion of the Committee, such benefit shall be reinstated if a claim is made by the proper payee for the forfeited benefit. If forfeited, the Employer shall have no further obligation for such benefit to the Participant or anyone else.   3.4   Non-Compete Provision/Discharge for Cause. Notwithstanding any contrary provision of the Plan, if a Participant who is entitled to receive a Supplemental Benefit engages in competition with the Employer or any related employer (without prior written authorization given by the Employer), or is discharged for cause, the Participant’s Supplemental Benefit will, at the discretion of the Employer, be forfeited. If forfeited, the Employer shall have no further obligation for such benefit to the Participant or anyone else. - 5 - --------------------------------------------------------------------------------   ARTICLE 4 BENEFITS PAYABLE UNDER THE PLAN 4.1   Normal Retirement Benefit. A Participant whose Retirement Date is on his Normal Retirement Date shall be entitled to a Supplemental Benefit, payable pursuant to the provisions of Article 5. The Supplemental Benefit shall be equal to the excess of (a) over (b) below.   (a)   The greater of (i), (ii) or (iii) below.   (i)   For each Participant specified in Appendix B, 3/4% of the Participant’s Average Monthly Earnings below the Social Security Integration Level plus 1-1/4% of the Participant’s Average Monthly Earnings in excess of the Social Security Integration Level, such sum multiplied by the Participant’s Years of Service.     (ii)   For each Participant specified in Appendix C, the monthly benefit that the Participant would have been entitled to had he continued to participate under the Inter-Ocean Employees’ Retirement Plan or Inter-Ocean Insurance Company Retirement Plan for Field Employees, as the case may be, until the termination of his employment with the Employer (or a related employer under Code §414).     (iii)   Participant’s monthly benefit determined under the CFC Retirement Plan as of the Participant’s Retirement Date ignoring the limit on earnings under Code §401(a)(17) and ignoring any limit on benefits under Code §415.   (b)   The Participant’s monthly benefit payable under the CFC Retirement Plan as of the Participant’s Retirement Date. 4.2   Early Retirement Benefit. A Participant whose Retirement Date is on or after his Early Retirement Date but before his Normal Retirement Date shall be entitled to a Supplemental Benefit, payable pursuant to the provisions of Article 5. The Supplemental - 6 - --------------------------------------------------------------------------------       Benefit shall be equal to an amount calculated under Section 4.1(a) as of the Participant’s Retirement Date, reduced by 1/2% for each month that the Participant’s Retirement Date precedes his Normal Retirement Date. The resulting amount shall be further reduced by the monthly benefit payable to the Participant under the CFC Retirement Plan as of the Participant’s Retirement Date.   4.3   Deferred Retirement Benefit. A Participant whose Retirement Date is after his Normal Retirement Date shall be entitled to a Supplemental Benefit, payable pursuant to the provisions of Article 5. The Supplemental Benefit shall be equal to the excess of (a) over (b) below.   (a)   The greater of (i) or (ii) below.   (i)   The amount calculated under Section 4.1(a) as of the Participant’s Retirement Date.     (ii)   The amount calculated under Section 4.1(a) as of the Participant’s Normal Retirement Date Actuarially Adjusted for the Participant’s deferred Retirement Date.   (b)   The Participant’s monthly benefit payable under the CFC Retirement Plan as of the Participant’s Retirement Date. 4.4   Disability Retirement Benefit. A Participant whose Retirement Date is on his Disability Retirement Date shall be entitled to a Supplemental Benefit, payable pursuant to the provisions of Article 5. The Supplemental Benefit shall be equal to an amount calculated under Section 4.1(a) as of the Participant’s Disability Retirement Date, reduced by 1/2% for each month that the Participant’s Disability Retirement Date precedes the Participant’s Normal Retirement Date. The resulting amount shall be reduced by the monthly benefit payable to the Participant under the CFC Retirement Plan as of the Participant’s Disability Retirement Date.   4.5   Death Benefits. If a Participant who is entitled to a benefit under the CFC Retirement Plan dies before his Retirement Date, or after Retirement Date but before the - 7 - --------------------------------------------------------------------------------       Participant’s Supplemental Benefit has been paid, the Participant’s Beneficiary shall be entitled to receive the Participant’s Supplemental Benefit payable in accordance with the provisions of Article 5. The Supplemental Benefit shall be equal to 100% of the amount of the Participant’s Supplemental Benefit determined in accordance with Article 4, Actuarially Adjusted and reduced in the same manner as is applicable under the CFC Retirement Plan, as if the Participant had terminated employment with the Employer as of his date of death and commenced benefit payments from the CFC Retirement Plan on the date on which the Beneficiary first commences benefit payments from the CFC Retirement Plan. The resulting amount shall be reduced by the monthly benefit payable to the Beneficiary under the CFC Retirement Plan. If no individual is entitled to receive death benefits under the CFC Retirement Plan, then no individual is entitled to Death Benefits under the Plan. - 8 - --------------------------------------------------------------------------------   ARTICLE 5 PAYMENT OF SUPPLEMENTAL BENEFITS 5.1   Form of Benefit. The vested Supplemental Benefit payable to a Participant or his Beneficiary shall only be paid in the form of a single lump sum payment. The lump sum payment shall be the actuarial equivalent of a life annuity payable to the Participant in monthly installments equal to the Participant’s Supplemental Benefit. The determination of the lump sum payment shall be calculated in the same manner and using the same actuarial assumptions as used in the calculation of optional lump sum payments under the CFC Retirement Plan. However, if such calculated lump sum payment under the CFC Retirement Plan is limited by Code §415, the Participant’s lump sum payment under the Plan shall be increased in an amount equal to the amount that the calculated lump sum payment under the CFC Retirement Plan is limited by Code §415.   5.2   Date of Payment.   (a)   Retirement Benefits. Subject to Sections 5.3, 5.4, 5.5 and 5.6, a vested Supplemental Benefit payable in accordance with Article 4 on account of retirement will be paid on a Participant’s Retirement Date, or as provided in (c) below.     (b)   Death Benefits. Subject to Sections 5.4, 5.5 and 5.6, a vested Supplemental Benefit payable in accordance with Article 4 on account of the Participant’s death will be paid as follows, or as otherwise provided in (c) below: (a) prior to January 1, 2007, the date on which the Beneficiary first commences benefit payments under the CFC Retirement Plan; and (b) on, or after, January 1, 2007, on the Participant’s date of death.     (c)   Administration of Benefit Payments. The payment of vested benefits under the Plan shall be paid on the payment dates specified in (a) and (b) above (as applicable), or as soon as administratively practicable thereafter, but not later than the later of: (i) December 31st of the calendar year in which the payment dates specified in (a) and (b) above occur (as applicable); or (ii) the 15th day of the 3rd - 9 - --------------------------------------------------------------------------------         calendar month following the payment dates specified in (a) and (b) above (as applicable). 5.3   Key Employees. Notwithstanding Section 5.2(a), if required by Code §409A and the regulations thereunder as interpreted by the Committee, any vested benefit payable under the Plan to a Participant who is a Key Employee may not be paid before the date that is 6 months after the Participant’s Separation from Service, or if earlier, the date of the Participant’s death. The amount of such benefit (the “Delayed Benefit”) shall be equal to the Participant’s vested Supplemental Benefit determined as of the date of the Participant’s Separation from Service increased by interest credited during the period beginning on the Participant’s Separation from Service and ending on the date the Delayed Benefit is paid. The interest rate used to credit interest during the 6-month period shall be the same as the rate used to determine lump sum payment amounts under Section 5.1. The Delayed Benefit shall be paid on the last day of the 6-month period or as soon as administratively practicable thereafter, but not later than the later of: (a) December 31st of the calendar year in which last day of the 6-month period occurs; or (b) the 15th day of the 3rd calendar month following the last day of the 6-month period.   5.4   Domestic Relations Orders. Notwithstanding Sections 5.2(a) and 5.2(b), the payment of vested benefits due under the Plan shall be accelerated and paid as is necessary to satisfy a domestic relations order (as defined in Code §414(p)(1)(B)).   5.5   Code §409A Failures. Notwithstanding Sections 5.2(a) and 5.2(b), the payment of vested benefits due under the Plan shall be accelerated and paid to a Participant or Beneficiary if the Plan fails to satisfy Code §409A. Benefit payments made pursuant to this section may not exceed the amount required to be included in the Participant’s or Beneficiary’s income as a result of the Plan’s failure to comply with Code §409A. The Participant (or Beneficiary) shall be solely responsible for all taxes, penalties and/or interest with respect to his benefit under the Plan, including the interest and/or additional taxes provided in Code §409A(a)(1)(B).   5.6   Discretionary Delay In Benefit Payments. Notwithstanding Sections 5.2(a) and 5.2(b), the Committee may delay the payment of vested benefits due under the Plan by reason of - 10 - --------------------------------------------------------------------------------       any events or conditions permitted under Code §409A and the regulations thereunder as interpreted by the Committee, including but not limited to situations where the Committee reasonably determines that any of the events described in (a) through (c) below would occur.   (a)   The Employer’s tax deduction attributable to a benefit payment would be limited or eliminated by Code §162(m). Such benefit shall be paid on the earliest date the Committee reasonably believes that the deduction attributable to the benefit payment will not be limited or eliminated by Code §162(m).     (b)   Making a benefit payment would violate the terms of a loan or similar agreement to which the Employer is a party, and such violation would cause material harm to the Employer. Such benefit payment shall be made on the earliest date the Committee reasonably believes that making the payment will not cause a violation of the terms of a loan or similar agreement, or will not cause material harm to the Employer.     (c)   Making a benefit payment would violate federal securities laws or other applicable laws. Such benefit payment shall be made on the earliest date the Committee reasonably believes that making the payment will not cause a violation of federal securities laws or other applicable laws. 5.7   Tax Withholding. As a condition to entitlement to benefits under the Plan, the Employer may deduct (or cause to be deducted) from any amounts payable to an individual (whether from the Plan or otherwise), or, in the Employer’s discretion, to otherwise to collect from the individual any withholding for federal, state or other taxes with respect to benefits under the Plan as determined by the Employer. - 11 - --------------------------------------------------------------------------------   ARTICLE 6 CLAIMS 6.1   Initial Claims Procedure.   (a)   Claim. In order to present a complaint regarding the nonpayment of a Plan benefit or a portion thereof (a “Claim”), a Participant or other beneficiary under the Plan (a “Claimant”) or his duly authorized representative must file such Claim by mailing or delivering a writing stating such Claim to the Committee. Upon such receipt of a Claim, the Committee shall furnish to the Claimant a written acknowledgment which shall inform such Claimant of the time limit set forth in (b)(i) below and of the effect, pursuant to (b)(iii) below, of failure to decide the Claim within such time limit.     (b)   Initial Decision.   (i)   Time Limit. The Committee shall decide upon a Claim within a reasonable period of time after receipt of such Claim; provided, however, that such period shall in no event exceed 90 days, unless special circumstances require an extension of time for processing. If such an extension of time for processing is required, then the Claimant shall, prior to the termination of the initial 90-day period, be furnished a written notice indicating such special circumstances and the date by which the Committee expects to render a decision. In no event shall an extension exceed a period of 90 days from the end of the initial period.     (ii)   Notice of Denial. If the Claim is wholly or partially denied, then the Committee shall furnish to the Claimant, within the time limit applicable under (i) above, a written notice setting forth in a manner calculated to be understood by the Claimant:   (A)   the specific reason or reasons for such denial; - 12 - --------------------------------------------------------------------------------     (B)   specific reference to the pertinent Plan provisions on which such denial is based;     (C)   a description of any additional material or information necessary for such Claimant to perfect his Claim and an explanation of why such material or information is necessary; and     (D)   appropriate information as to the steps to be taken if such Claimant wishes to submit his Claim for review pursuant to Section 6.2, including notice of the time limits set forth in Section 6.2(b)(ii).   (iii)   Deemed Denial for Purposes of Review. If a Claim is not granted and if, despite the provisions of (i) and (ii) above, notice of the denial of a Claim is not furnished within the time limit applicable under (i) above, then the Claimant may deem such Claim denied and may request a review of such deemed denial pursuant to the provisions of Section 6.2. 6.2   Claim Review Procedure.   (a)   Claimant’s Rights. If a Claim is wholly or partially denied under Section 6.1, then the Claimant or his duly authorized representative shall have the following rights:   (i)   to obtain, subject to (b) below, a full and fair review by the Committee;     (ii)   to review pertinent documents; and     (iii)   to submit issues and comments in writing.   (b)   Request for Review.   (i)   Filing. To obtain a review pursuant to (a) above, a Claimant entitled to such a review or his duly authorized representative shall, subject to (ii) below, mail or deliver a written request for such a review (a “Request for Review”) to the Committee. - 13 - --------------------------------------------------------------------------------     (ii)   Time Limits for Requesting a Review. A Request for Review must be mailed or delivered within 60 days after receipt by the Claimant of written notice of the denial of the Claim.     (iii)   Acknowledgment. Upon such receipt of a Request for Review, the Committee shall furnish to the Claimant a written acknowledgment which shall inform such Claimant of the time limit set forth in (c)(i) below and of the effect, pursuant to (c)(iii) below, of failure to furnish a decision on review within such time limit.   (c)   Decision on Review.   (i)   Time Limit.   (A)   General. If, pursuant to (b) above, a review is requested, then, except as otherwise provided in (B) below, the Committee or its delegate (but only if such delegate has been given the authority to make a final decision on the Claim) shall make a decision promptly and no later than 60 days after receipt of the Request for Review; except that, if special circumstances require an extension of time for processing, then the decision shall be made as soon as possible but not later than 120 days after receipt of the Request for Review. The Committee must furnish the Claimant written notice of any extension prior to its commencement.     (B)   Regularly Scheduled Meetings. Anything to the contrary in (A) above notwithstanding, if the Committee holds regularly scheduled meetings at least quarterly, then its decision on review shall be made no later than the date of the meeting which immediately follows the receipt of the Request for Review; provided, however, if such Request for Review is received within 30 days preceding the date of such meeting, then such decision on review shall be made no later than the date of the 2nd meeting which follows such - 14 - --------------------------------------------------------------------------------         receipt; and provided further that, if special circumstances require a further extension of time for processing, and if the Claimant is furnished written notice of such extension prior to its commencement, then such decision on review shall be rendered no later than the 3rd meeting which follows such receipt.   (ii)   Notice of Decision. The Committee or its delegate shall furnish to the Claimant, within the time limit applicable under (i) above, a written notice setting forth in a manner calculated to be understood by the Claimant:   (A)   the specific reason or reasons for the decision on review;     (B)   specific reference to the pertinent Plan provisions on which the decision on review is based;     (C)   a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the Claimant’s Claim; and     (D)   a statement of the Claimant’s right to bring an action under section 502(a) of the Employee Retirement Income Security Act of 1974.   (iii)   Deemed Denial. If, despite the provisions of (i) and (ii) above, the decision on review is not furnished within the time limit applicable under (i) above, then the Claimant shall be deemed to have exhausted his remedies under the Plan and he may deem the Claim to have been denied on review. The Committee shall have the sole, absolute and uncontrolled discretion to decide all claims under the Plan’s initial claims procedure and under the claims review procedure, and its decisions shall be binding on all parties. 6.3   Required Exhaustion of Administrative Remedies. Before a Participant may file a lawsuit regarding the Plan or benefits under the Plan, the Participant must first use the - 15 - --------------------------------------------------------------------------------       Plan’s initial claims procedure and the claims review procedure (including the requirement of a timely Request for Review) described above. - 16 - --------------------------------------------------------------------------------   ARTICLE 7 PLAN ADMINISTRATION 7.1   Plan Administration. The Committee, in addition to the powers which are expressly provided in the Plan, shall have the power and authority in its sole, absolute and uncontrolled discretion to control and manage the operation and administration of the Plan and shall have all powers necessary to accomplish these purposes including, but not limited to the following:   (a)   the power to determine who is a Participant;     (b)   the power to determine Supplemental Benefits;     (c)   the power to determine when, to whom, in what amount, and in what form distributions are to be made; and     (d)   such powers as are necessary, appropriate or desirable to enable it to perform its responsibilities, including the power to interpret the Plan, establish rules, regulations and forms with respect thereto. The Committee shall have discretionary authority to adopt rules and regulations to assist it in the administration of the Plan. Supplemental Benefits under the Plan will be paid only if the Committee decides in its discretion that an individual is entitled to such benefits. - 17 - --------------------------------------------------------------------------------   ARTICLE 8 MISCELLANEOUS PROVISIONS 8.1   Termination and Amendment.   (a)   Amendment. The Board of Directors may, in its discretion, amend the Plan at any time and in any manner that it deems advisable. Notwithstanding the foregoing, the Committee may make amendments that are necessary for the Plan to comply with applicable laws, to revise Appendix A, Appendix B and/or Appendix C, and minor amendments which do not materially affect the rights conferred under the Plan. Any amendment or termination may be given retroactive effect as determined by the Committee.     (b)   Termination. The Board of Directors may, in its discretion, terminate the Plan at any time and in any manner that it deems advisable. 8.2   Entire Agreement. This Plan document constitutes the entire agreement between the Employer and any Participant (or Beneficiary), and supersedes all other prior agreements, undertakings, both written and oral, with respect to the subject matter hereof. The Plan document may not be amended orally or by any course or purported course of dealing, but only by an amendment in accordance with Section 8.1 specifically identified as a Plan amendment. Written communications and descriptions not specifically identified within their text as amendments, shall not constitute amendments and shall have no interpretive or controlling effect on the interpretation of the Plan. Oral communications shall not constitute amendments and shall have no interpretation or controlling effect on the interpretation of the Plan.   8.3   Financing. Supplemental Benefits shall be paid from the general assets of the Employer, and shall not be funded, or segregated, in any way. To the extent that any individual acquires a right to receive Supplemental Benefits, such right shall be no greater than the right of any unsecured creditor of the Employer. No individual shall have any claim to or against a specific asset, or general assets, of the Employer. - 18 - --------------------------------------------------------------------------------   8.4   Non-Transferability. To the maximum extent permitted by law, Supplemental Benefits payable under the Plan shall not be assignable or subject to any manner of alienation, sale, transfer, claims of creditors, pledge, attachment, or encumbrances of any kind unless provided in Section 5.4.   8.5   Severability. If any provision of the Plan are held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions of the Plan, and the Plan shall be construed and enforced as if such provision had not been included.   8.6   Gender and Number. As used in the Plan, except when otherwise indicated by the context, the genders of pronouns and the singular and plural numbers of terms shall be interchangeable.   8.7   Headings and Captions. The headings and captions within the Plan are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan.   8.8   No Rights Conferred. Nothing contained herein will confer upon a Participant the right to be retained in the service of the Employer, nor will it interfere with the right of the Employer to discharge the Participant.   8.9   No Guarantee of Tax Consequences. The Participant (or Beneficiary) shall be responsible for all taxes, penalties and/or interest with respect to his benefit under the Plan. The Employer does not guarantee any particular tax consequences.   8.10   Applicable Law. This instrument shall be construed in accordance with and governed by the laws of the State of Ohio to the extent not superseded by the laws of the United States. - 19 - --------------------------------------------------------------------------------   APPENDIX A PARTICIPANTS AS OF JANUARY 1, 2006 As of January 1, 2006, the following individuals are Participants. 1.   Gerard R. Behnen   2.   John Beiting   3.   James E. Benoski   4.   Richard M. Cumming   5.   Donald J. Doyle, Jr.   6.   Craig W. Forrester   7.   Michael J. Gagnon   8.   Thomas A. Joseph   9.   Eric N. Matthews   10.   Daniel T. McCurdy, Jr.   11.   Kenneth S. Miller   12.   Robert B. Morgan   13.   Glenn Nicholson   14.   Larry R. Plum   15.   David Popplewell   16.   Jacob F. Scherer, Jr.   17.   John J. Schiff, Jr.   18.   Kenneth W. Stecher   19.   Timothy L. Timmel   20.   Jody L. Wainscott A-1 --------------------------------------------------------------------------------   APPENDIX B PARTICIPANTS ELIGIBLE PRIOR TO JANUARY 1, 2006 The following Participants were eligible to participate in the Plan prior to January 1, 2006. 1.   Gerard R. Behnen   2.   John Beiting   3.   James E. Benoski   4.   Richard M. Cumming   5.   Michael J. Gagnon   6.   Daniel T. McCurdy   7.   Robert B. Morgan   8.   Larry R. Plum   9.   John J. Schiff, Jr.   10.   Jody L. Wainscott B-1 --------------------------------------------------------------------------------   APPENDIX C INTER-OCEAN INSURANCE COMPANY PARTICIPANTS There are no Participants who were Inter-Ocean Insurance Company employees employed on or before February 23, 1973, or who were Cincinnati Insurance Company employees employed by Inter-Ocean Insurance Company on or before February 23, 1973.  

  Exhibit 10.3 STRATOS INTERNATIONAL INC. RESTRICTED STOCK AWARD AGREEMENT (EMPLOYEE AWARD)      This agreement dated as of ___ (the “Award Agreement”), is entered into by and between Stratos International Inc., a Delaware corporation (the “Company”), and ___ (the “Grantee”). All capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them by the Stratos Lightwave, Inc. 2003 Stock Plan (the “Plan”).      1. General. The purpose of the Plan is to provide selected officers, directors, employees and others performing services to the Company or any Subsidiary or Affiliate with additional incentive to promote the success of the Company’s business, encourage such persons to remain in the service of the Company and enable such persons to acquire proprietary interests in the Company. Shares of Restricted Stock are granted under this Award Agreement as of ___ (the “Award Date”) subject to all of the terms of this Award Agreement and pursuant to and subject to all of the provisions of the Plan applicable to Restricted Stock granted pursuant to Article 8 of the Plan, which provisions are, unless otherwise provided herein, incorporated by reference and made a part hereof to the same extent as if set forth in their entirety herein, and to such other terms necessary or appropriate to the grant hereof having been made. A copy of the Plan is on file in the offices of the Company.      2. Grant. Effective as of the Award Date, the Company hereby grants to the Grantee a total of ___ shares of Restricted Stock (the “Restricted Shares”), subject to the restrictions set forth in Section 3 hereof and the Plan. If the Grantee does not execute and deliver a signed copy of this Award Agreement to the Secretary of the Company prior to the close of business on May 30, 2006, the Restricted Shares shall be immediately forfeited and this Award Agreement shall terminate and have no effect.      3. Restrictions.   (a)   None of the Restricted Shares may be sold, transferred, pledged, hypothecated or otherwise encumbered or disposed of until they have vested in accordance with Section 6 of this Award Agreement.     (b)   Any Restricted Shares that are not vested shall be forfeited to the Company immediately upon termination of the Grantee’s employment with the Company and all of its Subsidiaries and Affiliates.      4. Stock Certificates. Each stock certificate evidencing any Restricted Shares shall contain such legends and stock transfer instructions or limitations as may be determined or authorized by the Committee in its sole discretion; and the Company may, in its sole discretion, retain custody of any such certificate throughout the period during which any restrictions are in --------------------------------------------------------------------------------   effect and require, as a condition to issuing any such certificate, that the Grantee tender to the Company a stock power duly executed in blank relating thereto.      5. Rights as Stockholder. The Grantee shall have no rights as a stockholder with respect to any Restricted Shares until a stock certificate for the shares is issued in Grantee’s name. Once any such stock certificate is issued in Grantee’s name, the Grantee shall be entitled to all rights associated with ownership of the Restricted Shares, except that the Restricted Shares will remain subject to the restrictions set forth in Section 3 hereof and if any additional shares of Common Stock become issuable on the basis of such Restricted Shares (e.g., a stock dividend), any such additional shares shall be subject to the same restrictions as the shares of Restricted Shares to which they relate.      6. Vesting. Except as otherwise provided in Sections 6(a), 6(b), 6(c) and 6(d), the Restricted Shares granted hereunder shall become vested on the fourth anniversary of the Award Date if the Grantee continues to be employed by the Company (or a Subsidiary or Affiliate thereof) through such date.   (a)   Up to fifty percent (50%) of the Restricted Shares shall become vested prior to the fourth anniversary of the Award Date based on the extent to which the Company’s Revenue for a fiscal year (commencing with the fiscal year ending April 30, 2007) exceeds the Company’s Revenue for the immediately preceding fiscal year. If the Grantee continues to be employed by the Company (or a Subsidiary or Affiliate thereof) through the last day of a fiscal year (commencing with the fiscal year ending April 30, 2007) and the Revenue reported by the Company for such fiscal year exceeds the Company’s Revenue for the immediately preceding fiscal year, then the Restricted Shares shall thereupon become immediately vested pursuant to the following schedule:                   Fiscal Year Revenue as a     Percentage of Restricted Shares     Percentage of Previous Fiscal     Subject to Accelerated Vesting     Year Revenue               109.9% or less         0%     110%       10%     120%       20%     130%       30%     140%       40%     150% or more       50%         If the actual Revenue for a fiscal year is at least 110% and less than 150% of the Company’s Revenue for the previous fiscal year and is not set forth above, the percentage of Restricted Shares subject to accelerated vesting shall be determined by interpolating the percentages set forth above on a straight line basis. For purposes of the Plan, the Company’s “Revenue” shall mean the Company’s gross revenue as determined by the Committee and set forth in the audited consolidated financial statements of the Company, prepared in accordance with generally accepted accounting principles (“GAAP”). The Committee, in its sole discretion, may adjust the Revenue targets set forth herein to take into account any unusual -2- --------------------------------------------------------------------------------         or nonrecurring events affecting the Company or any Subsidiary or Affiliate or the financial statements of the Company or any Subsidiary or Affiliate, including without limitation any acquisitions or dispositions, and any changes in applicable laws, regulations or accounting principles.   (b)   Up to fifty percent (50%) of the Restricted Shares shall become vested prior to the fourth anniversary of the Award Date based on the extent to which Net Income target levels set forth below are achieved after the Company’s 2006 fiscal year. If the Grantee continues to be employed by the Company (or a Subsidiary or Affiliate thereof) through the last day of a fiscal year (commencing with the fiscal year ended April 30, 2007) and the Net Income reported by the Company for such fiscal year exceeds the target levels set forth below, then Restricted Shares shall thereupon become immediately vested pursuant to the following schedule:               Fiscal Year     Percentage of Restricted Shares   Net Income     Subject to Accelerated Vesting     Less than Budget     0%   Budget     10%   Budget plus $2 million     20%   Budget plus $4 million     30%   Budget plus $6 million     40%   Budget plus $8 million or more     50%         If the actual Net Income for a fiscal year is at least $3 million and is less than $11 million and is not set forth above, the percentage of Restricted Shares subject to accelerated vesting shall be determined by interpolating the percentages set forth above on a straight line basis. For purposes of this Agreement, “Net Income” shall mean the Company’s net income as determined by the Committee and set forth in the audited financial statements of the Company, prepared in accordance with GAAP. The Committee, in its sole discretion, may adjust the Net Income targets set forth herein to take into account any unusual or nonrecurring events affecting the Company or any Subsidiary or Affiliate or the financial statements of the Company or any Subsidiary or Affiliate, including without limitation any acquisitions or dispositions, and any changes in applicable laws, regulations or accounting principles.     (c)   All Restricted Shares shall become immediately vested upon a Change of Control, as defined in the Plan.      7. Other Terms and Conditions. The Committee shall have the discretion to determine such other terms and provisions hereof as stated in the Plan. -3- --------------------------------------------------------------------------------        8. Applicable Law. The validity, construction, interpretation and enforceability of this Award Agreement shall be determined and governed by the laws of the State of Illinois without regard to any conflicts or choice of law rules or principles that might otherwise refer construction or interpretation of this Award Agreement to the substantive law of another jurisdiction, and any litigation arising out of this Award Agreement shall be brought in the Circuit Court of the State of Illinois or the United States District Court of the Eastern Division of the Northern District of Illinois and the Grantee consents to the jurisdiction and venue of those courts.      9. Severability. The provisions of this Award Agreement are severable and if any one or more provisions may be determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions, and any partially unenforceable provision to the extent enforceable in any jurisdiction, shall nevertheless be binding and enforceable.      10. Waiver. The waiver by the Company of a breach of any provision of this Award Agreement by Grantee shall not operate or be construed as a waiver of any subsequent breach by Grantee.      11. Binding Effect. The provisions of this Award Agreement shall be binding upon the parties hereto, their successors and assigns, including, without limitation, the Company, its successors or assigns, the estate of the Grantee and the executors, administrators or trustees of such estate and any receiver, trustee in bankruptcy or representative of the creditors of the Grantee.      12. Withholding. Grantee agrees, as a condition of this grant, to make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the vesting of the Restricted Shares acquired under this grant. In the event that the Company determines that any federal, state, local or foreign tax or withholding payment is required relating to the vesting of shares arising from this grant, the Company shall have the right to require such payments from Grantee, or withhold such amounts from other payments due Grantee from the Company or any Subsidiary or Affiliate.      13. Section 83(b) Election. Under Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”), the difference between the purchase price paid by the Grantee for the Restricted Shares, if any, and the fair market value of the Restricted Shares on the date Restricted Shares vest they will be reportable as ordinary income at that time. The parties acknowledge and agree that Grantee did not elect to be taxed on the Award Date with respect to Restricted Shares (rather than on the date when such shares vest) by filing an election under Section 83(b) of the Code with the Internal Revenue Service within 30 days after the Award Date. As a result, Grantee may recognize ordinary income as the forfeiture restrictions lapse and the Restricted Shares vest.      14. No Retention Rights. Nothing herein contained shall confer on the Grantee any right with respect to continuation of employment by the Company or its Subsidiaries or Affiliates, or interfere with the right of the Company or its Subsidiaries or Affiliates to terminate at any time the employment of the Grantee. -4- --------------------------------------------------------------------------------        15. Construction. This Award Agreement is subject to and shall be construed in accordance with the Plan, the terms of which are explicitly made applicable hereto. Unless otherwise defined herein, capitalized terms in this Award Agreement shall have the same definitions as set forth in the Plan. Except as otherwise specifically set forth in the Award Agreement, the provisions of the Plan shall govern.      16. Special Terms Relating to Severance Plan or Agreement. The Company and the Grantee hereby acknowledge and agree that as a condition to the grant of the Restricted Shares set forth in this Award Agreement, and notwithstanding the terms of any severance, management retention, change of control or other plan or agreement pursuant to which the Grantee is a party, a participant or otherwise has any rights (a “Severance Plan”):   (a)   the vesting of the Restricted Shares shall not accelerate pursuant to the terms of any Severance Plan on account of any change of control that is deemed to have occurred prior to the Award Date, including the merger of Sleeping Bear Merger Corp., a Delaware corporation and direct wholly owned subsidiary of the Company, into Sterling Holding Company, a Delaware corporation, or any termination of the Grantee’s employment following such change of control; and     (b)   as of the Award Date, no event has occurred and no circumstances exist that would entitle the Grantee to terminate employment with the Company (or any Subsidiary or Affiliate) for “Good Reason,” within the meaning of any Severance Plan, following any change of control that is deemed to have occurred prior to the Award Date pursuant to the terms of such Severance Plan.      IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.           GRANTEE   Stratos International, Inc.               By:                   Its:               -5-

EXHIBIT 10.61 STRATUS NON-COMPETE/NON-SOLICITATION AGREEMENT This STRATUS NON-COMPETE AND NON-SOLICITATION AGREEMENT (the “Agreement”) is made and entered into as of this 2nd day of December, 2005, by and between STRATUS SERVICES GROUP, INC., a Delaware company (“Stratus”) and ALS, LLC, a Florida limited liability company (“ALS”), and the respective affiliates, officers, directors and/or principals of each of Stratus and ALS. RECITALS: WHEREAS, ALS and Stratus have executed an Asset Purchase Agreement whereby ALS has purchased certain assets related to the ongoing clerical and light industrial staffing business of Stratus at its offices located in Chino, California; Colton, California; Los Nietos, California; Ontario, California; Santa Fe Springs, California; and Phoenix, Arizona branches and the Dallas Morning News account (the “Purchased Assets”); and WHEREAS, Stratus possesses substantial information and knowledge regarding the Purchased Assets; and WHEREAS, the parties desire to enter into an agreement whereby Stratus agrees not to compete with ALS relating to the Purchased Assets. NOW, THEREFORE, for consideration, the receipt and sufficiency of which is hereby acknowledged, and other good and valuable consideration, the parties hereto agree as follows: Confidentiality and Trade Secrets Stratus acknowledges that it has had access to confidential information concerning the Purchased Assets and clients relating thereto, including their business affairs, special needs, preferred methods of doing business, methods of operation, key contact personnel and other data, all of which provides Stratus with a competitive edge and none of which is readily available except to Stratus and employees of ALS. Stratus further acknowledges that it has had access to the names, addresses, telephone numbers, qualifications, education, accomplishments, experience, availability, resumes and other data regarding persons who have applied or been recruited for temporary or permanent employment relating to the Purchased Assets, as well as job order specifications and the particular characteristics and requirements of persons generally hired by a client, specific job listings, mailing lists, computer runoffs, financial and other information, all of which provides Stratus with a competitive edge and none of which is readily available except to Stratus and employees of ALS. Stratus agrees that all of the foregoing information regarding the Purchased Assets and all clients and employees related thereto constitutes valuable and proprietary trade secrets and confidential information of ALS (hereafter “Confidential Information”). 1 -------------------------------------------------------------------------------- Non-Competition Agreement Stratus agrees that it will not, during the two (2) year period commencing with the Effective Date of the Asset Purchase Agreement (“Restrictive Period”) service, solicit, compete in the geographic area of or deal with any customers or future customers of its offices located in Chino, California; Colton, California; Los Nietos, California; Ontario, California; Santa Fe Springs, California; and Phoenix, Arizona branches and the Dallas Morning News account (collectively the “Purchased Assets”). Stratus acknowledges that doing so in any manner would interfere with, diminish and otherwise jeopardize and damage the business and goodwill of the Purchased Assets. Notwithstanding the foregoing, Stratus retains the right to continue to service all of its other existing nationwide customers and accounts. Non-Disclosure Agreement Stratus agrees that except as directed by ALS, it will not at any time use for any reason or disclose to any person any of the Confidential Information of the Purchased Assets or permit any person to examine and/or make copies of any documents which may contain or are derived from Confidential Information, whether prepared by Stratus or otherwise, without the prior written permission of ALS. Agreement Not to Compete for Accounts or Personnel Except as set forth above, Stratus agrees that during the Restrictive Period it will not, directly or indirectly, contact, solicit, divert, take away or attempt to contact, solicit, divert or take away any staff employee, temporary personnel, customer, account, business or goodwill from ALS in the Purchased Assets, either for Stratus’ own benefit or some other person or entity, and will not aid or assist any other person or entity to engage in any such activities. No Adequate Remedy at Law Stratus acknowledges and agrees that any breach or threatened breach by of this Agreement by Stratus would cause immediate and irreparable injury to ALS and that money damages alone would not provide an adequate remedy in the event Stratus breaches any of the above covenants. Accordingly, Stratus agrees that ALS shall have the right to seek and obtain an injunction to enjoin any such breach by Stratus without the requirement of the posting of a bond and, if ALS shall institute any action or proceeding to enforce those covenants, Stratus hereby waives and agrees not to assert the claim or defense that ALS has an adequate remedy at law. The foregoing shall not prejudice ALS’ right to require Stratus to account for and pay over to ALS the amount of any damages incurred by ALS as a result of any such breach. Scope and Duration It is expressly understood and agreed that Stratus and ALS consider the restrictions contained in this Agreement to be reasonable and necessary for the purposes of preserving and protecting the goodwill, legitimate business interests, and proprietary trade secrets and confidential information of ALS. Nevertheless, if any of the aforesaid restrictions are found by a court having 2 -------------------------------------------------------------------------------- jurisdiction to be unreasonable, or to be overbroad as to geographic area, or time, or with respect to a particular scope of commerce, or to be otherwise unenforceable, the parties intend for the restrictions set forth above to be modified by such court so as to be reasonable and enforceable and, as so modified by the court, to be fully enforced. Successors and Assigns This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and assigns, except that neither party may assign its obligations hereunder without the prior written consent of the other parties hereto; provided, however, that the Buyer may assign Buyer's rights hereunder to a subsidiary or affiliate of Buyer, provided that the Buyer shall remain liable for its obligations hereunder. Any assignment in contravention of this provision shall be null and void. No assignment shall release the Buyer from any obligation or liability under this Agreement. Entire Agreement; Amendment This Agreement, all schedules and exhibits hereto, and all agreements and instruments to be delivered by the parties pursuant hereto represent the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersede all prior oral and written, and all contemporaneous oral negotiations, commitments and understandings between such parties. The Buyer and the Seller, by the consent of their respective Boards of Directors, or officers authorized by such Boards, may amend or modify this Agreement, in such manner as may be agreed upon, by a written instrument executed by the Buyer and the Seller.   Governing Law This Agreement shall be governed by and construed in accordance with the laws of the State of California, without regard to conflicts of law principles.   Section Headings The section headings are for the convenience of the parties and in no way alter, modify, amend, limit, or restrict the contractual obligations of the parties. Severability The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. 3 -------------------------------------------------------------------------------- Counterparts This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which, when taken together, shall be one and the same document. STRATUS SERVICES GROUP, INC. By: /s/ Michael A. Maltzman Michael A. Maltzman Executive Vice President & CFO ALS, LLC By: /s/ Michael J. O’Donnell Michael J. O’Donnell Managing Member   4 --------------------------------------------------------------------------------

CONSULTING AGREEMENT   This CONSULTING AGREEMENT (“Agreement”) is made and entered into this 15th day of February, 2006, by and between ALCHEMY ENTERPRISES, LTD., a corporation organized in the State of Nevada (“AHMY” or “Company”), and UNIVERSAL POWER VEHICLES CORPORATION, a corporation organized in the State of Nevada, (“UPV” or “Consultant”).   Consultant shall serve as an independent contractor of the Company and shall be responsible for rendering services and advice to the Company on the following terms and conditions:   1. SERVICES.   1.01 Consultant shall use their best efforts to render services and advice to the Company as reasonably needed, and, to do and perform all necessary or advisable services or acts to fulfill the duties and obligations required by the terms of this Agreement, subject at all times to the policies set by the Company’s Board of Directors and to the consent of the Board when required by the terms of this Agreement.   1.02 Best Efforts Covenant. Consultant will, to the best of their ability, devote their full professional and business time and best efforts and full cooperation to the performance of their duties for the Company and its subsidiaries and affiliates as follows:     (a) Delivery from Howard Foote (“Foote”), Elliott Winfield (“Winfield”) and UPV to the Company of an electric power cell system that is determined to be commercially and technologically viable for mass production as proven through a bench demonstration of the electric power cell with an output of 50-78kw (“Triggering Event”).     (b) Continued development and expansion of the electric power cell system technology for use in all areas of energy storage and usage.   In the event the Triggering Event is not attained within a period of three (3) years from the date of this Agreement due to either (a) a lack of best efforts, (b) abandonment of the project by Messrs. Foote and/or Winfield or (c) termination and/or breach of this Consulting Agreement, UPV, Foote and Winfield, jointly and severally, are responsible for reimbursing AHMY any funds expended by AHMY together with interest on the principal amount accrued at the rate of fifteen percent (15%) per annum (computed on the basis of a 365-day year and the actual days elapsed) beginning three (3) years from the date of this Agreement until paid.   2. TERM. The term of this Agreement shall be for a period of three (3) years (“Term”), beginning on the date this Agreement is executed by the parties (“Effective Date”) unless otherwise provided herein. UPV agrees to retain Foote and Winfield for the term of this Agreement and they will personally perform the Services set forth in Section 1 of this Agreement. This Agreement may be terminated earlier as herein provided. The parties agree that termination of the performance of duties by Consultant under this Agreement does not, under any circumstance, terminate any of the obligations of either party under this Agreement except the obligation of the Company to use the services of Consultant and the obligation of Consultant to provide such services. All other obligations under this Agreement shall be terminated and/or satisfied only as otherwise indicated herein.   3. COMPENSATION.   3.1 COMPENSATION. As compensation for the services to be performed hereunder, the Company shall pay to Consultant a fee in the amount of Two Hundred Thousand Dollars and No Cents ($200,000), less taxes and other normal withholdings (“Compensation”).   3.2 PREPAID COMPENSATION. One-Half of the Compensation ($100,000) shall be paid in advance to Consultant on the Effective Date. The remainder of the Compensation ($100,000) shall be paid in equal monthly   1   --------------------------------------------------------------------------------   installments beginning the seventh (7th) month after the Effective Date.   4. INDEPENDENT CONTRACTOR. The parties agree that:   4.1 No relationship of employer and employee is intended or created by this Agreement. Consultant shall act as an independent contractor and shall have no claim under this Agreement or otherwise against the Company for vacation pay, sick leave, retirement benefits, Social Security, Worker's Compensation, disability or unemployment insurance benefits, or employee benefits of any kind.   4.2 Consultant, as an independent contractor, is responsible for the payment of all federal, state, local and employment taxes that may arise as a result of monies or other benefits paid. In the event that it is finally determined by the proper tax authority that Consultant is not an independent contractor but an employee of the Company, then the Company shall have the right to deduct or withhold from the compensation due to Consultant hereunder any and all sums required for federal income, Social Security taxes and all state or local taxes now applicable or that may be enacted and become applicable in the future.   5. TERMINATION. This Agreement may be terminated as follows:   5.1 On any specified agreed date, if the Company and Consultant shall mutually agree in writing to terminate this Agreement.   5.2 Upon expiration of the term of this Agreement, provided either party gives prior written notice to the other party of that party's decision not to renew this Agreement.   5.3 The Company in its sole discretion may terminate this Agreement immediately upon any of the following:   5.3.1 Foote or Winfield has been disabled for a period of six (6) months. Disability shall be defined as any infirmity that prevents Consultant from being able to perform obligations required under this Agreement.    5.3.2 On the dissolution of Consultant.   5.3.3 The adoption by the Company of a plan to terminate its business and liquidate its assets, or, if the Company is ordered to be liquidated pursuant to a judicial proceeding.   5.3.4 In the event of any merger or consolidation or transfer of assets. The Company's rights, benefits, and obligations hereunder may be assigned to the surviving or resulting corporation or the transferee of the Company's assets.    5.3.5 The insolvency of the Company.   5.3.6 If Consultant fails, refuses or neglects to perform faithfully or diligently the duties of the Agreement, or for any reason that is deemed to be for cause under Arizona law.    5.3.7 If Consultant violates any of the provisions of this Agreement.    5.3.8 If Consultant commits an act of dishonesty, fraud, misrepresentation, or moral turpitude.   6. OBLIGATIONS AFTER TERMINATION. In the event of termination of this Agreement, the Company shall be obligated only to pay for the compensation earned by Consultant prior to termination. Consultant shall remain obligated to comply with the terms of this Agreement and any other arrangement or contract with the Company for the less of a period of one (1) year or the expiration of any enforceable arrangement or contract. During the term of this Agreement and for a period of one (1) year immediately following the termination of this Agreement for any reason, Consultant agrees to the following terms and conditions:   2   --------------------------------------------------------------------------------     6.1 Consultant shall not directly or indirectly make known to any person, firm, or corporation the names or addresses of any of the customers of the Company or any other information pertaining to them or call on, solicit, take away, or attempt to call on, solicit, or take away any of the customers of the Company on whom Consultant called or with whom Consultant became acquainted during the term of this Agreement, either for himself or for any other person, firm, or corporation.   6.2 Not to engage or participate in any trade or business competing with or similar in nature to the business of the Company, in the States of California and Arizona, for following termination.   7. CONFIDENTIALITY, NON-DISCLOSURE AND NON-COMPETE   7.1 Any and all information, written or oral, relating directly or indirectly to the business, operations, services, facilities, methodologies, technologies, intellectual property, research and development, sources of information, advertising and promotional plans, customers, clients and suppliers of the Company supplied to Consultant, any of the principal executives, management, shareholders or subsidiaries of Consultant, consultants and authorized agents of Consultant by or on behalf of the Company, or otherwise acquired during the course of dealings between the parties or otherwise, shall be deemed "Confidential Information."   7.2 The Company and Consultant acknowledge and agree that Consultant’s services are of a special and unusual character which have a unique value to the Company, the loss of which cannot be adequately compensated by damages in an action at law and if used in competition with the Company, could cause serious harm to the Company. Accordingly, Consultant agrees that during the term of this Agreement and for a period of one (1) year after the termination of this Agreement, irrespective of the reason for such termination, Consultant, Foote and Winfield will not (1) enter into any agreement with or directly or indirectly solicit or attempt to solicit any employee or other representatives of the Company for the purpose of causing them to leave the Company to take employment with any other business entity, or (2) compete, directly or indirectly, with the Company in any way and that Consultant, Foote and Winfield will not act as an officer, director, employee, consultant, shareholder, lender or agent of any entity engaged in any business of the same nature as, or in competition with, the business in which the Company is now engaged or is engaged at the time of Consultant’s termination of this Consulting Agreement, except for the ownership of less than five percent (5%) of the outstanding capital stock of a publicly traded company.   7.3 Contemporaneous with the execution of this Agreement, Consultant will execute and will cause to have Foote and Winfield execute the originals of the Confidentiality and Non-Compete Agreements that are attached as Exhibits A and B that are made a part hereof.   8. BREACH OF RESTRICTIVE COVENANT. In addition to any rights of the Company pursuant to the attached non-compete agreement, if Consultant breaches the foregoing covenant not to compete, either during the term of this Agreement or upon termination, Consultant shall pay the Company, the sum of all revenues lost by the Company as a result of Consultant's diversion of customers in violation of this Agreement. Nothing in this Agreement shall be construed as prohibiting the Company from pursuing any remedies available to it for Consultant's unauthorized disclosure of such information, including the recovery of damages from Consultant.   9. CORPORATION'S AUTHORITY. Consultant agrees to observe and comply with the rules and regulations of the Corporation, as adopted by the Board of Directors, respecting performance of duties and to carry out and perform orders, directions and policies stated by the Company from time to time either orally or in writing. Consultant understands that the Company shall have final authority over acceptance or refusal of any customer, over the prices to be charged any customer for goods or services sold and over all other matters relating to the business of the Company.   10. GOVERNMENTAL AUTHORITIES. The parties agree that, in connection with the services performed hereunder, they shall each comply with all laws, rules and regulations of all governmental authorities having jurisdiction over the matters relating to this Agreement.     3   --------------------------------------------------------------------------------     11. HOLD HARMLESS. Each party shall conduct themselves at all times in accordance with the highest standards of professional conduct and responsibility and each hereby indemnifies and saves harmless the other from each and every and all losses, claims, demands, obligations, liabilities, indebtedness and causes of action of every kind, type, nature or description whatsoever, whether known or unknown, as if expressly set forth and described herein, which either party may incur, suffer, become liable for, or which may be asserted or claimed against the other party as a result of the acts, errors or omissions of the other party.   12. MISCELLANEOUS PROVISIONS. The parties agree that the following general provisions shall apply to this Agreement.   13. AGREEMENT TO PERFORM NECESSARY ACTS. Each party to this Agreement agrees to perform any further acts reasonably required under the terms of this Agreement and to execute and deliver any documents which may be reasonably necessary to carry out the provisions of this Agreement.   14. AUTHORITY AND EXECUTION. The execution and delivery of this Agreement by each party and performance of the transactions contemplated hereby by such party have been duly authorized on the part of such party, and the person(s) executing this Agreement on behalf of such party have full power and authority to execute the same.   15. ASSIGNMENT. No right or interest in this Agreement shall be assigned by either party without the written permission of the other party and no delegation of any obligation owed or of the performance of any obligation shall be made without the written permission of the parties. Any attempted assignment or delegation shall be wholly void and totally ineffective for all purposes unless made in conformity with this Agreement.   16. SUCCESSORS AND ASSIGNS. Except as provided in the preceding paragraph, this Agreement shall inure to the benefit of and be binding upon the parties hereof, and each of their successors and assigns.   17. WILLS. In the event that any party to this Agreement is an individual, that individual agrees to include in his will or other testamentary instrument a direction and authorization to his/her successor representative to comply with the provisions of this Agreement and to buy or to sell assets in accordance with this Agreement. Notwithstanding the foregoing, however, the failure of any individual to do so shall not affect the validity or enforceability of this Agreement.   18. ENTIRE AGREEMENT. This writing is intended by the parties as a final expression of their Agreement, is intended also as a complete and exclusive statement of the terms of this, the sole and only, Agreement between them, correctly sets forth their obligations to each other as of this date and contains all of the covenants and agreements between the parties with respect to those services. No course of prior dealings between the parties and no usage of the trade shall be relevant to supplement or explain any term used in this Agreement. Acceptance or acquiescence in a course of performance rendered under this Agreement shall not be relevant to determine the meaning of this Agreement even though the accepting or acquiescing party has knowledge of the nature of the performance and opportunity for objection. Each party to this Agreement acknowledges that no representations, inducements, promises, or agreements, oral or otherwise, have been made by any party, or anyone acting on behalf of any party, that are not embodied herein, and that no other agreement, statement, or promise not contained in this Agreement shall be valid or binding.   19. MODIFICATION. This Agreement or any of its terms cannot be modified, changed, altered, appealed, discharged or terminated except by an instrument in writing (referring specifically to this Agreement) executed by the party against whom enforcement of any such modification is sought.   20. AMENDMENTS. The provisions of this Agreement may be waived, altered, amended, repealed, or otherwise changed, in whole or in part, only on the written consent of all the parties to this Agreement.   21. EFFECT OF WAIVER. Failure to insist on strict compliance with any of the terms, covenants, or conditions of this Agreement shall not be deemed a waiver of that term, covenant, or condition, nor shall any waiver or relinquishment of any right or power at any one time or times be deemed a waiver or relinquishment of the right or power for all or any other times. Except as otherwise provided herein, no claim of waiver, consent or acquiescence with respect to any   4   --------------------------------------------------------------------------------   provision of this Agreement shall be made against either party except on the basis of a written instrument executed by or on behalf of such party. Any party shall have the unilateral right by written instrument to waive any condition or extend the time for performance of any condition or act to be performed for its benefit or approval, and a waiver of any condition, right or remedy shall not be deemed a waiver of any other condition, right or remedy. The waiver by any party of the performance of any covenant, condition or promise shall not invalidate this Agreement nor shall it be considered a waiver by it of any other covenant, condition or promise. The exercise of any remedy provided in this Agreement shall not be a waiver of any consistent remedy provided by law, and the provision of this Agreement for any remedy shall not exclude other consistent remedies unless they are expressly excluded. The waiver of any breach of this Agreement by either party shall not constitute a continuing waiver or a waiver of any subsequent breach either of the same provision or any other provision of this Agreement.   22. CONSTRUCTION. This Agreement shall be construed as a whole and in accordance with its plain meaning. The organization of this Agreement is for convenience only and shall not be used in construing the meaning of the provisions of this Agreement.   23. SEVERABILITY AND INVALIDITY. It is intended that each provision of this Agreement shall be viewed as separate and divisible. If any provision in this Agreement is held by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions shall nevertheless continue in full force without being impaired or invalidated in any way.   24. HEADINGS AND TITLES. The title headings of the respective sections and paragraphs of this Agreement are inserted for convenience and ease of reference only and shall not be deemed to be part of this Agreement or do not define, limit, augment or describe the scope, content or intent of this Agreement or any part or parts of this Agreement.   25. GENDER. When the context in which the words are used in this Agreement indicates that such is the intent, the singular and plural number shall be deemed to include the other, and, the masculine, feminine and neuter genders shall be deemed to include the other.   26. GOVERNING LAW. This Agreement has been executed in the place indicated below and shall be construed in accordance with, and governed by, the laws of the State of Arizona.   27. ARBITRATION OF DISPUTES. Any controversy or claim between the parties arising out of or relating to this Agreement, or the breach thereof, or any claim hereunder, shall be settled by arbitration in the County of Maricopa in accordance with the Rules of the American Arbitration Association, and judgment upon the award rendered in any state or federal court having jurisdiction thereof. The fee of the arbitrator or arbitrators shall be borne by the parties in accordance with the Rules of the American Arbitration Association and, insofar as may be feasible, the parties shall designate an experienced arbitrator (or arbitrators) who is knowledgeable of the type contemplated by this Agreement. The parties agree that as between them, this arbitration provision shall not preclude either party from seeking provisional judicial remedies to preserve the status quo.   28. REMEDY FOR BREACH. If either party breaches any provision of this Agreement, the other party shall be entitled, if it so elects, to institute and prosecute proceedings to obtain damages for breach of this Agreement or for any other legal or equitable relief to which it may be entitled at law. It is further agreed that any breach or evasion of any of the terms of this contract by either party hereto will result in immediate and irreparable injury to the other party and will authorize recourse to injunction and/or specific performance, if appropriate, as well as to all other legal or equitable remedies to which such injured party may be entitled hereunder.   29. ATTORNEYS' FEES. If either party files any action or brings any proceeding against the other arising out of this Agreement, then the prevailing party shall be entitled to recover as an element of its costs of suit, and not as damages, reasonable attorneys' fees to be fixed by court. The "prevailing party" shall be the party who is entitled to recover its costs of suit, whether or not suit proceeds to final judgment. A party not entitled to recover its costs shall not recover attorneys' fees. No sum for attorneys' fees shall be counted in calculating the amount of a judgment for purposes of determining whether a party is entitled to its costs or attorneys' fees.   5   --------------------------------------------------------------------------------     30. COUNTERPART EXECUTION. This Agreement may be executed in one or more counterparts, each of which shall be deemed fully effective as an original and all of which together shall constitute one and the same instrument.   31. FACSIMILE TRANSMISSION. In the event that any person utilizes a "facsimile" transmission, including but not limited to signed documents, the parties agree to accept the same as if they bore original signatures. The parties hereby agree to provide the other parties, within seventy-two (72) hours of transmission, such facsimile transmitted documents bearing the original signature, if any.   32. NOTICE. All notices, requests, demands, options and other communications under this Agreement shall be in writing and shall be deemed to have been duly given on the date of service, if given personally, or by telephone, telegram, or electronic transmission to the President of the party to whom notice is being given, or, if served personally on the party to whom notice is to be given, or within seventy-two (72) hours after mailing, if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, and if properly addressed to the party, at its address set forth on the signature page of this Agreement or any other address that any party may designate by written notice to the others.   Notices to the Company shall be given as follows:   Alchemy Enterprises, Ltd. 3812 N. Gallatin Mesa, Arizona 85215 Attn: Harold Sciotto, Chief Executive Officer   or such other address as may be furnished by the Company to Consultant from time to time in writing.   Notices to Consultant shall be given as follows:   Universal Power Vehicles Corp. 53975 Avenida Cortez La Quinta, CA 92253 Attn: Howard Foote   or other such addresses as may be furnished by Consultant to the Company from time to time in writing.   33. TIME IS OF ESSENCE. Time is expressly declared to be of the essence of this Contract.   34. COMPUTATION OF TIME. All periods of time referred to herein shall include all Saturdays and Sundays and State or National holidays, unless the period of time specifies business days. A business day is any day other than Sunday and State or National holidays. Notwithstanding the foregoing, however, if the date for the last date to perform any act or giving any notice with respect to this Agreement shall fall on a Saturday, Sunday or State or National holiday, such act or notice may be timely performed or given on the next succeeding day which is not a Saturday, Sunday or State or National holiday. The time to perform any act or give any notice shall include twenty-four hours within each day unless expressly provided otherwise.   35. COSTS OF PERFORMANCE. Any party breaching this agreement shall bear and save the other party harmless from all costs and expenses required for securing any court orders, court decrees, court approvals, inheritance tax clearances, and estate tax clearances required to enable the non-breaching party to secure the required performance of the breaching party.   36. REPRESENTATIONS AND WARRANTIES. Each party to this Agreement hereby represents and warrants to the other parties to this Agreement as follows:     6   --------------------------------------------------------------------------------     36.1 Each party believes the matter set forth in the Recitals to be true and correct;   36.2 Each party has received independent legal advice from its attorneys with respect to the advisability of entering into this Agreement;   36.3 Each party has carefully read this Agreement and understands this Agreement;   36.4 No party has previously assigned, encumbered, or in any manner transferred all or any portion of any claim or right that may be covered by this Agreement;   36.5 No representation, warranty, or promise not expressly set forth in this Agreement has been made by any party to this Agreement or by its agents, representatives, or attorneys with respect to the subject matter of this Agreement and no party has entered into this Agreement on the basis of any such representation, warranty, or promise; and   36.6 This Agreement is not intended to be, and shall not be deemed or construed to be, an admission of liability by any party for any purpose.                     7     --------------------------------------------------------------------------------                           IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, as of February 15, 2006.     ALCHEMY ENTERPRISES, LTD. (“COMPANY”)   Sign: /s/ Harold Sciotto Print: Harold Sciotto Position: President Dated: February 15, 2006         UNIVERSAL POWER VEHICLES CORP (“CONSULTANT”)   Sign: /s/ Howard Foote Print: Howard Foote Position: President Dated: February 15, 2006                           8    

-------------------------------------------------------------------------------- AMENDING AGREEMENT (REVOLVING LINE OF CREDIT) THIS AGREEMENT is made effective September 29, 2006. AMONG: > > > > NORD RESOURCES CORPORATION, a Delaware corporation, with an office at 1 > > > > West Wetmore Road, Suite 203, Tucson, Arizona, 85705 > > > > > > > > (“Nord”) AND: > > > > RONALD HIRSCH, an adult individual residing in the county of Orange, > > > > State of California > > > > > > > > (“Hirsch”) AND: > > > > STEPHEN SEYMOUR, an adult individual residing in the county of > > > > Baltimore, State of Maryland > > > > > > > > (“Seymour”) WHEREAS: (A)                On June 21, 2005, Nord entered into a $600,000 revolving line of credit agreement (the “Credit Agreement”) and Secured Promissory Note (the “Note” and together with the Credit Agreement, the “Revolver”) with Hirsch and Seymour, that was amended on November 8, 2005, May 5, 2006, August 14, 2006 and August 17, 2006; (B)                Nord, Hirsch and Seymour wish to amend the terms of the Revolver as described in this Agreement; and (C)                Capitalized terms not otherwise herein defined shall have the meaning ascribed to them in the Revolver. THIS AGREEMENT WITNESSES that in consideration of the premises and of the sum of $10 and other good and valuable consideration now paid by each of the parties to the others (the receipt and sufficiency of which are hereby acknowledged by the parties), the parties covenant and agree that; -------------------------------------------------------------------------------- - 2 - Revolving Line of Credit 1.           The Maturity Date is the earlier of: (a)           December 22, 2006, or (b)           the closing date of (i)           a registered equity offering and/or a debt project financing (collectively or separately, a “Funding”) in which the Company raises not less than the aggregate amount of $20,000,000, or (ii)          a significant corporate transaction (a “Significant Transaction”) in which (A)           any person, together with all affiliates and associates of such person, becomes the beneficial owner, directly or indirectly, of securities of the Company representing 51% or more of the common shares the Company, or (B)           there is a sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company or of assets of the Company valued at $12,000,000 or greater provided that if the maturity date of Nord’s $4,900,000 loan facility with Nedbank is extended, Nord, Hirsch, and Seymour will negotiate a further amendment to this section in good faith. All outstanding amounts owing under the Revolver will be paid in cash on the Maturity Date, as so extended. Amendment 2.           Except as amended hereby, the Revolver continues in full force and effect as of the date hereof. Entire Agreement 3.           This Agreement constitutes the entire agreement between the parties, and supersedes every previous agreement, communication, expectation, negotiation, representation or understanding, whether oral or written, express or implied, statutory or otherwise between the parties, with respect to the subject matter of this Agreement. Nothing in this Section 2 will limit or restrict the effectiveness and validity of any document with respect to the subject matter of this Agreement that is executed and delivered contemporaneously with or pursuant to this Agreement. -------------------------------------------------------------------------------- - 3 - Counterparts 4.           This Agreement may be executed in any number of counterparts, in original form or by facsimile, each of which will together, for all purposes, constitute one and the same instrument, binding on the parties, and each of which will together be deemed to be an original, notwithstanding that each party is not a signatory to the same counterpart. IN WITNESS WHEREOF this Agreement has been executed by the parties effective as of the day and year first above written. NORD RESOURCES CORPORATION Per: /s/ John T. Perry     John Perry     Senior Vice President, Secretary, Treasurer and     Chief Financial Officer     /s/ Ronald Hirsch   /s/ Stephen D. Seymour RONALD HIRSCH   STEPHEN SEYMOUR --------------------------------------------------------------------------------

------------------------ EXECUTION COPY 12/07/05 ------------------------ BANK OF AMERICA, NATIONAL ASSOCIATION PURCHASER AND WELLS FARGO BANK, N.A. COMPANY AMENDED AND RESTATED MASTER SELLER'S WARRANTIES AND SERVICING AGREEMENT DATED AS OF DECEMBER 1, 2005 FIXED RATE AND ADJUSTABLE RATE MORTGAGE LOANS TABLE OF CONTENTS ARTICLE I DEFINITIONS 1 ARTICLE II CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF CUSTODIAL MORTGAGE FILES; BOOKS AND RECORDS; CUSTODY AGREEMENT; DELIVERY OF DOCUMENTS 14 Section 2.01. Conveyance of Mortgage Loans; Possession of Custodial Mortgage Files; Maintenance of Retained Mortgage File and Servicing Files.................................................14 Section 2.02. Books and Records; Transfers of Mortgage Loans.............................................15 Section 2.03. Custody Agreement; Delivery of Documents...................................................16 ARTICLE III REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH 18 Section 3.01. Company Representations and Warranties.....................................................18 Section 3.02. Representations and Warranties Regarding Individual Mortgage Loans.........................21 Section 3.03. Repurchase.................................................................................38 ARTICLE IV ADMINISTRATION AND SERVICING OF MORTGAGE LOANS 40 Section 4.01. Company to Act as Servicer.................................................................40 Section 4.02. Liquidation of Mortgage Loans..............................................................42 Section 4.03. Collection of Mortgage Loan Payments.......................................................43 Section 4.04. Establishment of and Deposits to Custodial Account.........................................43 Section 4.05. Permitted Withdrawals From Custodial Account...............................................45 Section 4.06. Establishment of and Deposits to Escrow Account............................................46 Section 4.07. Permitted Withdrawals From Escrow Account..................................................47 Section 4.08. Payment of Taxes, Insurance and Other Charges..............................................48 Section 4.09. Protection of Accounts.....................................................................48 Section 4.10. Maintenance of Hazard Insurance............................................................48 Section 4.11. Maintenance of Mortgage Impairment Insurance...............................................50 Section 4.12. Maintenance of Fidelity Bond and Errors and Omissions Insurance............................50 Section 4.13. Inspections................................................................................51 Section 4.14. Restoration of Mortgaged Property..........................................................51 Section 4.15. Maintenance of PMI Policy and LPMI Policy; Claims..........................................52 Section 4.16. Title, Management and Disposition of REO Property..........................................52 Section 4.17. Real Estate Owned Reports..................................................................54 Section 4.18. Liquidation Reports........................................................................54 Section 4.19. Reports of Foreclosures and Abandonments of Mortgaged Property.............................54 Section 4.20. Notification of Adjustments................................................................54 Section 4.21. Credit Reporting; Gramm-Leach-Bliley Act...................................................55 Section 4.22. Confidentiality/Protection of Customer Information.........................................55 Section 4.26 Establishment of and Deposits to Subsidy Account...........................................57 ARTICLE V PAYMENTS TO PURCHASER 59 Section 5.01. Remittances................................................................................59 Section 5.02. Statements to Purchaser....................................................................59 Section 5.03. Monthly Advances by Company................................................................60 i ARTICLE VI GENERAL SERVICING PROCEDURES 60 Section 6.01. Transfers of Mortgaged Property............................................................60 Section 6.02. Satisfaction of Mortgages and Release of Retained Mortgage Files...........................61 Section 6.03. Servicing Compensation.....................................................................62 Section 6.04. Annual Statement as to Compliance..........................................................62 Section 6.05. Annual Independent Public Accountants' Servicing Report....................................62 Section 6.06. Right to Examine Company Records...........................................................63 Section 6.07. Compliance with REMIC Provisions...........................................................65 ARTICLE VII COMPANY TO COOPERATE 65 Section 7.01. Provision of Information...................................................................65 Section 7.02. Financial Statements; Servicing Facility...................................................66 ARTICLE VIII THE COMPANY 66 Section 8.01. Indemnification; Third Party Claims........................................................66 Section 8.02. Merger or Consolidation of the Company.....................................................67 Section 8.03. Limitation on Liability of Company and Others..............................................67 Section 8.04. Limitation on Resignation and Assignment by Company........................................68 ARTICLE IX REMOVAL OF MORTGAGE LOANS FROM AGREEMENT 68 Section 9.01. Removal of Mortgage Loans from Inclusion Under this Agreement..............................68 ARTICLE X DEFAULT 79 Section 10.01. Events of Default..........................................................................79 Section 10.02. Waiver of Defaults.........................................................................80 ARTICLE XI TERMINATION 80 Section 11.01. Termination................................................................................80 Section 11.02. Termination Without Cause..................................................................81 ARTICLE XII MISCELLANEOUS PROVISIONS 81 Section 12.01. Successor to Company.......................................................................81 Section 12.02. Amendment..................................................................................82 Section 12.03. Governing Law..............................................................................82 Section 12.04. Arbitration................................................................................83 Section 12.05. Duration of Agreement......................................................................83 Section 12.06. Notices....................................................................................83 Section 12.07. Severability of Provisions.................................................................84 Section 12.08. Relationship of Parties....................................................................84 Section 12.09. Execution; Successors and Assigns..........................................................84 Section 12.10. Recordation of Assignments of Mortgage.....................................................84 Section 12.11. Assignment by Purchaser....................................................................85 Section 12.12. Solicitation of Mortgagor..................................................................85 Section 12.13. Further Agreements.........................................................................85 Section 12.14. Confidential Information...................................................................85 Section 12.15. Counterparts...............................................................................85 Section 12.16. Exhibits...................................................................................85 ii Section 12.17. General Interpretive Principles............................................................86 Section 12.18. Reproduction of Documents..................................................................86 Section 12.19. Buydown Loan Aggregate Limitation..........................................................86 EXHIBITS Exhibit A Form of Assignment and Conveyance Agreement Exhibit B Form of Assignment, Assumption and Recognition Agreement Exhibit C Custody Agreement Exhibit D Contents of each Retained Mortgage File, Custodial Mortgage File and Servicing File Exhibit E Data File Exhibit F Servicing System Guidelines and Requirements Exhibit G Monthly Remittance Advice Exhibit H Servicing Criteria Exhibit I Sarbanes Certification Exhibit J Form of Sarbanes-Oxley Back-up Certification iii This is an Amended and Restated Master Seller's Warranties and Servicing Agreement for fixed rate and adjustable rate residential first lien mortgage loans, dated and effective as of December 1, 2005, and is executed between Bank of America, National Association, as purchaser (the "Purchaser"), and Wells Fargo Bank, N.A., as seller and servicer (the "Company"). W I T N E S S E T H WHEREAS, the Purchaser has agreed to purchase from the Company and the Company has agreed to sell to the Purchaser from time to time (each a "Transaction") on a servicing retained basis certain first lien fixed rate and adjustable rate residential mortgage loans (the "Mortgage Loans") which shall be delivered as whole loans (each a "Loan Package") on various dates (each a "Closing Date") as provided for in certain Assignment and Conveyance Agreements by and between the Purchaser and the Company as executed in conjunction with each Transaction; and WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed of trust or other security instrument creating a first lien on a residential dwelling located in the jurisdiction indicated on the related Mortgage Loan Schedule; and WHEREAS, the Purchaser and the Company wish to prescribe the manner of purchase of the Mortgage Loans and the conveyance, servicing and control of the Mortgage Loans. NOW, THEREFORE, in consideration of the mutual agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Purchaser and the Company agree as follows: ARTICLE I DEFINITIONS Whenever used herein, the following words and phrases, unless the content otherwise requires, shall have the following meanings: Accepted Servicing Practices: With respect to any Mortgage Loan, procedures (including collection procedures) that comply with applicable federal, state and local law, and that the Company customarily employs and exercises in servicing and administering mortgage loans for its own account, the terms of the related Mortgage and Mortgage Note and accepted mortgage servicing practices of prudent mortgage lending institutions which service mortgage loans of the same type as the Mortgage Loans in the jurisdiction where the related Mortgaged Property is located. Adjustable Rate Mortgage Loan: A Mortgage Loan that contains a provision pursuant to which the Mortgage Interest Rate is adjusted periodically. Adjustment Date: As to each Adjustable Rate Mortgage Loan, the date on which the Mortgage Interest Rate is adjusted in accordance with the terms of the related Mortgage Note and Mortgage. 1 Agency/Agencies: Fannie Mae, Freddie Mac or GNMA, or any of them as applicable. Agency Transfer: Any sale or transfer of some or all of the Mortgage Loans by the Purchaser to an Agency which sale or transfer is not a Securitization Transaction or Whole Loan Transfer. Agreement: This Amended and Restated Master Seller's Warranties and Servicing Agreement and all exhibits hereto, amendments hereof and supplements hereto. ALTA: The American Land Title Association or any successor thereto. Appraisal: A written appraisal of a Mortgaged Property made by a Qualified Appraiser, which appraisal must be written, in form and substance, acceptable to Fannie Mae and Freddie Mac, as applicable, and satisfy the requirements of Title XI of the Financial Institution, Reform, Recovery and Enforcement Act of 1989 and the regulations promulgated thereunder, in effect as of the date of the Appraisal. Appraised Value: With respect to any Mortgage Loan, the lesser of (i) the value set forth on the Appraisal made in connection with the origination of the related Mortgage Loan as the value of the related Mortgaged Property, or (ii) the purchase price paid for the Mortgaged Property, provided, however, that in the case of a refinanced Mortgage Loan, such value shall be based solely on the Appraisal made in connection with the origination of such Mortgage Loan. Assignment and Conveyance Agreement: The agreement substantially in the form of Exhibit A attached hereto. Assignment, Assumption and Recognition Agreement: The agreement substantially in the form of Exhibit B attached hereto. Assignment of Mortgage: An assignment of the Mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect the sale of the Mortgage to the Purchaser or if the related Mortgage has been recorded in the name of MERS or its designee, such actions as are necessary to cause the Purchaser to be shown as the owner of the related Mortgage on the records of MERS for purposes of the system of recording transfers of beneficial ownership of mortgages maintained by MERS, including assignment of the MIN Number which will appear either on the Mortgage or the Assignment of Mortgage to MERS. Assignment of Mortgage Note and Pledge Agreement: With respect to a Cooperative Loan, an assignment of the Mortgage Note and Pledge Agreement. Assignment of Proprietary Lease: With respect to a Cooperative Loan, an assignment of the Proprietary Lease sufficient under the laws of the jurisdiction wherein the related Cooperative Apartment is located to effect the assignment of such Proprietary Lease. Buydown Agreement: An agreement between the Company and a Mortgagor, or an agreement among the Company, a Mortgagor and a seller of a Mortgaged Property or a third party with respect to a Mortgage Loan which provides for the application of Buydown Funds. 2 Buydown Funds: In respect of any Buydown Mortgage Loan, any amount contributed by the seller of a Mortgaged Property subject to a Buydown Mortgage Loan, the buyer of such property, the Company or any other source, plus interest earned thereon, in order to enable the Mortgagor to reduce the payments required to be made from the mortgagor's funds in the early years of a Mortgage Loan. Buydown Mortgage Loan: Any Mortgage Loan in respect of which, pursuant to a Buydown Agreement, (i) the Mortgagor pays less than the full monthly payments specified in the Mortgage Note for a specified period, and (ii) the difference between the payments required under such Buydown Agreement and the Mortgage Note is provided from Buydown Funds. Buydown Period: The period of time when a Buydown Agreement is in effect with respect to a related Buydown Mortgage Loan. Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a day on which banking and savings and loan institutions in the states where the parties are located are authorized or obligated by law or executive order to be closed. Closing Date: The date or dates, set forth in the related Commitment Letter, on which from time to time the Purchaser shall purchase and the Company shall sell the Mortgage Loans listed on the respective Mortgage Loan Schedule for each Transaction. Code: The Internal Revenue Code of 1986, as it may be amended from time to time or any successor statute thereto, and applicable U.S. Department of the Treasury regulations issued pursuant thereto. Commission: The United States Securities and Exchange Commission. Commitment Letter: The commitment letter between the Company and the Purchaser which sets forth, among other things, the Purchaser Price for certain Mortgage Loans described therein to be sold by the Company and purchased by the Purchaser on the Closing Date set forth therein. Company: Wells Fargo Bank, N.A., or its successor in interest or assigns, or any successor to the Company under this Agreement appointed as herein provided. Company Employees: As defined in Section 4.12. Company Information: As defined in Section 9.01(f)(i)(A). Condemnation Proceeds: All awards or settlements in respect of a Mortgaged Property, whether permanent or temporary, partial or entire, by exercise of the power of eminent domain or condemnation, to the extent not required to be released to a Mortgagor in accordance with the terms of the related Mortgage Loan Documents. 3 Cooperative: The entity that holds title (fee or an acceptable leasehold estate) to all of the real property that the related Project comprises, including the land, separate dwelling units and all common areas. Cooperative Apartment: The specific dwelling unit relating to a Cooperative Loan. Cooperative Lien Search: A search for (a) federal tax liens, mechanics' liens, lis pendens, judgments of record or otherwise against (i) the Cooperative, (ii) the seller of the Cooperative Apartment and (iii) the Company, if the Cooperative Loan is a refinanced Mortgage Loan, (b) filings of financing statements and (c) the deed of the Project into the Cooperative. Cooperative Loan: A Mortgage Loan that is secured by Cooperative Shares and a Proprietary Lease granting exclusive rights to occupy the related Cooperative Apartment. Cooperative Shares: The shares of stock issued by a Cooperative, owned by the Mortgagor, and allocated to a Cooperative Apartment. Covered Loan: A Mortgage Loan categorized as "Covered" pursuant to the Standard & Poor's Glossary for File Format for LEVELS(R) Version 5.6b, Appendix E, as revised from time to time and in effect on each related Closing Date. Custodial Account: The separate account or accounts created and maintained pursuant to Section 4.04. Custody Agreement: The agreement governing the retention of the originals of each Mortgage Note, Assignment of Mortgage and other Mortgage Loan Documents, a form of which is annexed hereto as Exhibit C. Custodial Mortgage File: With respect to each Mortgage Loan, the file consisting of the Mortgage Loan Documents listed as items 1 through 5 of Exhibit D attached hereto, which have been delivered to the Custodian as of the Closing Date. Custodian: The custodian under the Custody Agreement, or its successor in interest or assigns, or any successor to the Custodian under the Custody Agreement as provided therein. Cut-off Date: With respect to each Transaction, the first day of the month in which the Closing Date occurs. Data File: The electronic data file prepared by the Company and delivered to the Purchaser including the data fields set forth on Exhibit E with respect to each Mortgage Loan, in relation to each Transaction. Deleted Mortgage Loan: A Mortgage Loan which is repurchased by the Company in accordance with the terms of this Agreement and which is, in the case of a substitution pursuant to Section 3.03, replaced or to be replaced with a Qualified Substitute Mortgage Loan. Depositor: The depositor, as such term is defined in Regulation AB, with respect to any Securitization Transaction. 4 Determination Date: The Business Day immediately preceding the related Remittance Date. Due Date: The day of the month on which the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace, as specified in the related Mortgage Note. Due Period: With respect to each Remittance Date, the period commencing on the second day of the month preceding the month of such Remittance Date and ending on the first day of the month of such Remittance Date. Errors and Omissions Insurance Policy: An errors and omissions insurance policy to be maintained by the Company pursuant to Section 4.12. Escrow Account: The separate account or accounts created and maintained pursuant to Section 4.06. Escrow Payments: With respect to any Mortgage Loan, the amounts constituting ground rents, taxes, assessments, water rates, sewer rents, municipal charges, mortgage insurance premiums, fire and hazard insurance premiums, condominium charges, and any other payments required to be escrowed by the Mortgagor with the mortgagee pursuant to the Mortgage or any other related document. Event of Default: Any one of the conditions or circumstances enumerated in Section 10.01. Exchange Act: The Securities Exchange Act of 1934, as amended. Fannie Mae: The Federal National Mortgage Association, or any successor thereto. FDIC: The Federal Deposit Insurance Corporation, or any successor thereto. Fidelity Bond: A fidelity bond to be maintained by the Company pursuant to Section 4.12. Freddie Mac: The Federal Home Loan Mortgage Corporation, or any successor thereto. GNMA: The Government National Mortgage Association, or any successor thereto. Gross Margin: With respect to each Adjustable Rate Mortgage Loan, the fixed percentage amount set forth in the related Mortgage Note which is added to the Index in order to determine the related Mortgage Interest Rate, as set forth in the respective Mortgage Loan Schedule. High Cost Loan: A Mortgage Loan classified as (a) a "high cost" loan under the Home Ownership and Equity Protection Act of 1994, (b) a "high cost home," "threshold," "covered," (excluding New Jersey "Covered Home Loans" as that term is defined in clause (1) of the definition of that term in the New Jersey Home Ownership Security Act of 2002), "high risk 5 home," "predatory" or similar loan under any other applicable state, federal or local law or (c) a Mortgage Loan categorized as "High Cost" pursuant to the Standard & Poor's Glossary for File Format for LEVELS(R) Version 5.6b, Appendix E, as revised from time to time and in effect on each related Closing Date. Index: With respect to any Adjustable Rate Mortgage Loan, the index identified on the related Mortgage Loan Schedule and set forth in the related Mortgage Note for the purpose of calculating the interest therein. Insurance Proceeds: With respect to each Mortgage Loan, proceeds of insurance policies insuring the Mortgage Loan or the related Mortgaged Property, including LPMI Proceeds, if applicable. Interest Only Mortgage Loan: A Mortgage Loan for which an interest-only payment feature is allowed during the interest-only period set forth in the related Mortgage Note. Investor: With respect to each MERS Designated Mortgage Loan, the Person named on the MERS System as the investor pursuant to the MERS Procedures Manual. Lender Paid Mortgage Insurance Policy or LPMI Policy: A PMI Policy for which the Purchaser or the Company pays all premiums from its own funds, without reimbursement therefor. Liquidation Proceeds: Cash received in connection with the liquidation of a defaulted Mortgage Loan, whether through the sale or assignment of such Mortgage Loan, trustee's sale, foreclosure sale or otherwise, or the sale of the related Mortgaged Property if the Mortgaged Property is acquired in satisfaction of the Mortgage Loan. Loan Package: As defined in the Recitals of this Agreement. Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the ratio of the original loan amount of the Mortgage Loan at its origination (unless otherwise indicated) to the Appraised Value of the Mortgaged Property. LPMI Proceeds: Proceeds of any Lender Paid Mortgage Insurance Policy. Material Adverse Change: (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, condition (financial or otherwise) or prospects of the Company; (b) a material impairment of the ability of the Company to perform under this Agreement or any related agreements; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability of this Agreement against the Company (unless such material adverse effect is directly caused by an action of the Purchaser which can be remedied by the Purchaser). MERS: MERSCORP, Inc., its successors and assigns. MERS Designated Mortgage Loan: A Mortgage Loan for which (a) the Company has designated or will designate MERS as, and has taken or will take such action as is necessary to 6 cause MERS to be, the mortgagee of record, as nominee for the Company, in accordance with MERS Procedures Manual and (b) the Company has designated or will designate the Custodian as the Investor on the MERS System. MERS Procedures Manual: The MERS Procedures Manual, as it may be amended, supplemented or otherwise modified from time to time. MERS Report: The report from the MERS System listing MERS Designated Mortgage Loans and other information. MERS System: MERS mortgage electronic registry system, as more particularly described in the MERS Procedures Manual. Monthly Advance: The portion of each Monthly Payment that is delinquent with respect to each Mortgage Loan at the close of business on the Determination Date required to be advanced by the Company pursuant to Section 5.03 on the Business Day immediately preceding the Remittance Date of the related month. Monthly Payment: The scheduled monthly payment of principal and interest on a Mortgage Loan or in the case of an Interest Only Mortgage Loan, payments of (i) interest, or (ii) principal and interest, as applicable, on a Mortgage Loan. Moody's: Moody's Investors Service, Inc. Mortgage: The mortgage, deed of trust or other instrument securing a Mortgage Note, which creates a first lien on an unsubordinated estate in fee simple in real property securing the Mortgage Note, or the Pledge Agreement securing the Mortgage Note for a Cooperative Loan. Mortgage Impairment Insurance Policy: A mortgage impairment or blanket hazard insurance policy as described in Section 4.11. Mortgage Interest Rate: The annual rate of interest borne on a Mortgage Note in accordance with the provisions of the Mortgage Note. Mortgage Loan: An individual Mortgage Loan which is the subject of this Agreement, each Mortgage Loan originally sold and subject to this Agreement being identified on the related Mortgage Loan Schedule, which Mortgage Loan includes without limitation the Retained Mortgage File, the Custodial Mortgage File, the Monthly Payments, Principal Prepayments, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds, REO Disposition Proceeds and all other rights, benefits, proceeds and obligations arising from or in connection with such Mortgage Loan. Mortgage Loan Documents: With respect to a Mortgage Loan, the documents listed on Exhibit D attached hereto. Mortgage Loan Remittance Rate: With respect to each Mortgage Loan, the annual rate of interest remitted to the Purchaser, which shall be equal to the related Mortgage Interest Rate minus the Servicing Fee Rate. 7 Mortgage Loan Schedule: With respect to each Transaction, a schedule of Mortgage Loans setting forth the following information with respect to each Mortgage Loan: (1) the Company's Mortgage Loan number; (2) the city, state and zip code of the Mortgaged Property; (3) a code indicating whether the Mortgaged Property is a single family residence, two-family residence, three-family residence, four-family residence, planned unit development, Cooperative Loan, manufactured housing or condominium; (4) the current Mortgage Interest Rate; (5) the current net Mortgage Interest Rate; (6) the current Monthly Payment; (7) with respect to each Adjustable Rate Mortgage Loan, the Gross Margin; (8) the original term to maturity; (9) the scheduled maturity date; (10) the principal balance of the Mortgage Loan as of the Cut-off Date after deduction of payments of principal due on or before the Cut-off Date whether or not collected; (11) the Loan-to-Value Ratio; (12) with respect to each Adjustable Rate Mortgage Loan, the next Adjustment Date; (13) with respect to each Adjustable Rate Mortgage Loan, the lifetime Mortgage Interest Rate cap; (14) a code indicating whether the Mortgage Loan is convertible or not; (15) a code indicating the mortgage guaranty insurance company; (16) a code indicating whether the Mortgage Loan is an Interest Only Mortgage Loan; and (17) the Servicing Fee. Mortgage Note: The note or other evidence of the indebtedness of a Mortgagor secured by a Mortgage. Mortgaged Property: The real property securing repayment of the debt evidenced by a Mortgage Note, or with respect to a Cooperative Loan, the related Cooperative Apartment. Mortgagor: The obligor on a Mortgage Note. OCC: The Office of the Comptroller of the Currency. Officer's Certificate: A certificate signed by the Chairman of the Board or the Vice Chairman of the Board or the President or a Vice President or an Assistant Vice President and certified by the Treasurer or the Secretary or one of the Assistant Treasurers or Assistant Secretaries of the Company, and delivered to the Purchaser as required by this Agreement. Opinion of Counsel: A written opinion of counsel, who may be an employee of the Company, reasonably acceptable to the Purchaser. Periodic Interest Rate Cap: As to each Adjustable Rate Mortgage Loan, the maximum increase or decrease in the Mortgage Interest Rate on any Adjustment Date pursuant to the terms of the Mortgage Note. Person: Any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof. Pledge Agreement: With respect to a Cooperative Loan, the specific agreement creating a first lien on and pledge of the Cooperative Shares and the appurtenant Proprietary Lease. 8 Pledge Instruments: With respect to a Cooperative Loan, the Stock Power, the Assignment of the Proprietary Lease and the Assignment of the Mortgage Note and Pledge Agreement. Pledged Asset Mortgage Loan: A Mortgage Loan for which the Mortgagor has pledged financial assets as partial collateral for the Mortgage Loan, in lieu of a cash down payment. PMI Policy: A policy of primary mortgage guaranty insurance issued by a Qualified Insurer, as required by this Agreement with respect to certain Mortgage Loans. The premiums on a PMI Policy may be paid by the Mortgagor or by the Company from its own funds, without reimbursement. If the premiums are paid by the Company, the PMI Policy is an LPMI Policy. Prepayment Interest Shortfall: As to any Remittance Date and each Mortgage Loan subject to a Principal Prepayment received during the calendar month preceding such Remittance Date, the amount, if any, by which one month's interest at the related Mortgage Loan Remittance Rate on such Principal Prepayment exceeds the amount of interest paid in connection with such Principal Prepayment. Prepayment Penalty: The prepayment charge or penalty interest required to be paid by a Mortgagor as the result of a Principal Prepayment in full of the related Mortgage Loan, not otherwise due thereon in respect of principal or interest, which is intended to be a disincentive to prepayment, as provided in the related Mortgage Note or Mortgage. Prime Rate: The prime rate announced to be in effect from time to time, as published as the average rate in The Wall Street Journal. Principal Prepayment: Any payment or other recovery of principal on a Mortgage Loan which is received in advance of its scheduled Due Date. Principal Prepayment Period: The calendar month preceding the month in which the related Remittance Date occurs. Project: With respect to a Cooperative Loan, all real property owned by the related Cooperative including the land, separate dwelling units and all common areas. Proprietary Lease: With respect to a Cooperative Loan, a lease on a Cooperative Apartment evidencing the possessory interest of the Mortgagor in such Cooperative Apartment. Purchase Price: The purchase price for each Loan Package shall be the percentage of par as stated in the related Commitment Letter, multiplied by the aggregate scheduled principal balance, as of the related Cut-off Date, of the Mortgage Loans in the related Loan Package, after application of scheduled payments of principal for such related Loan Package due on or before the related Cut-off Date whether or not collected. The purchase price for a Loan Package may be adjusted as stated in the related Commitment Letter. Purchaser: Bank of America, National Association, or its successor in interest or any successor or assignee to the Purchaser under this Agreement as herein provided. 9 Qualification Defect: With respect to a Mortgage Loan, (a) a defective document in the Custodial Mortgage File or Retained Mortgage File, (b) the absence of a document in the Custodial Mortgage File or Retained Mortgage File, or (c) the breach of any representation, warranty or covenant with respect to the Mortgage Loan made by the Company, but, in each case, only if the affected Mortgage Loan would cease to qualify as a "qualified mortgage" for purposes of the REMIC Provisions. Qualified Appraiser: An appraiser, duly appointed by the Company, who had no interest, direct or indirect, in the Mortgaged Property or in any loan made on the security thereof, and whose compensation was not affected by the approval or disapproval of the Mortgage Loan, and such appraiser and the appraisal made by such appraiser both satisfied the requirements of Title XI of the Financial Institution Reform, Recovery, and Enforcement Act and the regulations promulgated thereunder, all as in effect on the date the Mortgage Loan was originated. Qualified Correspondent: Any Person from which the Company purchased Mortgage Loans, provided that the following conditions are satisfied: (i) such Mortgage Loans were originated pursuant to an agreement between the Company and such Person that contemplated that such Person would underwrite mortgage loans from time to time, for sale to the Company, in accordance with underwriting guidelines designated by the Company ("Designated Guidelines") or guidelines that do not vary materially from such Designated Guidelines; (ii) such Mortgage Loans were in fact underwritten as described in clause (i) above and were acquired by the Company within 180 days after origination; (iii) either (x) the Designated Guidelines were, at the time such Mortgage Loans were originated, used by the Company in origination of mortgage loans of the same type as the Mortgage Loans for the Company's own account or (y) the Designated Guidelines were, at the time such Mortgage Loans were underwritten, designated by the Company on a consistent basis for use by lenders in originating mortgage loans to be purchased by the Company; and (iv) the Company employed, at the time such Mortgage Loans were acquired by the Company, pre-purchased or post-purchased quality assurance procedures (which may involve, among other things, review of a sample of mortgage loans purchased during a particular time period or through particular channels) designed to ensure that Persons from which it purchased mortgage loans properly applied the underwriting criteria designated by the Company. Qualified Depository: A deposit account or accounts maintained with a federal or state chartered depository institution the deposits in which are insured by the FDIC to the applicable limits and the short-term unsecured debt obligations of which (or, in the case of a depository institution that is a subsidiary of a holding company, the short-term unsecured debt obligations of such holding company) are rated "A-1" by S&P or "Prime-1" by Moody's (or a comparable rating if another rating agency is specified by the Purchaser by written notice to the Company) at the time any deposits are held on deposit therein. Qualified Insurer: A mortgage guaranty insurance company duly authorized and licensed where required by law to transact mortgage guaranty insurance business and approved as an insurer by Fannie Mae or Freddie Mac. Qualified Substitute Mortgage Loan: A mortgage loan eligible to be substituted by the Company for a Deleted Mortgage Loan which must, on the date of such substitution be approved 10 by the Purchaser and, (i) have an outstanding principal balance, after deduction of all scheduled payments due in the month of substitution (or in the case of a substitution of more than one mortgage loan for a Deleted Mortgage Loan, an aggregate principal balance), not in excess of the Stated Principal Balance of the Deleted Mortgage Loan; (ii) have a Mortgage Loan Remittance Rate not less than, and not more than two percent (2%) greater than, the Mortgage Loan Remittance Rate of the Deleted Mortgage Loan; (iii) have a remaining term to maturity not greater than and not more than one year less than that of the Deleted Mortgage Loan; (iv) comply with each representation and warranty set forth in Sections 3.01 and 3.02; (v) be of the same type as the Deleted Mortgage Loan; (vi) have a Gross Margin not less than that of the Deleted Mortgage Loan; (vii) have the same Index as the Deleted Mortgage Loan; (viii) have a FICO score not less than that of the Deleted Mortgage Loan, (ix) have an LTV not greater than that of the Deleted Mortgage Loan; (x) have a Company credit grade not lower in quality than that of the Deleted Mortgage Loan and (xi) have the same lien status as the Deleted Mortgage Loan. Rating Agency: Each of Fitch, Inc., Moody's and S&P, or any successor thereto. Recognition Agreement: An agreement whereby a Cooperative and a lender with respect to a Cooperative Loan (i) acknowledge that such lender may make, or intends to make, such Cooperative Loan, and (ii) make certain agreements with respect to such Cooperative Loan. Reconstitution: Any Securitization Transaction or Whole Loan Transfer. Reconstitution Agreement: The agreement or agreements entered into by the Company and the Purchaser and/or certain third parties on the Reconstitution Date or Dates with respect to any or all of the Mortgage Loans serviced hereunder, in connection with a Whole Loan Transfer or Securitization Transaction. Reconstitution Date: The date on which any or all of the Mortgage Loans serviced under this Agreement may be removed from this Agreement and reconstituted as part of a Securitization Transaction, Agency Transfer or Whole Loan Transfer pursuant to Section 9.01 hereof. The Reconstitution Date shall be such date which the Purchaser shall designate. On such date, except as provided in this Agreement, the Mortgage Loans transferred may cease to be covered by this Agreement and the Company's servicing responsibilities shall cease under this Agreement with respect to the related transferred Mortgage Loans. Regulation AB: Subpart 229.1100 - Asset Backed Securities (Regulation AB), 17 C.F.R. SS.SS.229.1100-229.1123, as such may be amended from time to time, and subject to such clarification and interpretation as have been provided by the Commission in the adopting release (Asset-Backed Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005) or by the staff of the Commission, or as may be provided by the Commission or its staff from time to time. REMIC: A "real estate mortgage investment conduit" within the meaning of Section 860D of the Code. REMIC Provisions: Provisions of the federal income tax law relating to a REMIC, which appear at Section 860A through 860G of Subchapter M of Chapter 1, Subtitle A of the Code, and 11 related provisions, regulations, rulings or pronouncements promulgated thereunder, as the foregoing may be in effect from time to time. Remittance Date: The 18th day (or if such 18th day is not a Business Day, the first Business Day immediately following, except with respect to those Mortgage Loans subject to a Securitization Transaction in which case such date shall be the Business Day immediately preceding the 18th day) of any month. REO Disposition: The final sale by the Company of any REO Property. REO Disposition Proceeds: All amounts received with respect to an REO Disposition pursuant to Section 4.16. REO Property: A Mortgaged Property acquired by the Company on behalf of the Purchaser through foreclosure or by deed in lieu of foreclosure, as described in Section 4.16. Repurchase Price: With respect to any Mortgage Loan, as defined in the related Commitment Letter. Retained Mortgage File: With respect to each Mortgage Loan, the file consisting of the Mortgage Loan Documents listed as items 6 through 10 of Exhibit D attached hereto. RESPA: The Real Estate Settlement Procedures Act, as amended. S&P: Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. Securities Act: The Securities Act of 1933, as amended. Securitization Transaction: Any transaction involving (a) a sale or other transfer of some or all of the Mortgage Loans directly or indirectly to an issuing entity in connection with an issuance of publicly offered or privately placed, rated or unrated mortgage-backed securities, (b) an issuance of publicly offered or privately placed, rated or unrated securities, the payments on which are determined primarily by reference to one or more portfolios of residential mortgage loans consisting, in whole or in part, of some or all of the Mortgage Loans or (c) a synthetic securitization in which some or all of the Mortgage Loans are included as part of the reference portfolio relating to such securitization. Servicer: As defined in Section 9.01(e)(iii). Servicing Advances: All customary, reasonable and necessary "out of pocket" costs and expenses (including reasonable attorneys' fees and disbursements) other than Monthly Advances incurred in the performance by the Company of its servicing obligations, including, but not limited to, the cost of (a) the preservation, restoration and protection of the Mortgaged Property, (b) any enforcement or judicial proceedings, including foreclosures, (c) the management and liquidation of any REO Property and (d) compliance with the obligations under Section 4.08 and Section 4.10. 12 Servicing Criteria: The "servicing criteria" set forth in Item 1122(d) of Regulation AB, as such may be amended from time to time. Servicing Fee: With respect to each Mortgage Loan, the amount of the annual fee the Purchaser shall pay to the Company, which shall, for a period of one full month, be equal to one-twelfth of the product of (a) the Servicing Fee Rate and (b) the outstanding principal balance of such Mortgage Loan. Such fee shall be payable monthly, computed on the basis of the same principal amount and period respecting which any related interest payment on a Mortgage Loan is received. The obligation of the Purchaser to pay the Servicing Fee is limited to, and the Servicing Fee is payable solely from, the interest portion (including recoveries with respect to interest from Liquidation Proceeds, to the extent permitted by Section 4.05) of such Monthly Payment collected by the Company, or as otherwise provided under Section 4.05. Servicing Fee Rate: The per annum percentage for each Mortgage Loan, as stated in the related Commitment Letter. Servicing File: With respect to each Mortgage Loan, the file consisting of the Mortgage Loan Documents listed as items 11 through 26 of Exhibit D attached hereto plus copies of all Mortgage Loan Documents contained in the Custodial Mortgage File and the Retained Mortgage File, which are retained by the Company. Servicing Officer: Any officer of the Company involved in or responsible for the administration and servicing of the Mortgage Loans whose name appears on a list of servicing officers furnished by the Company to the Purchaser upon request, as such list may from time to time be amended. Stated Principal Balance: As to each Mortgage Loan and any date of determination, (i) the principal balance of the Mortgage Loan at the Cut-off Date after giving effect to payments of principal due on or before such date, whether or not received, minus (ii) all amounts previously distributed to the Purchaser with respect to the related Mortgage Loan representing payments or recoveries of principal or advances in lieu thereof. Static Pool Information: Static pool information as described in Item 1105(a)(1)-(3) and 1105(c) of Regulation AB. Stock Certificate: With respect to a Cooperative Loan, a certificate evidencing ownership of the Cooperative Shares issued by the Cooperative. Stock Power: With respect to a Cooperative Loan, an assignment of the Stock Certificate or an assignment of the Cooperative Shares issued by the Cooperative. Subcontractor: Any vendor, subcontractor or other Person that is not responsible for the overall servicing (as "servicing" is commonly understood by participants in the mortgage-backed securities market) of Mortgage Loans but performs one or more discrete functions identified in Item 1122(d) of Regulation AB with respect to Mortgage Loans under the direction or authority of the Company or a Subservicer. 13 Subservicer: Any Person that services Mortgage Loans on behalf of the Company or any Subservicer and is responsible for the performance (whether directly or through Subservicers or Subcontractors) of a substantial portion of the material servicing functions required to be performed by the Company under this Agreement or any Reconstitution Agreement that are identified in Item 1122(d) of Regulation AB. Subservicing Agreement: Any subservicing agreement between the Company and any Subservicer relating to servicing and/or administration of some or all of the Mortgage Loans included in a Mortgage Loan Package. Subsidy Account: An account maintained by the Company specifically to hold all Subsidy Funds to be applied to individual Subsidy Loans. Subsidy Funds: With respect to any Subsidy Loans, funds contributed by the employer of a Mortgagor in order to reduce the payments required from the Mortgagor for a specified period in specified amounts. Subsidy Loan: Any Mortgage Loan subject to a temporary interest subsidy agreement pursuant to which the monthly interest payments made by the related Mortgagor will be less than the scheduled monthly interest payments on such Mortgage Loan, with the resulting difference in interest payments being provided by the employer of the Mortgagor. Each Subsidy Loan will be identified as such in the related Data File. Third-Party Originator: Each Person, other than a Qualified Correspondent, that originated Mortgage Loans acquired by the Company. Time$aver(R) Mortgage Loan: A Mortgage Loan which has been refinanced pursuant to a Company program that allows a rate/term refinance of an existing Company-serviced loan with minimal documentation. Underwriting Guidelines: The underwriting guidelines of the Company, applicable to each Loan Package, as provided to the Purchaser by the Company. Whole Loan Transfer: Any sale or transfer of some or all of the Mortgage Loans by the Purchaser to a third party, which sale or transfer is not a Securitization Transaction or an Agency Transfer. ARTICLE II CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF CUSTODIAL MORTGAGE FILES; BOOKS AND RECORDS; CUSTODY AGREEMENT; DELIVERY OF DOCUMENTS Section 2.01. Conveyance of Mortgage Loans; Possession of Custodial Mortgage Files; Maintenance of Retained Mortgage File and Servicing Files. Pursuant to each Assignment and Conveyance Agreement, on the related Closing Date, the Company, simultaneously with the payment of the Purchase Price by the Purchaser, shall 14 thereby sell, transfer, assign, set over and convey to the Purchaser, without recourse, but subject to the terms of this Agreement and the related Assignment and Conveyance Agreement, all the right, title and interest of the Company in and to the Mortgage Loans listed on the respective Mortgage Loan Schedule annexed to such Assignment and Conveyance Agreement, together with the Retained Mortgage Files and Custodial Mortgage File and all rights and obligations arising under the documents contained therein. The Company shall deliver the related Mortgage Loan Schedule and the related Data File to the Purchaser at least two (2) Business Days before the Closing Date. Pursuant to Section 2.03, the Company shall deliver the Custodial Mortgage File for each Mortgage Loan comprising the related Loan Package to the Custodian. The contents of each Retained Mortgage File not delivered to the Custodian are and shall be held in trust by the Company for the benefit of the Purchaser as the owner thereof. Additionally and separate to the Retained Mortgage File, the Company shall maintain a Servicing File, for the sole purpose of servicing the related Mortgage Loans, consisting of a copy of the contents of the Custodial Mortgage File and the Retained Mortgage File. The possession of each Servicing File and Retained Mortgage File held by the Company is at the will of the Purchaser and such retention and possession by the Company is in a custodial capacity only. Upon the sale of the Mortgage Loans the ownership of each Mortgage Note, the related Mortgage and the related Custodial Mortgage File, Retained Mortgage File and Servicing File shall vest immediately in the Purchaser, and the ownership of all records and documents with respect to the related Mortgage Loan prepared by or which come into the possession of the Company shall vest immediately in the Purchaser and shall be retained and maintained by the Company, in trust, at the will of the Purchaser and only in such custodial capacity. The Company shall release its custody of the contents of any Retained Mortgage File and Servicing File only in accordance with written instructions from the Purchaser, unless such release is required as incidental to the Company's servicing of the Mortgage Loans, in the case of the Servicing File, or is in connection with a repurchase of any Mortgage Loan pursuant to Section 3.03 or 6.02. All such costs associated with the release, transfer and re-delivery to the Company shall be the responsibility of the Purchaser (unless in connection with Section 3.03 or 6.02). Section 2.02. Books and Records; Transfers of Mortgage Loans. From and after the sale to the Purchaser of the Mortgage Loans in the related Loan Package on each Closing Date, all rights arising out of such Mortgage Loans, including, but not limited to, all funds received on or in connection with such Mortgage Loans, shall be received and held by the Company in trust for the benefit of the Purchaser as owner of such Mortgage Loans, and the Company shall retain record title to the related Mortgages for the sole purpose of facilitating the servicing and the supervision of the servicing of such Mortgage Loans. The sale of each Mortgage Loan shall be reflected on the Company's balance sheet and other financial statements as a sale of assets by the Company. The Company shall be responsible for maintaining, and shall maintain, a complete set of books and records for each Mortgage Loan which shall be marked clearly to reflect the ownership of each Mortgage Loan by the Purchaser. In particular, the Company shall maintain in its possession, available for inspection by the Purchaser, or its designee, and shall deliver to the Purchaser upon demand, evidence of compliance with all federal, state and local laws, rules and regulations, and requirements of 15 Fannie Mae or Freddie Mac, including but not limited to documentation as to the method used in determining the applicability of the provisions of the Flood Disaster Protection Act of 1973, as amended, to the Mortgaged Property, documentation evidencing insurance coverage and eligibility of any condominium project for approval by Fannie Mae or Freddie Mac and records of periodic inspections required by Section 4.13. To the extent that original documents are not required for purposes of realization of Liquidation Proceeds or Insurance Proceeds, documents maintained by the Company may be in the form of microfilm or microfiche or such other reliable means of recreating original documents, including but not limited to, optical imagery techniques so long as the Company complies with the requirements of the Fannie Mae Selling and Servicing Guide, as amended from time to time. The Company shall maintain with respect to each Mortgage Loan and shall make available for inspection by the Purchaser or its designee the related Retained Mortgage File and Servicing File during the time the Purchaser retains ownership of such Mortgage Loan and thereafter in accordance with applicable laws and regulations. The Company shall keep at its servicing office books and records in which, subject to such reasonable regulations as it may prescribe, the Company shall note transfers of Mortgage Loans. No transfer of a Mortgage Loan may be made unless such transfer is in compliance with the terms hereof. For the purposes of this Agreement, the Company shall be under no obligation to deal with any person with respect to this Agreement or the Mortgage Loans unless the books and records show such person as the owner of the Mortgage Loan. The Purchaser may, subject to the terms of this Agreement, sell and transfer one or more of the Mortgage Loans. The Purchaser also shall advise the Company of the transfer. Upon receipt of notice of the transfer, the Company shall mark its books and records to reflect the ownership of the Mortgage Loans of such assignee, and shall release the previous Purchaser from its obligations hereunder with respect to the Mortgage Loans sold or transferred. Such notification of a transfer, including a final schedule of Mortgage Loans subject to transfer, shall be received by the Company no fewer than five (5) Business Days before the last Business Day of the month. If such notification is not received as specified above, the Company's duties to remit and report as required by Section 5 shall begin with the next Due Period. Upon request from the Purchaser, at the Purchaser's expense, the Company shall deliver no later than thirty (30) days after such request any Retained Mortgage File or document therein, or copies thereof, to the Purchaser at the direction of the Purchaser. The Purchaser shall return any Retained Mortgage File or document therein delivered pursuant to this Section no later than ten (10) days after receipt thereof. In the event that the Company fails to make delivery of the requested Retained Mortgage File or document therein, or copies thereof, as required under this Section 2.02, the Company shall repurchase, pursuant to Section 3.03 of this Agreement, the related Mortgage Loan within thirty (30) days of a request to do so by the Purchaser. Section 2.03. Custody Agreement; Delivery of Documents. On each Closing Date with respect to each Mortgage Loan comprising the related Loan Package, the Company shall have delivered to the Custodian not fewer than five (5) Business Days prior to such Closing Date those Mortgage Loan Documents as required by Exhibit D to this Agreement with respect to each Mortgage Loan. In addition, in connection with the 16 assignment of any MERS Designated Mortgage Loan, the Company agrees that on or prior to the second Business Day following the Closing Date it will cause, at its own expense, the MERS System to indicate that the related Mortgage Loans have been assigned by the Company to the Purchaser in accordance with this Agreement by entering in the MERS System the information required by the MERS System to identify the Purchaser as owner of such Mortgage Loans. The Company further agrees that it will not alter the information referenced in this paragraph with respect to any Mortgage Loan during the term of this Agreement unless and until such Mortgage Loan is repurchased in accordance with the terms of this Agreement or unless otherwise directed by the Purchaser. The Custodian shall certify its receipt of all such Mortgage Loan Documents in each Custodial Mortgage File required to be delivered pursuant to this Agreement, as evidenced by the Initial Certification of the Custodian in the forms annexed to the Custody Agreement. The Company shall be responsible for recording the initial Assignments of Mortgage. The Purchaser will be responsible for the fees and expenses of the Custodian. All recording fees and other costs associated with the recording of initial Assignments of Mortgage and other relevant documents to the Purchaser or its designee will be borne by the Company. For Mortgage Loans not registered under the MERS System, if the Purchaser requests that the related Assignments of Mortgage be recorded, the Company shall cause such Assignments of Mortgage which were delivered in blank to be completed and to be recorded. The Company shall be required to deliver such Assignments of Mortgage for recording within 30 days of the date on which the Company is notified that recording will be required pursuant to this Section 2.03. The Company shall furnish the Custodian with a copy of each Assignment of Mortgage submitted for recording. In the event that any such Assignment is lost or returned unrecorded because of a defect therein, the Company shall promptly have a substitute Assignment of Mortgage prepared or have such defect cured, as the case may be, and thereafter cause such Assignment of Mortgage to be duly recorded. The Company shall forward to the Custodian original documents evidencing an assumption, modification, consolidation or extension of any Mortgage Loan entered into in accordance with Section 4.01 or 6.01 within one week of their execution, provided, however, that the Company shall provide the Custodian with a certified true copy of any such document submitted for recordation within ten (10) days of its execution, and shall provide the original of any such document submitted for recordation or a copy of such document certified by the appropriate public recording office to be a true and complete copy of the original within sixty (60) days of its submission for recordation. If the original or a copy of any document submitted for recordation to the appropriate public recording office is not so delivered to the Custodian with 240 days following the related Closing Date, and if the Company does not cure such failure within thirty (30) days after receipt of written notification of such failure from the Purchaser, the related Mortgage Loan shall, upon the request of the Purchaser, be repurchased by the Company at a price and in the manner specified in Section 3.03; provided, however, that with respect to any Mortgage Loan, if such defect constitutes a Qualification Defect, any such repurchase must take place within sixty (60) days of the date such defect is discovered. 17 In the event the public recording office is delayed in returning any original document, which the Company is required to deliver at any time to the Custodian in accordance with the terms of the Custody Agreement or which the Company is required to maintain in the Retained Mortgage File, the Company shall deliver to the Custodian within 270 days of its submission for recordation, a copy of such document and an Officer's Certificate, which shall (i) identify the recorded document; (ii) state that the recorded document has not been delivered to the Custodian due solely to a delay by the public recording office, (iii) state the amount of time generally required by the applicable recording office to record and return a document submitted for recordation, and (iv) specify the date the applicable recorded document will be delivered to the Custodian. The Company will be required to deliver the document to the Custodian by the date specified in (iv) above. An extension of the date specified in (iv) above may be requested from the Purchaser, which consent shall not be unreasonably withheld. However, if the Company cannot deliver such original or clerk-certified copy of any document submitted for recordation to the appropriate public recording office within the specified time for any reason, within thirty (30) days after receipt of written notification of such failure from the Purchaser, the Company shall repurchase the related Mortgage Loan at the price and in the manner specified in Section 3.03. In the event that new, replacement, substitute or additional Stock Certificates are issued with respect to existing Cooperative Shares, the Company immediately shall deliver to the Custodian the new Stock Certificates, together with the related Stock Powers in blank. Such new Stock Certificates shall be subject to the related Pledge Instruments and shall be subject to all of the terms, covenants and conditions of this Agreement. ARTICLE III REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH Section 3.01. Company Representations and Warranties. The Company hereby represents and warrants to the Purchaser that, as of the related Closing Date: (a) Due Organization and Authority. The Company is a national banking association duly organized, validly existing and in good standing under the laws of the United States and has all licenses necessary to carry on its business as now being conducted and is licensed, qualified and in good standing in each state where a Mortgaged Property is located if the laws of such state require licensing or qualification in order to conduct business of the type conducted by the Company, and in any event the Company is in compliance with the laws of any such state to the extent necessary to ensure the enforceability of the related Mortgage Loan and the servicing of such Mortgage Loan in accordance with the terms of this Agreement; the Company has the full power and authority to execute and deliver this Agreement and to perform 18 in accordance herewith; the execution, delivery and performance of this Agreement (including all instruments of transfer to be delivered pursuant to this Agreement) by the Company and the consummation of the transactions contemplated hereby have been duly and validly authorized; this Agreement evidences the valid, binding and enforceable obligation of the Company; and all requisite action has been taken by the Company to make this Agreement valid and binding upon the Company in accordance with its terms; (b) Ordinary Course of Business. The consummation of the transactions contemplated by this Agreement are in the ordinary course of business of the Company, who is in the business of selling and servicing loans, and the transfer, assignment and conveyance of the Mortgage Notes and the Mortgages by the Company pursuant to this Agreement are not subject to the bulk transfer or any similar statutory provisions in effect in any applicable jurisdiction; (c) No Conflicts. Neither the execution and delivery of this Agreement, the acquisition of the Mortgage Loans by the Company, the sale of the Mortgage Loans to the Purchaser or the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement will conflict with or result in a breach of any of the terms, charter documents or by-laws or any legal restriction or any agreement or instrument to which the Company is now a party or by which it is bound, or constitute a default or result in the violation of any law, rule, regulation, order, judgment or decree to which the Company or its property is subject, or impair the ability of the Purchaser to realize on the Mortgage Loans, or impair the value of the Mortgage Loans; (d) Ability to Service. The Company is an approved seller/servicer of conventional residential mortgage loans for Fannie Mae or Freddie Mac, with the facilities, procedures, and experienced personnel necessary for the sound servicing of mortgage loans of the same type as the Mortgage Loans. The Company is a HUD approved mortgagee pursuant to Section 203 of the National Housing Act and is in good standing to sell mortgage loans to and service mortgage loans for Fannie Mae or Freddie Mac, and no event has occurred, including but not limited to a change in insurance coverage, which would make the Company unable to comply with Fannie Mae or Freddie Mac eligibility requirements or which would require notification to either Fannie Mae or Freddie Mac; 19 (e) Reasonable Servicing Fee; Fair Consideration. The Company acknowledges and agrees that the Servicing Fee represents reasonable compensation for performing such services and that the entire Servicing Fee shall be treated by the Company, for accounting and tax purposes, as compensation for the servicing and administration of the Mortgage Loans pursuant to this Agreement. The consideration received by the Company upon the sale of the Mortgage Loans under this Agreement constitutes fair consideration and reasonably equivalent value for the Mortgage Loans; (f) Ability to Perform; Solvency. The Company does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in this Agreement. The Company is solvent and the sale of the Mortgage Loans will not cause the Company to become insolvent. The sale of the Mortgage Loans is not undertaken to hinder, delay or defraud any of the Company's creditors; (g) No Litigation Pending. There is no action, suit, proceeding or investigation pending or threatened against the Company which, either in any one instance or in the aggregate, may result in any material adverse change in the business, operations, financial condition, properties or assets of the Company, or in any material impairment of the right or ability of the Company to carry on its business substantially as now conducted, or in any material liability on the part of the Company, or which would draw into question the validity of this Agreement or the Mortgage Loans or of any action taken or to be contemplated herein, or which would be likely to impair materially the ability of the Company to perform under the terms of this Agreement; (h) No Consent Required. No consent, approval, authorization or order of any court or governmental agency or body is required for the execution, delivery and performance by the Company of or compliance by the Company with this Agreement or the sale of the Mortgage Loans as evidenced by the consummation of the transactions contemplated by this Agreement, or if required, such consent approval, authorization or order has been obtained prior to the related Closing Date; (i) Selection Process. The Mortgage Loans were selected from among the outstanding adjustable rate or fixed rate one- to four-family mortgage loans in the Company's mortgage banking portfolio at the related Closing Date as to which the 20 representations and warranties set forth in Section 3.02 could be made and such selection was not made in a manner so as to affect adversely the interests of the Purchaser; (j) No Untrue Information. Neither this Agreement nor any statement, report or other document furnished or to be furnished pursuant to this Agreement or in connection with the transactions contemplated hereby contains any untrue statement of fact or omits to state a fact necessary to make the statements contained therein not misleading; (k) Sale Treatment. The Company has determined that the disposition of the Mortgage Loans pursuant to this Agreement will be afforded sale treatment for accounting and tax purposes; (l) No Material Change. There has been no material adverse change in the business, operations, financial condition or assets of the Company since the date of the Company's most recent financial statements; (m) No Brokers' Fees. The Company has not dealt with any broker, investment banker, agent or other Person that may be entitled to any commission or compensation in the connection with the sale of the Mortgage Loans; and (n) MERS. The Company is a member of MERS in good standing. Section 3.02. Representations and Warranties Regarding Individual Mortgage Loans. As to each Mortgage Loan, the Company hereby represents and warrants to the Purchaser that as of the related Closing Date: (a) Mortgage Loans as Described. The information set forth in the respective Mortgage Loan Schedule and the information contained on the respective Data File delivered to the Purchaser is true and correct; 21 (b) Payments Current. All payments required to be made up to the Cut-off Date for the Mortgage Loan under the terms of the Mortgage Note have been made and credited. No payment under any Mortgage Loan has been 30 days delinquent more than one time within twelve months prior to the related Closing Date; (c) No Outstanding Charges. There are no defaults in complying with the terms of the Mortgages, and all taxes, governmental assessments, insurance premiums, leasehold payments, water, sewer and municipal charges, which previously became due and owing have been paid, or an escrow of funds has been established in an amount sufficient to pay for every such item which remains unpaid and which has been assessed but is not yet due and payable. The Company has not advanced funds, or induced, or solicited directly or indirectly, the payment of any amount required under the Mortgage Loan, except for interest accruing from the date of the Mortgage Note or date of disbursement of the Mortgage Loan proceeds, whichever is later, to the day which precedes by one month the Due Date of the first installment of principal and interest; (d) Original Terms Unmodified. The terms of the Mortgage Note and Mortgage have not been impaired, waived, altered or modified in any respect, except by a written instrument which has been recorded, if necessary, to protect the interests of the Purchaser and maintain the lien priority of the Mortgage, and is retained by the Company in the Retained Mortgage File; the related Mortgage Note has been delivered to the Custodian. The substance of any such waiver, alteration or modification has been approved by the issuer of any related PMI Policy or LPMI Policy and the title insurer, to the extent required by the policy, and its terms are reflected on the respective Mortgage Loan Schedule. No instrument of waiver, alteration or modification has been executed, and no Mortgagor has been released, in whole or in part, except in connection with an assumption agreement approved by the issuer of any related PMI Policy or LPMI Policy and the title insurer, to the extent required by the policy, and which assumption agreement is part of the Custodial Mortgage File delivered to the Custodian and the terms of which are reflected in the respective Mortgage Loan Schedule; (e) No Defenses. The Mortgage Loan is not subject to any right of rescission, set-off, counterclaim or defense, including without limitation the defense of usury, nor will the operation of any of the terms of the Mortgage Note or the Mortgage, or the exercise of any right thereunder, render either the 22 Mortgage Note or the Mortgage unenforceable, in whole or in part, or subject to any right of rescission, set-off, counterclaim or defense, including without limitation the defense of usury, and no such right of rescission, set-off, counterclaim or defense has been asserted with respect thereto; (f) No Satisfaction of Mortgage. The Mortgage has not been satisfied, canceled, subordinated or rescinded, in whole or in part, and the Mortgaged Property has not been released from the lien of the Mortgage, in whole or in part, nor has any instrument been executed that would effect any such satisfaction, release, cancellation, subordination or rescission; (g) Validity of Mortgage Documents. The Mortgage Note and the Mortgage and related documents are genuine, and each is the legal, valid and binding obligation of the maker thereof enforceable in accordance with its terms. All parties to the Mortgage Note and the Mortgage had legal capacity to enter into the Mortgage Loan and to execute and deliver the Mortgage Note and the Mortgage, and the Mortgage Note and the Mortgage have been duly and properly executed by such parties. The Company has reviewed all of the documents constituting the Retained Mortgage File and Custodial Mortgage File and has made such inquiries as it deems necessary to make and confirm the accuracy of the representations set forth herein; With respect to each Cooperative Loan, the Mortgage Note, the Mortgage, the Pledge Agreement, and related documents are genuine, and each is the legal, valid and binding obligation of the maker thereof enforceable in accordance with its terms. All parties to the Mortgage Note, the Mortgage, the Pledge Agreement, the Proprietary Lease, the Stock Power, Recognition Agreement and the Assignment of Proprietary Lease had legal capacity to enter into the Mortgage Loan and to execute and deliver such documents, and such documents have been duly and properly executed by such parties; (h) No Fraud. No error, omission, misrepresentation, negligence, fraud or similar occurrence with respect to a Mortgage Loan has taken place on the part of the Company, or the Mortgagor, or to the best of the Company's knowledge, any appraiser, any builder, or any developer, or any other party involved in the origination of the Mortgage Loan or in the application of any insurance in relation to such Mortgage Loan; 23 (i) Compliance with Applicable Laws. Any and all requirements of any federal, state or local law including, without limitation, usury, truth-in-lending, real estate settlement procedures, consumer credit protection and privacy, equal credit opportunity, disclosure or predatory and abusive lending laws applicable to the origination and servicing of the Mortgage Loan have been complied with, the Mortgagor received all disclosure materials required by applicable law with respect to the making of mortgage loans of the same type as the Mortgage Loan and, if the Mortgage Loan is a refinanced Mortgage Loan, rescission materials required by applicable laws, and the Company shall maintain in its possession, available for the Purchaser's inspection, and shall deliver to the Purchaser upon demand, evidence of compliance with all such requirements. All inspections, licenses and certificates required to be made or issued with respect to all occupied portions of the Mortgaged Property and, with respect to the use and occupancy of the same, including, but not limited to, certificates of occupancy and fire underwriting certificates, have been made or obtained from the appropriate authorities; (j) Location and Type of Mortgaged Property. The Mortgaged Property is located in the state identified in the respective Mortgage Loan Schedule and consists of a contiguous parcel of real property with a detached single family residence erected thereon, or a two- to four-family dwelling, or a Cooperative Apartment, or a manufactured dwelling, or an individual condominium unit in a condominium project, or an individual unit in a planned unit development or a townhouse, provided, however, that any condominium project or planned unit development shall conform to the applicable Fannie Mae or Freddie Mac requirements, or the Underwriting Guidelines, regarding such dwellings, and no residence or dwelling is a mobile home. As of the respective date of the Appraisal for each Mortgaged Property, any Mortgaged Property being used for commercial purposes conforms to the Underwriting Guidelines and, to the best of the Company's knowledge, since the date of such Appraisal, no portion of the Mortgaged Property has been used for commercial purposes outside of the Underwriting Guidelines; (k) Valid First Lien. The Mortgage is a valid, subsisting and enforceable first lien on the Mortgaged Property, including all buildings on the Mortgaged Property and all installations and mechanical, electrical, plumbing, heating and air conditioning systems located in or annexed to such buildings, and all additions, alterations and replacements made at any time with respect to the foregoing. The lien of the Mortgage is subject only to: 24 (1) the lien of current real property taxes and assessments not yet due and payable; (2) covenants, conditions and restrictions, rights of way, easements and other matters of the public record as of the date of recording acceptable to mortgage lending institutions generally and specifically referred to in the lender's title insurance policy delivered to the originator of the Mortgage Loan and (i) referred to or otherwise considered in the Appraisal made for the originator of the Mortgage Loan and (ii) which do not adversely affect the Appraised Value of the Mortgaged Property set forth in such Appraisal; and (3) other matters to which like properties are commonly subject which do not materially interfere with the benefits of the security intended to be provided by the mortgage or the use, enjoyment, value or marketability of the related Mortgaged Property. Any security agreement, chattel mortgage or equivalent document related to and delivered in connection with the Mortgage Loan establishes and creates a valid, subsisting and enforceable first lien and first priority security interest on the property described therein and the Company has full right to sell and assign the same to the Purchaser; With respect to each Cooperative Loan, each Pledge Agreement creates a valid, enforceable and subsisting first security interest in the Cooperative Shares and Proprietary Lease, subject only to (i) the lien of the related Cooperative for unpaid assessments representing the Mortgagor's pro rata share of the Cooperative's payments for its blanket mortgage, current and future real property taxes, insurance premiums, maintenance fees and other assessments to which like collateral is commonly subject and (ii) other matters to which like collateral is commonly subject which do not materially interfere with the benefits of the security intended to be provided by the Pledge Agreement; provided, however, that the appurtenant Proprietary Lease may be subordinated or otherwise subject to the lien of any mortgage on the Project; (l) Full Disbursement of Proceeds. The proceeds of the Mortgage Loan have been fully disbursed, except for escrows established or created due to seasonal weather conditions, and there is no requirement for future advances thereunder. All costs, fees and expenses incurred in making or closing the Mortgage Loan and the recording of the Mortgage were paid, and the Mortgagor is not entitled to any refund of any amounts paid or due under the Mortgage Note or Mortgage; 25 (m) Consolidation of Future Advances. Any future advances made prior to the Cut-off Date, have been consolidated with the outstanding principal amount secured by the Mortgage, and the secured principal amount, as consolidated, bears a single interest rate and single repayment term reflected on the related Mortgage Loan Schedule. The lien of the Mortgage securing the consolidated principal amount is expressly insured as having first lien priority by a title insurance policy, an endorsement to the policy insuring the mortgagee's consolidated interest or by other title evidence acceptable to Fannie Mae or Freddie Mac; the consolidated principal amount does not exceed the original principal amount of the Mortgage Loan; the Company shall not make future advances after the Cut-off Date; (n) Ownership. The Company is the sole owner of record and holder of the Mortgage Loan and the related Mortgage Note and the Mortgage are not assigned or pledged, and the Company has good and marketable title thereto and has full right and authority to transfer and sell the Mortgage Loan to the Purchaser. The Company is transferring the Mortgage Loan free and clear of any and all encumbrances, liens, pledges, equities, participation interests, claims, agreements with other parties to sell or otherwise transfer the Mortgage Loan, charges or security interests of any nature encumbering such Mortgage Loan; (o) Origination/Doing Business. The Mortgage Loan was originated by a savings and loan association, a savings bank, a commercial bank, a credit union, an insurance company, or similar institution that is supervised and examined by a federal or state authority or by a mortgagee approved by the Secretary of Housing and Urban Development pursuant to Sections 203 and 211 of the National Housing Act. All parties which have had any interest in the Mortgage Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period in which they held and disposed of such interest, were) (1) in compliance with any and all applicable licensing requirements of the laws of the state wherein the Mortgaged Property is located, and (2) either (A) organized under the laws of such state, (B) qualified to do business in such state, (C) federal savings and loan associations or national banks having principal offices in such state, or (D) not doing business in such state; (p) LTV, PMI Policy; LPMI Policy. Each Mortgage Loan has an LTV as specified on the Mortgage Loan Schedule. Except as indicated on the Mortgage Loan Schedule, each 26 Mortgage Loan with an LTV greater than 80%, at the time of origination, a portion of the unpaid principal balance of each Mortgage Loan is and will be insured as to payment defaults by a PMI Policy or LPMI Policy. If the Mortgage Loan is insured by a PMI Policy for which the Mortgagor pays all premiums, the coverage will remain in place until (i) the LTV decreases to 78% or (ii) the PMI Policy is otherwise terminated pursuant to the Homeowners Protection Act of 1998, 12 USC SS.4901, et seq. All provisions of such PMI Policy or LPMI Policy have been and are being complied with, such policy is in full force and effect, and all premiums due thereunder have been paid. The Qualified Insurer has a claims paying ability acceptable to Fannie Mae or Freddie Mac. Any Mortgage Loan subject to a PMI Policy or an LPMI Policy obligates the Mortgagor or the Company to maintain the PMI Policy or LPMI Policy, as applicable, and to pay all premiums and charges in connection therewith. The Mortgage Interest Rate for the Mortgage Loan as set forth on the related Mortgage Loan Schedule is net of any such insurance premium; (q) Title Insurance. The Mortgage Loan is covered by an ALTA lender's title insurance policy (or in the case of any Mortgage Loan secured by a Mortgaged Property located in a jurisdiction where such policies are generally not available, an opinion of counsel of the type customarily rendered in such jurisdiction in lieu of title insurance) or other generally acceptable form of policy of insurance acceptable to Fannie Mae or Freddie Mac, issued by a title insurer acceptable to Fannie Mae or Freddie Mac and qualified to do business in the jurisdiction where the Mortgaged Property is located, insuring the Company, its successors and assigns, as to the first priority lien of the Mortgage in the original principal amount of the Mortgage Loan, subject only to the exceptions contained in clauses (1), (2) and (3) of Paragraph (k) of this Section 3.02, and with respect to Adjustable Rate Mortgage Loans against any loss by reason of the invalidity or unenforceability of the lien resulting from the provisions of the Mortgage providing for adjustment to the Mortgage Interest Rate and Monthly Payment. Additionally, such lender's title insurance policy includes no exceptions regarding ingress, egress or encroachments that impact the value or the marketability of the Mortgaged Property. The Company is the sole insured of such lender's title insurance policy, and such lender's title insurance policy is in full force and effect and will be in force and effect upon the consummation of the transactions contemplated by this Agreement. No claims have been made under such lender's title insurance policy, and no prior holder of the Mortgage, including the Company, has done, by act or omission, anything which would impair the coverage of such lender's title insurance policy; 27 (r) No Defaults. There is no default, breach, violation or event of acceleration existing under the Mortgage or the Mortgage Note and no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute a default, breach, violation or event of acceleration, and neither the Company nor its predecessors have waived any default, breach, violation or event of acceleration; (s) No Mechanics' Liens. There are no mechanics' or similar liens or claims which have been filed for work, labor or material (and no rights are outstanding that under the law could give rise to such liens) affecting the related Mortgaged Property which are or may be liens prior to, or equal or coordinate with, the lien of the related Mortgage which are not insured against by the title insurance policy referenced in Paragraph (q) above; (t) Location of Improvements; No Encroachments. Except as insured against by the title insurance policy referenced in Paragraph (q) above, all improvements which were considered in determining the Appraised Value of the Mortgaged Property lay wholly within the boundaries and building restriction lines of the Mortgaged Property and no improvements on adjoining properties encroach upon the Mortgaged Property. No improvement located on or being part of the Mortgaged Property is in violation of any applicable zoning law or regulation; (u) Payment Terms. Except with respect to the Interest Only Mortgage Loans, principal payments commenced no more than 60 days after the funds were disbursed to the Mortgagor in connection with the Mortgage Loan. The Mortgage Loans have an original term to maturity of not more than 30 years, with interest payable in arrears each month. As to each Adjustable Rate Mortgage Loan on each applicable Adjustment Date, the Mortgage Interest Rate will be adjusted to equal the sum of the Index plus the applicable Gross Margin, rounded up or down to the nearest multiple of 0.125% indicated by the Mortgage Note; provided that the Mortgage Interest Rate will not increase or decrease by more than the Periodic Interest Rate Cap on any Adjustment Date, and will in no event exceed the maximum Mortgage Interest Rate or be lower than the minimum Mortgage Interest Rate listed on the related Mortgage Loan Schedule for such Mortgage Loan. As to each Adjustable Rate Mortgage Loan that is not an Interest Only Mortgage Loan, each Mortgage Note requires a monthly payment which is sufficient, during the period prior to the first 28 adjustment to the Mortgage Interest Rate, to fully amortize the outstanding principal balance as of the first day of such period over the then remaining term of such Mortgage Note and to pay interest at the related Mortgage Interest Rate. As to each Adjustable Rate Mortgage Loan, if the related Mortgage Interest Rate changes on an Adjustment Date or, with respect to an Interest Only Mortgage Loan, on an Adjustment Date following the related interest only period, the then outstanding principal balance will be reamortized over the remaining life of such Mortgage Loan. No Mortgage Loan contains terms or provisions which would result in negative amortization; (v) Customary Provisions. The Mortgage and related Mortgage Note contain customary and enforceable provisions such as to render the rights and remedies of the holder thereof adequate for the realization against the Mortgaged Property of the benefits of the security provided thereby, including, (i) in the case of a Mortgage designated as a deed of trust, by trustee's sale, and (ii) otherwise by judicial foreclosure. There is no homestead or other exemption available to a Mortgagor which would interfere with the right to sell the Mortgaged Property at a trustee's sale or the right to foreclose the Mortgage; (w) Occupancy of the Mortgaged Property. As of the date of origination, the Mortgaged Property was lawfully occupied under applicable law and to the best of the Company's knowledge, the Mortgaged Property is lawfully occupied as of the related Closing Date; (x) No Additional Collateral. Except in the case of a Pledged Asset Mortgage Loan and as indicated on the related Data File, the Mortgage Note is not and has not been secured by any collateral, pledged account or other security except the lien of the corresponding Mortgage and the security interest of any applicable security agreement or chattel mortgage referred to in Paragraph (k) above; (y) Deeds of Trust. In the event the Mortgage constitutes a deed of trust, a trustee, duly qualified under applicable law to serve as such, has been properly designated and currently so serves and is named in the Mortgage, and no fees or expenses are or will become payable by the Mortgagee to the trustee under the deed of trust, except in connection with a trustee's sale after default by the Mortgagor; 29 (z) Acceptable Investment. The Company has no knowledge of any circumstances or conditions with respect to the Mortgage Loan, the Mortgaged Property, the Mortgagor or the Mortgagor's credit standing that can reasonably be expected to cause private institutional investors to regard the Mortgage Loan as an unacceptable investment, cause the Mortgage Loan to become delinquent, or adversely affect the value or marketability of the Mortgage Loan; (aa) Transfer of Mortgage Loans. With respect to each Mortgage that is not recorded in the name of MERS or its designee, the Assignment of Mortgage upon the insertion of the name of the assignee and recording information is in recordable form and is acceptable for recording under the laws of the jurisdiction in which the Mortgaged Property is located; (bb) Mortgaged Property Undamaged. The Mortgaged Property is undamaged by waste, fire, earthquake or earth movement, windstorm, flood, tornado or other casualty so as to affect adversely the value of the Mortgaged Property as security for the Mortgage Loan or the use for which the premises were intended; (cc) Servicing and Collection Practices; Escrow Deposits. The origination, servicing and collection practices used with respect to the Mortgage Loan have been in accordance with Accepted Servicing Practices, and have been in all material respects legal and proper. With respect to escrow deposits and Escrow Payments, all such payments are in the possession of the Company and there exist no deficiencies in connection therewith for which customary arrangements for repayment thereof have not been made. All Escrow Payments have been collected in full compliance with state and federal law. No escrow deposits or Escrow Payments or other charges or payments due the Company have been capitalized under the Mortgage Note; (dd) No Condemnation. There is no proceeding pending or to the best of the Company's knowledge threatened for the total or partial condemnation of the related Mortgaged Property; (ee) The Appraisal. The Mortgage Loan Documents contain an Appraisal of the related Mortgaged Property by a Qualified Appraiser acceptable to Fannie Mae or Freddie Mac. As to each Time$aver(R) Mortgage Loan, the Appraisal may 30 be from the original of the existing Company-serviced loan, which was refinanced via such Time$aver(R) Mortgage Loan; (ff) Insurance. The Mortgaged Property securing each Mortgage Loan is insured by an insurer acceptable to Fannie Mae or Freddie Mac against loss by fire and such hazards as are covered under a standard extended coverage endorsement and such other hazards as are customary in the area where the Mortgaged Property is located pursuant to insurance policies conforming to the requirements of Section 4.10, in an amount which is not less than the lesser of 100% of the insurable value of the Mortgaged Property and the outstanding principal balance of the Mortgage Loan, but in no event less than the minimum amount necessary to fully compensate for any damage or loss on a replacement cost basis. If the Mortgaged Property is a condominium unit, it is included under the coverage afforded by a blanket policy for the project. If the Mortgaged Property is in an area identified in the Federal Register by the Federal Emergency Management Agency as having special flood hazards, a flood insurance policy meeting the requirements of the current guidelines of the Federal Insurance Administration is in effect with a generally acceptable insurance carrier and such policy conforms to Fannie Mae or Freddie Mac requirements, in an amount representing coverage not less than the least of (A) the outstanding principal balance of the Mortgage Loan, (B) the full insurable value and (C) the maximum amount of insurance which was available under the Flood Disaster Protection Act of 1973, as amended. All individual insurance policies contain a standard mortgagee clause naming the Company and its successors and assigns as mortgagee, and all premiums thereon have been paid. The Mortgage obligates the Mortgagor thereunder to maintain a hazard insurance policy at the Mortgagor's cost and expense, and on the Mortgagor's failure to do so, authorizes the holder of the Mortgage to obtain and maintain such insurance at such Mortgagor's cost and expense, and to seek reimbursement therefor from the Mortgagor. The hazard insurance policy is the valid and binding obligation of the insurer, is in full force and effect, and will be in full force and effect and inure to the benefit of the Purchaser upon the consummation of the transactions contemplated by this Agreement. The Company has not acted or failed to act so as to impair the coverage of any such insurance policy or the validity, binding effect and enforceability thereof; (gg) Servicemembers Civil Relief Act. The Mortgagor has not notified the Company, and the Company has no knowledge of any relief requested by or allowed to the Mortgagor under the Servicemembers Civil Relief Act, as amended, or similar state laws; 31 (hh) Balloon Payments, Graduated Payments or Contingent Interests. The Mortgage Loan is not a graduated payment mortgage loan and the Mortgage Loan does not have a shared appreciation or other contingent interest feature. Except as indicated on the related Mortgage Loan Schedule, no Mortgage Loan has a balloon payment feature; (ii) No Construction Loans. No Mortgage Loan was made in connection with (i) the construction or rehabilitation of a Mortgaged Property or (ii) facilitating the trade-in or exchange of a Mortgaged Property other than a construction-to-permanent loan which has converted to a permanent Mortgage Loan; (jj) Underwriting. Each Mortgage Loan was underwritten in accordance with the Underwriting Guidelines and the Mortgage Note and Mortgage are on forms acceptable to Freddie Mac or Fannie Mae; (kk) No Bankruptcy. No Mortgagor was a debtor in any state or federal bankruptcy or insolvency proceeding at the time the Mortgage Loan was originated and as of the related Closing Date, the Company has not received notice that any Mortgagor is a debtor under any state or federal bankruptcy or insolvency proceeding; (ll) Delivery of Custodial Mortgage Files. The Mortgage Note, Assignment of Mortgage and any other documents required to be delivered by the Company hereunder have been delivered to the Custodian. The Company is in possession of a complete Retained Mortgage File in compliance with Exhibit D, except for such documents where the originals of which have been sent for recordation. With respect to each Mortgage Loan for which a lost note affidavit has been delivered to the Custodian in place of the original Mortgage Note, the related Mortgage Note is no longer in existence, and, if such Mortgage Loan is subsequently in default, the enforcement of such Mortgage Loan or of the related Mortgage by or on behalf of the Purchaser will not be affected by the absence of the original Mortgage Note; (mm) Buydown Mortgage Loans. With respect to each Mortgage Loan that is a Buydown Mortgage Loan: (i) On or before the date of origination of such Mortgage Loan, the Company and the Mortgagor, or the Company, 32 the Mortgagor and the seller of the Mortgaged Property or a third party entered into a Buydown Agreement. The Buydown Agreement provides that the seller of the Mortgaged Property (or third party) shall deliver to the Company temporary Buydown Funds in an amount equal to the aggregate undiscounted amount of payments that, when added to the amount the Mortgagor on such Mortgage Loan is obligated to pay on each Due Date in accordance with the terms of the Buydown Agreement, is equal to the full scheduled Monthly Payment due on such Mortgage Loan. The temporary Buydown Funds enable the Mortgagor to qualify for the Buydown Mortgage Loan. The effective interest rate of a Buydown Mortgage Loan if less than the interest rate set forth in the related Mortgage Note will increase within the Buydown Period as provided in the related Buydown Agreement so that the effective interest rate will be equal to the interest rate as set forth in the related Mortgage Note. The Buydown Mortgage Loan satisfies the requirements of Fannie Mae or Freddie Mac guidelines; (ii) The Mortgage and Mortgage Note reflect the permanent payment terms rather than the payment terms of the Buydown Agreement. The Buydown Agreement provides for the payment by the Mortgagor of the full amount of the Monthly Payment on any Due Date that the Buydown Funds are available. The Buydown Funds were not used to reduce the original principal balance of the Mortgage Loan or to increase the Appraised Value of the Mortgage Property when calculating the Loan-to-Value Ratios for purposes of the Agreement and, if the Buydown Funds were provided by the Company and if required under Fannie Mae or Freddie Mac guidelines, the terms of the Buydown Agreement were disclosed to the appraiser of the Mortgaged Property; (iii) The Buydown Funds may not be refunded to the Mortgagor unless the Mortgagor makes a principal payment for the outstanding balance of the Mortgage Loan; (iv) As of the date of origination of the Mortgage Loan, the provisions of the related Buydown Agreement complied with the requirements of Fannie Mae or Freddie Mac regarding buydown agreements; 33 (nn) Interest Calculation. Interest on each Mortgage Loan is calculated on the basis of a 360-day year consisting of twelve 30-day months. No Mortgage Loan provides for interest payable on a simple interest basis. No Mortgage Loan provides for an increase in the related Mortgage Interest Rate upon the occurrence of an event of default under the related Mortgage Note; (oo) Violation of Environmental Laws. There is no pending action or proceeding directly involving any Mortgaged Property of which the Company is aware in which compliance with any environmental law, rule or regulation is an issue; and to the best of the Company's knowledge, nothing further remains to be done to satisfy in full all requirements of each such law, rule or regulation constituting a prerequisite to use and enjoyment of said property; (pp) Texas Refinance Mortgage Loans. Each Mortgage Loan originated in the state of Texas pursuant to Article XVI, Section 50(a)(6) of the Texas Constitution (a "Texas Refinance Loan") has been originated in compliance with the provisions of Article XVI, Section 50(a)(6) of the Texas Constitution, Texas Civil Statutes and the Texas Finance Code; (qq) Conversion to Fixed Interest Rate. No Adjustable Rate Mortgage Loan contains a provision permitting or requiring conversion to a fixed interest rate Mortgage Loan; (rr) Homeownership and Equity Protection Act. No Mortgage Loan is a High Cost Loan or Covered Loan; (ss) Due on Sale. The Mortgage contains an enforceable provision, to the extent not prohibited by applicable law as of the date of such Mortgage, for the acceleration of the payment of the unpaid principal balance of the Mortgage Loan in the event that the Mortgaged Property is sold or transferred without the prior written consent of the mortgagee thereunder; (tt) Adjustments. All of the terms of the related Mortgage Note pertaining to interest adjustments, payment adjustments and adjustments of the outstanding principal balance, if any, are enforceable and such adjustments on such 34 Mortgage Loan have been made properly and in accordance with the provisions of such Mortgage Loan; (uu) Regarding the Mortgagor. The Mortgagor is one or more natural persons and/or trustees for an Illinois land trust or a trustee under a "living trust" and such "living trust" is in compliance with Fannie Mae guidelines for such trusts. In the event the Mortgagor is a trust, the trustee of such trust is a natural person and an obligor under the related Mortgage Note in his or her individual capacity; (vv) Flood Certification Contract. Each Mortgage Loan is covered by a paid in full, life of loan, flood certification contract and each of these contracts is assignable to the Purchaser and its assigns; (ww) Cooperative Loans. With respect to each Cooperative Loan: (i) The Cooperative Shares are held by a person as a tenant-stockholder in a Cooperative. Each original UCC financing statement, continuation statement or other governmental filing or recordation necessary to create or preserve the perfection and priority of the first lien and security interest in the Cooperative Loan and Proprietary Lease has been timely and properly made. Any security agreement, chattel mortgage or equivalent document related to the Cooperative Loan and delivered to Purchaser or its designee establishes in Purchaser a valid and subsisting perfected first lien on and security interest in the Mortgaged Property described therein, and Purchaser has full right to sell and assign the same. The Proprietary Lease term expires no less than five years after the Mortgage Loan term or such other term acceptable to Fannie Mae or Freddie Mac; (ii) A Cooperative Lien Search has been made by a company competent to make the same which company is acceptable to Fannie Mae or Fredde Mac and qualified to do business in the jurisdiction where the Cooperative is located; (iii) (a) The term of the related Proprietary Lease is not less than the terms of the Cooperative Loan; (b) there is no provision in any Proprietary Lease which requires the Mortgagor to offer for sale the Cooperative Shares owned by such Mortgagor first to the Cooperative; (c) there is no prohibition in any Proprietary Lease against pledging the Cooperative Shares or assigning the Proprietary Lease; (d) the Cooperative has been 35 created and exists in full compliance with the requirements for residential cooperatives in the jurisdiction in which the Project is located and qualifies as a cooperative housing corporation under Section 210 of the Code; (e) the Recognition Agreement is on a form published by Aztech Document Services, Inc. or includes similar provisions; and (f) the Cooperative has good and marketable title to the Project, and owns the Project either in fee simple or under a leasehold that complies with the requirements of Fannie Mae or Freddie Mac; such title is free and clear of any adverse liens or encumbrances, except the lien of any blanket mortgage; (iv) The Company has the right under the terms of the Mortgage Note, Pledge Agreement and Recognition Agreement to pay any maintenance charges or assessments owed by the Mortgagor; (v) Each Stock Power (i) has all signatures guaranteed or (ii) if all signatures are not guaranteed, then such Cooperative Shares will be transferred by the stock transfer agent of the Cooperative if the Company undertakes to convert the ownership of the collateral securing the related Cooperative Loan; (xx) Contents of the Retained Mortgage File. The Retained Mortgage File contains the documents listed as items 6 through 10 of Exhibit D attached hereto; (yy) Single Premium Credit Life Insurance. No Mortgagor was required to purchase any credit life, disability, accident or health insurance product as a condition of obtaining the extension of credit. No Mortgagor was required to obtain a prepaid single premium credit life, disability, accident or health insurance policy in connection with the origination of the Mortgage Loan. None of the proceeds of the Mortgage Loan were used to finance single premium credit life insurance, disability insurance, accident or similar insurance policies as part of the origination of, or as a condition to closing, the Mortgage Loan; (zz) Credit Reporting. With respect to each Mortgage Loan, the Company has fully furnished, in accordance with the Fair Credit Reporting Act and its implementing regulations, accurate and complete information (i.e. favorable and unfavorable) on its borrower credit files to Equifax, Experian and Trans Union Credit Information Company (three of the credit repositories), on a monthly basis; 36 (aaa) No Arbitration Provisions. No Mortgagor agreed to submit to arbitration to resolve any dispute arising out of or relating in any way to the related Mortgage Loan or the origination thereof; (bbb) Anti-Money Laundering Laws. With respect to each Mortgage Loan, the Company has complied with all applicable anti-money laundering laws and regulations, (the "Anti-Money Laundering Laws"), and has established an anti-money laundering compliance program as required by the applicable Anti-Money Laundering Laws, and maintains, and will maintain, sufficient information to identify the applicable Mortgagor for purposes of the Anti-Money Laundering Laws; (ccc) Prepayment Penalties. WITH RESPECT TO MORTGAGE LOANS WITH PREPAYMENT PENALTIES, ALL INFORMATION ON THE RELATED MORTGAGE LOAN SCHEDULE, DATA FILE AND UNDERWRITING GUIDELINES REGARDING PREPAYMENT PENALTIES IS COMPLETE AND ACCURATE IN ALL MATERIAL RESPECTS AND EXCEPT FOR BALLOON MORTGAGE LOANS ORIGINATED IN CERTAIN STATES SPECIFIED IN THE UNDERWRITING GUIDELINES WITH RESTRICTIONS ON COLLECTION OF PREPAYMENT PENALTIES, EACH PREPAYMENT PENALTY IS PERMISSIBLE AND ENFORCEABLE IN ACCORDANCE WITH THE TERMS UNDER APPLICABLE LAW. PREPAYMENT PENALTIES ON THE MORTGAGE LOANS ARE APPLICABLE TO PREPAYMENTS RESULTING FROM both refinancings and sales of the related Mortgaged Properties and the terms of such Prepayment Penalties do not provide for a waiver or release (i.e., "holidays") during the term of the Prepayment Penalty. No Mortgage Loan originated on or after October 1, 2002 provides for the payment of a Prepayment Penalty beyond the three-year term following the origination of the Mortgage Loan. No Mortgage Loan originated prior to such date provides for the payment of a Prepayment Penalty beyond the five-year term following the origination of the Mortgage Loan; (ddd) Leasehold Estates. With respect to Mortgage Loans that are secured by a leasehold estate, the lease is valid, in full force and effect and conforms to the Underwriting Guidelines; and (eee) Georgia Fair Lending Act. No Mortgage Loan was originated on or after October 1, 2002 and before March 7, 2003, which is secured by property located in the State of Georgia. No Mortgage Loan originated on or after March 7, 2003 is a 37 "High Cost Home Loan" as defined in the Georgia Fair Lending Act, as amended. Section 3.03. Repurchase. It is understood and agreed that the representations and warranties set forth in Sections 3.01 and 3.02 shall survive the sale of the Mortgage Loans to the Purchaser and the delivery of the applicable Mortgage Loan Documents to the Custodian and shall inure to the benefit of the Purchaser hereunder, notwithstanding any restrictive or qualified endorsement on any Mortgage Note or Assignment of Mortgage or the examination or failure to examine any Custodial Mortgage File or Retained Mortgage File. Upon discovery by either the Company or the Purchaser of a breach of any of the foregoing representations and warranties that materially and adversely affects the value of the Mortgage Loans or the interest of the Purchaser (or that materially and adversely affects the interests of Purchaser in the related Mortgage Loan in the case of a representation and warranty relating to a particular Mortgage Loan), the party discovering such breach shall give prompt written notice to the other. Within ninety (90) days after the earlier of either discovery by or notice to the Company of any breach of a representation or warranty which materially and adversely affects the value of the Mortgage Loans or the interest of the Purchaser therein, the Company shall use its best efforts promptly to cure such breach in all material respects and, if such breach cannot be cured, the Company shall, at the Purchaser's option, repurchase such Mortgage Loan at the Repurchase Price. In the event that a breach shall involve any representation or warranty set forth in Section 3.01, and such breach cannot be cured within ninety (90) days of the earlier of either discovery by or notice to the Company of such breach, all of the Mortgage Loans shall, at the Purchaser's option, be repurchased by the Company at the Repurchase Price. However, if the breach shall involve a representation or warranty set forth in Section 3.02 and the Company discovers or receives notice of any such breach within ninety (90) days of the Closing Date, the Company shall, if the breach cannot be cured, at the Purchaser's option and provided that the Company has a Qualified Substitute Mortgage Loan, rather than repurchase the Mortgage Loan as provided above, remove such Mortgage Loan (a "Deleted Mortgage Loan") and substitute in its place a Qualified Substitute Mortgage Loan or Loans, provided that any such substitution shall be effected not later than one hundred twenty (120) days after the Closing Date. Notwithstanding the foregoing, however, if a breach is a Qualification Defect, such cure or repurchase must take place within sixty (60) days of the discovery of or notice of such breach. Notwithstanding anything to the contrary herein, within ninety (90) days of the earlier of either discovery by or notice to the Company of any breach of the representations or warranties set forth in clauses (rr), (yy) and (aaa) of Section 3.02, the Company shall repurchase such Mortgage Loan at the Repurchase Price. If the Company has no Qualified Substitute Mortgage Loan, it shall repurchase the deficient Mortgage Loan within ninety (90) days after the written notice of the breach or the failure to cure, whichever is later. Any repurchase of a Mortgage Loan or Loans pursuant to the foregoing provisions of this Section 3.03 shall be accomplished by deposit in the Custodial Account of the amount of the Repurchase Price for distribution to the Purchaser on the Remittance Date immediately following the Principal Prepayment Period in which such 38 Repurchase Price is received, after deducting therefrom any amount received in respect of such repurchased Mortgage Loan or Loans and being held in the Custodial Account for future distribution. At the time of repurchase or substitution, the Purchaser and the Company shall arrange for the reassignment of the Deleted Mortgage Loan to the Company and the delivery to the Company of any documents held by the Custodian relating to the Deleted Mortgage Loan. If the Company repurchases a Mortgage Loan that is a MERS Mortgage Loan, the Company shall cause MERS to designate on the MERS System the removal of the purchaser as beneficial holder with respect to the Mortgage Loan. In the event of a repurchase or substitution, the Company shall, simultaneously with such reassignment, give written notice to the Purchaser that such repurchase or substitution has taken place, amend the related Mortgage Loan Schedule to reflect the withdrawal of the Deleted Mortgage Loan from this Agreement, and, in the case of substitution, identify a Qualified Substitute Mortgage Loan and amend the related Mortgage Loan Schedule to reflect the addition of such Qualified Substitute Mortgage Loan to this Agreement. In connection with any such substitution, the Company shall be deemed to have made as to such Qualified Substitute Mortgage Loan the representations and warranties set forth in this Agreement except that all such representations and warranties set forth in this Agreement shall be deemed made as of the date of such substitution. The Company shall effect such substitution by delivering to the Custodian for such Qualified Substitute Mortgage Loan the documents required by Section 2.03, with the Mortgage Note endorsed as required by Section 2.03. No substitution will be made in any calendar month after the Determination Date for such month. The Company shall deposit in the Custodial Account the Monthly Payment less the Servicing Fee due on such Qualified Substitute Mortgage Loan or Loans in the month following the date of such substitution. Monthly Payments due with respect to Qualified Substitute Mortgage Loans in the month of substitution shall be retained by the Company. With respect to any Deleted Mortgage Loan, distributions to Purchaser shall include the Monthly Payment due on any Deleted Mortgage Loan in the month of substitution, and the Company shall thereafter be entitled to retain all amounts subsequently received by the Company in respect of such Deleted Mortgage Loan. For any month in which the Company substitutes a Qualified Substitute Mortgage Loan for a Deleted Mortgage Loan, the Company shall determine the amount (if any) by which the aggregate principal balance of all Qualified Substitute Mortgage Loans as of the date of substitution is less than the aggregate Stated Principal Balance of all Deleted Mortgage Loans (after application of scheduled principal payments due in the month of substitution). The amount of such shortfall shall be distributed by the Company in the month of substitution pursuant to Section 5.01. Accordingly, on the date of such substitution, the Company shall deposit from its own funds into the Custodial Account an amount equal to the amount of such shortfall. In addition to such repurchase or substitution obligation, the Company shall indemnify the Purchaser and hold it harmless against any losses, damages, penalties, fines, forfeitures, reasonable and necessary legal fees and related costs, judgments, and other costs and expenses resulting from any claim, demand, defense or assertion based on or grounded upon, or resulting from a breach of the representations and warranties contained in this Agreement. It is understood and agreed that the obligations of the Company set forth in this Section 3.03 to cure, substitute for or repurchase a defective Mortgage Loan and to indemnify the Purchaser as 39 provided in this Section 3.03 constitute the sole remedies of the Purchaser respecting a breach of the foregoing representations and warranties. Any cause of action against the Company relating to or arising out of the breach of any representations and warranties made in Sections 3.01 and 3.02 shall accrue as to any Mortgage Loan upon (i) discovery of such breach by the Purchaser or notice thereof by the Company to the Purchaser, (ii) failures by the Company to cure such breach or repurchase such Mortgage Loan as specified above, and (iii) demand upon the Company by the Purchaser for compliance with this Agreement. ARTICLE IV ADMINISTRATION AND SERVICING OF MORTGAGE LOANS Section 4.01. Company to Act as Servicer. The Company, as an independent contractor, shall service and administer the Mortgage Loans on behalf of the Purchaser and shall have full power and authority, acting alone or through the utilization of a Subervicer or a Subcontractor, to do any and all things in connection with such servicing and administration which the Company may deem necessary or desirable, consistent with the terms of this Agreement and with Accepted Servicing Practices. Consistent with the terms of this Agreement, the Company may waive, modify or vary any term of any Mortgage Loan or consent to the postponement of strict compliance with any such term or in any manner grant indulgence to any Mortgagor if in the Company's reasonable and prudent determination such waiver, modification, postponement or indulgence is not materially adverse to the Purchaser, provided, however, the Company shall not make any future advances with respect to a Mortgage Loan. The Company shall not permit any modification with respect to a Mortgage Loan that would change the Mortgage Interest Rate, defer or forgive the payment of principal or change the final maturity date on such Mortgage Loan, unless the Mortgagor is in default with respect to the Mortgage Loan or such default is, in the judgment of the Company, imminent. In the event that no default exists or is imminent, the Company shall request written consent from the Purchaser to permit such a modification and the Purchaser shall provide written consent or notify the Company of its objection to such modification within five (5) Business Days after its receipt of the Company's request. In the event of any such modification which permits the deferral of interest or principal payments on any Mortgage Loan, the Company shall, on the Business Day immediately preceding the Remittance Date in any month in which any such principal or interest payment has been deferred, deposit in the Custodial Account from its own funds, in accordance with Section 5.03, the difference between (a) such month's principal and one month's interest at the Mortgage Loan Remittance Rate on the unpaid principal balance of such Mortgage Loan and (b) the amount paid by the Mortgagor. The Company shall be entitled to reimbursement for such advances to the same extent as for all other advances made pursuant to Section 5.03. Without limiting the generality of the foregoing, the Company shall continue, and is hereby authorized and empowered, to execute and deliver on behalf of itself and the Purchaser, all instruments of satisfaction or cancellation, or of partial or full release, discharge and all other comparable instruments, with respect to the Mortgage Loans and with respect to the Mortgaged Properties. If reasonably required by the Company, the 40 Purchaser shall furnish the Company with any powers of attorney and other documents necessary or appropriate to enable the Company to carry out its servicing and administrative duties under this Agreement. In servicing and administering the Mortgage Loans, the Company shall employ procedures (including collection procedures) and exercise the same care that it customarily employs and exercises in servicing and administering mortgage loans for its own account, giving due consideration to Accepted Servicing Practices where such practices do not conflict with the requirements of this Agreement, and the Purchaser's reliance on the Company. The Company is authorized and empowered by the Purchaser, in its own name, when the Company believes it appropriate in its reasonable judgment to register any Mortgage Loan on the MERS System, or cause the removal from MERS registration of any Mortgage Lon on the MERS System, to execute and deliver, on behalf of the Purchaser, any and all instruments of assignment and other comparable instruments with respect to such assignment or re-recording of a Mortgage in the name of MERS, solely as nominee for the Purchaser and its successors and assigns. The Company shall cause to be maintained for each Cooperative Loan a copy of the financing statements and shall file and such financing statements and continuation statements as necessary, in accordance with the Uniform Commercial Code applicable in the jurisdiction in which the related Cooperative Apartment is located, to perfect and protect the security interest and lien of the Purchaser. The Company may arrange for the subservicing of any Mortgage Loan it services by a Subservicer pursuant to a Subservicing Agreement, a copy of which shall be provided to the Purchaser; provided, however, that such subservicing arrangement and the terms of the related Subservicing Agreement must provide for the servicing of such Mortgage Loan in a manner consistent with the servicing arrangements contemplated hereunder. The Company shall be solely liable for all fees owed to the Subservicer under the Subservicing Agreement, regardless whether the Company's compensation hereunder is adequate to pay such fees. Notwithstanding the provisions of any Subservicing Agreement, any of the provisions of this Agreement relating to agreements or arrangements between the Company and a Subservicer or reference to actions taken through a Subservicer or otherwise, the Company shall remain obligated and liable to the Purchaser for the servicing and administration of the Mortgage Loans it services in accordance with the provisions of this Agreement without diminution of such obligation or liability by virtue of such Subservicing Agreements or arrangements or by virtue of indemnification from the Subservicer and to the same extent and under the same terms and conditions as if the Company alone were servicing and administering those Mortgage Loans. All actions of each Subservicer performed pursuant to the related Subservicing Agreement shall be performed as agent of the Company with the same force and effect as if performed directly by the Company. For purposes of this Agreement, the Company shall be deemed to have received any collections, recoveries or payments with respect to the Mortgage Loans it services that are received by a Subservicer regardless of whether such payments are remitted by the Subservicer to the Company. Any Subservicing Agreement entered into by the Company shall provide that it may be assumed or terminated by the Purchaser, if the Purchaser has assumed the duties of the Company, at the Purchaser's option, as applicable, without cost or obligation to the assuming or terminating party 41 or its assigns. Any Subservicing Agreement, and any other transactions or services relating to the Mortgage Loans involving a Subservicer, shall be deemed to be between the Company and such Subservicer alone, and the Purchaser shall not be deemed parties thereto and shall have no claims or rights of action against, rights, obligations, duties or liabilities to or with respect to the Subservicer or its officers, directors or employees, except as set forth in this Section 4.01. Section 4.02. Liquidation of Mortgage Loans. In the event that any payment due under any Mortgage Loan and not postponed pursuant to Section 4.01 is not paid when the same becomes due and payable, or in the event the Mortgagor fails to perform any other covenant or obligation under the Mortgage Loan and such failure continues beyond any applicable grace period, the Company shall take such action as (1) the Company would take under similar circumstances with respect to a similar mortgage loan held for its own account for investment, (2) shall be consistent with Accepted Servicing Practices, (3) the Company shall determine prudently to be in the best interest of Purchaser, and (4) is consistent with any related PMI Policy or LPMI Policy. In the event that any payment due under any Mortgage Loan is not postponed pursuant to Section 4.01 and remains delinquent for a period of 90 days or any other default continues for a period of ninety (90) days beyond the expiration of any grace or cure period, the Company shall commence foreclosure proceedings, the Company shall notify the Purchaser in writing of the Company's intention to do so and shall provide such information regarding the Mortgage Loan as the Purchaser reasonably may request, provided that the Company shall not commence foreclosure proceedings if the Purchaser objects to such action within three (3) Business Days after receiving such notice. The Company shall follow any written directions of the Purchaser with respect to the servicing of such Mortgage Loan, as long as such directions are in accordance with Accepted Servicing Practices and do not violate applicable law. In the event the Purchaser objects to such foreclosure action, the Company shall not be required to make Monthly Advances with respect to such Mortgage Loan, pursuant to Section 5.03, and the Company's obligation to make such Monthly Advances shall terminate on the 90th day referred to above. In such connection, the Company shall from its own funds make all necessary and proper Servicing Advances, provided, however, that the Company shall not be required to expend its own funds in connection with any foreclosure or towards the restoration or preservation of any Mortgaged Property, unless it shall determine (a) that such preservation, restoration and/or foreclosure will increase the proceeds of liquidation of the Mortgage Loan to Purchaser after reimbursement to itself for such expenses and (b) that such expenses will be recoverable by it either through Liquidation Proceeds (respecting which it shall have priority for purposes of withdrawals from the Custodial Account pursuant to Section 4.05) or through Insurance Proceeds (respecting which it shall have similar priority). Notwithstanding anything to the contrary contained herein, in connection with a foreclosure or acceptance of a deed in lieu of foreclosure, in the event the Company has reasonable cause to believe that a Mortgaged Property is contaminated by hazardous or toxic substances or wastes, or if the Purchaser otherwise requests an environmental inspection or review of such Mortgaged Property, such an inspection or review is to be conducted by a qualified inspector. The cost for such inspection or review shall be borne by the Purchaser. Upon completion of the inspection or review, the Company shall promptly provide the Purchaser with a written report of the environmental inspection. 42 After reviewing the environmental inspection report, the Purchaser shall determine how the Company shall proceed with respect to the Mortgaged Property. In the event (a) the environmental inspection report indicates that the Mortgaged Property is contaminated by hazardous or toxic substances or wastes and (b) the Purchaser directs the Company to proceed with foreclosure or acceptance of a deed in lieu of foreclosure, the Company shall be reimbursed for all reasonable costs associated with such foreclosure or acceptance of a deed in lieu of foreclosure and any related environmental clean up costs, as applicable, from the related Liquidation Proceeds, or if the Liquidation Proceeds are insufficient to fully reimburse the Company, the Company shall be entitled to be reimbursed from amounts in the Custodial Account pursuant to Section 4.05 hereof. In the event the Purchaser directs the Company not to proceed with foreclosure or acceptance of a deed in lieu of foreclosure, the Company shall be reimbursed for all Servicing Advances made with respect to the related Mortgaged Property from the Custodial Account pursuant to Section 4.05 hereof. Section 4.03. Collection of Mortgage Loan Payments. Continuously from the respective Cut-off Date until the principal and interest on all Mortgage Loans are paid in full or the Mortgage Loans have been fully liquidated (with respect to Mortgage Loans that remain subject to this Agreement pursuant to Section 9.01 herein), in accordance with this Agreement and Accepted Servicing Practices, the Company shall proceed diligently to collect all payments due under each of the Mortgage Loans when the same shall become due and payable and shall take special care in ascertaining and estimating Escrow Payments and all other charges that will become due and payable with respect to the Mortgage Loan and the Mortgaged Property, to the end that the installments payable by the Mortgagors will be sufficient to pay such charges as and when they become due and payable. Section 4.04. Establishment of and Deposits to Custodial Account. The Company shall segregate and hold all funds collected and received pursuant to a Mortgage Loan separate and apart from any of its own funds and general assets and shall establish and maintain one or more Custodial Accounts, in the form of time deposit or demand accounts, titled "Wells Fargo Bank, N.A., in trust for Bank of America, National Association, its successors or assigns, and/or subsequent purchasers of Mortgage Loans - P & I." The Custodial Account shall be established with a Qualified Depository. Upon request of the Purchaser and within ten (10) days thereof, the Company shall provide the Purchaser with written confirmation of the existence of such Custodial Account. The Custodial Account shall at all times be insured to the fullest extent allowed by applicable law. Funds deposited in the Custodial Account may be drawn on by the Company in accordance with Section 4.05. The Company shall deposit in the Custodial Account within two (2) Business Days of Company's receipt, and retain therein, the following collections received by the Company and payments made by the Company after the Cut-off Date, or received by the Company prior to the Cut-off Date but allocable to a period subsequent thereto, other than payments of principal and interest due on or before the Cut-off Date: (i) all payments on account of principal on the Mortgage Loans, including all Principal Prepayments (including Prepayment Penalties paid by the 43 Mortgagor or other amounts paid by the Company pursuant to Section 4.21 of this Agreement); (ii) all payments on account of interest on the Mortgage Loans adjusted to the Mortgage Loan Remittance Rate; (iii) all Liquidation Proceeds; (iv) all Insurance Proceeds including amounts required to be deposited pursuant to Section 4.10 (other than proceeds to be held in the Escrow Account and applied to the restoration or repair of the Mortgaged Property or released to the Mortgagor in accordance with Section 4.14), Section 4.11 and Section 4.15; (v) all Condemnation Proceeds which are not applied to the restoration or repair of the Mortgaged Property or released to the Mortgagor in accordance with Section 4.14; (vi) any amount required to be deposited in the Custodial Account pursuant to Section 4.01, 5.03, 6.01 or 6.02; (vii) any amounts payable in connection with the repurchase of any Mortgage Loan pursuant to Section 3.03 and all amounts required to be deposited by the Company in connection with a shortfall in principal amount of any Qualified Substitute Mortgage Loan pursuant to Section 3.03; (viii) with respect to each Principal Prepayment, the Prepayment Interest Shortfall (to be paid by the Company out of its own funds); (ix) any amounts required to be deposited by the Company pursuant to Section 4.11 in connection with the deductible clause in any blanket hazard insurance policy; (x) any amounts received with respect to or related to any REO Property and all REO Disposition Proceeds pursuant to Section 4.16; and (xi) an amount from the Subsidy Account that when added to the Mortgagor's payment will equal the full monthly amount due under the related Mortgage Note. The foregoing requirements for deposit into the Custodial Account shall be exclusive, it being understood and agreed that, without limiting the generality of the foregoing, payments in the nature of late payment charges and assumption fees, to the extent permitted by Section 6.01, need not be deposited by the Company into the Custodial Account. Any interest paid on funds deposited in the Custodial Account by the depository institution shall accrue to the benefit of the Company and the Company shall be entitled to retain and withdraw such interest from the Custodial Account pursuant to Section 4.05. The Company shall maintain adequate records with respect to all deposits made pursuant to this Section 4.04. All funds required to be deposited in 44 the Custodial Account shall be held in trust for the Purchaser until withdrawn in accordance with Section 4.05. Section 4.05. Permitted Withdrawals From Custodial Account. The Company shall, from time to time, withdraw funds from the Custodial Account for the following purposes: (i) to make payments to the Purchaser in the amounts and in the manner provided for in Section 5.01; (ii) to reimburse itself for Monthly Advances of the Company's funds made pursuant to Section 5.03, the Company's right to reimburse itself pursuant to this sub-clause (ii) being limited to amounts received on the related Mortgage Loan which represent late payments of principal and/or interest respecting which any such advance was made, it being understood that, in the case of any such reimbursement, the Company's right thereto shall be prior to the rights of Purchaser, except that, where the Company is required to repurchase a Mortgage Loan pursuant to Section 3.03 or 6.02, the Company's right to such reimbursement shall be subsequent to the payment to the Purchaser of the Repurchase Price pursuant to such sections and all other amounts required to be paid to the Purchaser with respect to such Mortgage Loan; (iii) to reimburse itself for unreimbursed Servicing Advances, and for any unpaid Servicing Fees, the Company's right to reimburse itself pursuant to this sub-clause (iii) with respect to any Mortgage Loan being limited to related Liquidation Proceeds, Condemnation Proceeds, Insurance Proceeds and such other amounts as may be collected by the Company from the Mortgagor or otherwise relating to the Mortgage Loan, it being understood that, in the case of any such reimbursement, the Company's right thereto shall be prior to the rights of Purchaser, except that where the Company is required to repurchase a Mortgage Loan pursuant to Section 3.03 or 6.02, in which case the Company's right to such reimbursement shall be subsequent to the payment to the Purchaser of the Repurchase Price pursuant to such sections and all other amounts required to be paid to the Purchaser with respect to such Mortgage Loan; (iv) to pay itself interest on funds deposited in the Custodial Account if such interest amount was previously credited; (v) to reimburse itself for expenses incurred and reimbursable to it pursuant to Section 8.01; (vi) to pay any amount required to be paid pursuant to Section 4.16 related to any REO Property, it being understood that, in the case of any such expenditure or withdrawal related to a particular REO Property, the amount of such expenditure or withdrawal from the Custodial Account 45 shall be limited to amounts on deposit in the Custodial Account with respect to the related REO Property; (vii) to reimburse itself for any Servicing Advances or REO expenses after liquidation of the Mortgaged Property not otherwise reimbursed above; (viii) to remove funds inadvertently placed in the Custodial Account by the Company; (ix) to clear and terminate the Custodial Account upon the termination of this Agreement; and (x) to transfer funds to another Qualified Depository. In the event that the Custodial Account is interest bearing, on each Remittance Date, the Company shall withdraw all funds from the Custodial Account except for those amounts which, pursuant to Section 5.01, the Company is not obligated to remit on such Remittance Date. The Company may use such withdrawn funds only for the purposes described in this Section 4.05. The Company shall keep and maintain separate accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from the Custodial Account, to the extent held by or on behalf of it, pursuant to sub-clauses (iii), (v), (vi) and (vii) above. Section 4.06. Establishment of and Deposits to Escrow Account. The Company shall segregate and hold all funds collected and received pursuant to a Mortgage Loan constituting Escrow Payments separate and apart from any of its own funds and general assets and shall establish and maintain one or more Escrow Accounts, in the form of time deposit or demand accounts, titled, "Wells Fargo Bank, N.A., in trust for Bank of America, National Association, its successors or assigns, and/or subsequent purchasers of Residential Mortgage Loans, and various Mortgagors - T & I." The Escrow Accounts shall be established with a Qualified Depository, in a manner which shall provide maximum available insurance thereunder. Upon request of the Purchaser and within ten (10) days thereof, the Company shall provide the Purchaser with written confirmation of the existence of such Escrow Account. Funds deposited in the Escrow Account may be drawn on by the Company in accordance with Section 4.07. The Company shall deposit in the Escrow Account or Accounts within two (2) Business Days of Company's receipt, and retain therein: (i) all Escrow Payments collected on account of the Mortgage Loans, for the purpose of effecting timely payment of any such items as required under the terms of this Agreement; (ii) all amounts representing Insurance Proceeds or Condemnation Proceeds which are to be applied to the restoration or repair of any Mortgaged Property; and (iii) all payments on account of Buydown Funds. 46 The Company shall make withdrawals from the Escrow Account only to effect such payments as are required under this Agreement, as set forth in Section 4.07. The Company shall be entitled to retain any interest paid on funds deposited in the Escrow Account by the depository institution, other than interest on escrowed funds required by law to be paid to the Mortgagor. To the extent required by law, the Company shall pay interest on escrowed funds to the Mortgagor notwithstanding that the Escrow Account may be non-interest bearing or that interest paid thereon is insufficient for such purposes. Section 4.07. Permitted Withdrawals From Escrow Account. Withdrawals from the Escrow Account or Accounts may be made by the Company only: (i) to effect timely payments of ground rents, taxes, assessments, water rates, mortgage insurance premiums, condominium charges, fire and hazard insurance premiums or other items constituting Escrow Payments for the related Mortgage; (ii) to reimburse the Company for any Servicing Advances made by the Company pursuant to Section 4.08 with respect to a related Mortgage Loan, but only from amounts received on the related Mortgage Loan which represent late collections of Escrow Payments thereunder; (iii) to refund to any Mortgagor any funds found to be in excess of the amounts required under the terms of the related Mortgage Loan; (iv) for transfer to the Custodial Account for application to reduce the principal balance of the Mortgage Loan in accordance with the terms of the related Mortgage and Mortgage Note; (v) for application to the restoration or repair of the Mortgaged Property in accordance with the procedures outlined in Section 4.14; (vi) to pay to the Company, or any Mortgagor to the extent required by law, any interest paid on the funds deposited in the Escrow Account; (vii) to remit to Purchaser payments on account of Buydown Funds as applicable; (viii) to remove funds inadvertently placed in the Escrow Account by the Company; and (ix) to clear and terminate the Escrow Account on the termination of this Agreement. 47 Section 4.08. Payment of Taxes, Insurance and Other Charges. With respect to each Mortgage Loan, the Company shall maintain accurate records reflecting the status of ground rents, taxes, assessments, water rates, sewer rents, and other charges which are or may become a lien upon the Mortgaged Property and the status of PMI Policy or LPMI Policy premiums and fire and hazard insurance coverage and shall obtain, from time to time, all bills for the payment of such charges (including renewal premiums) and shall effect payment thereof prior to the applicable penalty or termination date, employing for such purpose deposits of the Mortgagor in the Escrow Account which shall have been estimated and accumulated by the Company in amounts sufficient for such purposes, as allowed under the terms of the Mortgage. The Company assumes full responsibility for the timely payment of all such bills and shall effect timely payment of all such charges irrespective of each Mortgagor's faithful performance in the payment of same or the making of the Escrow Payments, and the Company shall make advances from its own funds to effect such payments. To the extent that a Mortgage does not provide for Escrow Payments, the Company shall use its reasonable efforts in accordance with Accepted Servicing Practices to determine whether any such payments are made by the Mortgagor at the time they first become due. The Company shall make advances from its own funds to effect such delinquent payments within such time period as will avoid the loss of the related Mortgaged Property by foreclosure of a tax or other lien. Advances pursuant to this Section 4.08 shall constitute Servicing Advances hereunder; provided that the Company shall be required to so advance only to the extent that the Company, in its good faith judgment, believes the Servicing Advance to be recoverable from Insurance Proceeds or Liquidation Proceeds or otherwise. The costs incurred by the Company, if any, in effecting the timely payments of taxes and assessments on the Mortgaged Properties and related insurance premiums shall not be added to the Stated Principal Balances of the related Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so permit. Section 4.09. Protection of Accounts. The Company may transfer the Custodial Account, Subsidy Account or the Escrow Account to a different Qualified Depository from time to time, provided that the Company shall give notice to the Purchaser of any proposed change of the location of either Account not later than ten (10) Business Days prior to any change thereof. Section 4.10. Maintenance of Hazard Insurance. The Company shall cause to be maintained for each Mortgage Loan hazard insurance such that all buildings upon the Mortgaged Property are insured by an insurer acceptable to Fannie Mae or Freddie Mac against loss by fire, hazards of extended coverage and such other hazards as are customary or required by law in the area where the Mortgaged Property is located, in an amount which is at least equal to the lesser of (i) 100% of the insurable value, on a replacement cost basis, of the improvements on the related Mortgaged Property and (ii) the greater of (a) the outstanding principal balance of the Mortgage Loan and (b) an amount such that the proceeds thereof shall be sufficient to prevent the Mortgagor or the loss payee from becoming a co-insurer. In the event a hazard insurance policy shall be in danger of being terminated, or in the event the insurer shall cease to be acceptable to Fannie Mae or Freddie Mac, the Company shall notify the Purchaser and the related Mortgagor, and shall use its best efforts, 48 as permitted by applicable law, to obtain from another qualified insurer a replacement hazard insurance policy substantially and materially similar in all respects to the original policy. In no event, however, shall a Mortgage Loan be without a hazard insurance policy at any time, subject only to Section 4.11 hereof. If the related Mortgaged Property is located in an area identified by the Federal Emergency Management Agency ("FEMA") as having special flood hazards (and such flood insurance has been made available) a flood insurance policy meeting the requirements of the current guidelines of the Federal Insurance Administration is in effect with a generally acceptable insurance carrier acceptable to Fannie Mae or Freddie Mac in an amount representing coverage equal to the lesser of (i) the minimum amount required, under the terms of coverage, to compensate for any damage or loss on a replacement cost basis (or the unpaid balance of the mortgage if replacement cost coverage is not available for the type of building insured) and (ii) the maximum amount of insurance which is available under the Flood Disaster Protection Act of 1973, as amended. If at any time during the term of the Mortgage Loan, the Company determines in accordance with applicable law and pursuant to the FEMA guides that a Mortgaged Property is located in a special flood hazard area and is not covered by flood insurance or is covered in an amount less than the amount required by the Flood Disaster Protection Act of 1973, as amended, the Company shall notify the related Mortgagor to obtain such flood insurance coverage, and if said Mortgagor fails to obtain the required flood insurance coverage within forty-five (45) days after such notification, the Company shall immediately force place the required flood insurance on the Mortgagor's behalf. Any out-of-pocket expenses or advance made by the Company on such force placed flood insurance coverage shall be deemed a Servicing Advance. If a Mortgage is secured by a unit in a condominium project, the Company shall verify that the coverage required of the owner's association, including hazard, flood, liability, and fidelity coverage, is being maintained in accordance with then current Fannie Mae requirements, and secure from the owner's association its agreement to notify the Company promptly of any change in the insurance coverage or of any condemnation or casualty loss that may have a material effect on the value of the Mortgaged Property as security. In the event that any Purchaser or the Company shall determine that the Mortgaged Property should be insured against loss or damage by hazards and risks not covered by the insurance required to be maintained by the Mortgagor pursuant to the terms of the Mortgage, the Company shall communicate and consult with the Mortgagor with respect to the need for such insurance and bring to the Mortgagor's attention the required amount of coverage for the Mortgaged Property and if the Mortgagor does not obtain such coverage, the Company shall immediately force place the required coverage on the Mortgagor's behalf. All policies required hereunder shall name the Company as loss payee and shall be endorsed with standard or union mortgagee clauses, without contribution, which shall provide for at least thirty (30) days prior written notice of any cancellation, reduction in amount or material change in coverage. The Company shall not interfere with the Mortgagor's freedom of choice in selecting either his insurance carrier or agent, provided, however, that the Company shall not accept any 49 such insurance policies from insurance companies unless such companies are acceptable to Fannie Mae and Freddie Mac and are licensed to do business in the jurisdiction in which the Mortgaged Property is located. The Company shall determine that such policies provide sufficient risk coverage and amounts, that they insure the property owner, and that they properly describe the property address. The Company shall furnish to the Mortgagor a formal notice of expiration, in accordance with the Accepted Servicing Practices, of any such insurance in sufficient time for the Mortgagor to arrange for renewal coverage by the expiration date. Pursuant to Section 4.04, any amounts collected by the Company under any such policies (other than amounts to be deposited in the Escrow Account and applied to the restoration or repair of the related Mortgaged Property, or property acquired in liquidation of the Mortgage Loan, or to be released to the Mortgagor, in accordance with the Company's normal servicing procedures as specified in Section 4.14) shall be deposited in the Custodial Account subject to withdrawal pursuant to Section 4.05. Section 4.11. Maintenance of Mortgage Impairment Insurance. In the event that the Company shall obtain and maintain a blanket policy insuring against losses arising from fire and hazards covered under extended coverage on all of the Mortgage Loans, then, to the extent such policy (1) names the Company as loss payee, (2) provides coverage in an amount equal to the amount required pursuant to Section 4.10 without coinsurance and (3) otherwise complies with Accepted Servicing Practices and all other requirements of Section 4.10, it shall conclusively be deemed to have satisfied its obligations as set forth in Section 4.10. The Company shall prepare and make any claims on the blanket policy as deemed necessary by the Company in accordance with Accepted Servicing Practices. Any amounts collected by the Company under any such policy relating to a Mortgage Loan shall be deposited in the Custodial Account subject to withdrawal pursuant to Section 4.05. Such policy may contain a deductible clause, in which case, in the event that there shall not have been maintained on the related Mortgaged Property a policy complying with Section 4.10, and there shall have been a loss which would have been covered by such policy, the Company shall deposit in the Custodial Account at the time of such loss the amount not otherwise payable under the blanket policy because of such deductible clause, such amount to be deposited from the Company's funds, without reimbursement therefor. Upon request of the Purchaser, the Company shall cause to be delivered to such Purchaser a certificate of insurance and a statement from the insurer thereunder that such policy shall in no event be terminated or materially modified without 30 days' prior written notice to such Purchaser. Section 4.12. Maintenance of Fidelity Bond and Errors and Omissions Insurance. The Company shall maintain with responsible companies, at its own expense, a blanket Fidelity Bond and an Errors and Omissions Insurance Policy, with broad coverage on all officers, employees or other persons acting in any capacity requiring such persons to handle funds, money, documents or papers relating to the Mortgage Loans ("Company Employees"). Any such Fidelity Bond and Errors and Omissions Insurance Policy shall be in the form of the Mortgage Banker's Blanket Bond and shall protect and insure the Company against losses, including forgery, theft, embezzlement, fraud, errors and omissions and negligent acts of such Company Employees. Such Fidelity Bond and Errors and Omissions Insurance Policy also shall 50 protect and insure the Company against losses in connection with the release or satisfaction of a Mortgage Loan without having obtained payment in full of the indebtedness secured thereby. No provision of this Section 4.12 requiring such Fidelity Bond and Errors and Omissions Insurance Policy shall diminish or relieve the Company from its duties and obligations as set forth in this Agreement. The minimum coverage under any such Fidelity Bond and Errors and Omissions Insurance Policy shall be acceptable to Fannie Mae or Freddie Mac. Upon the request of any Purchaser, the Company shall cause to be delivered to such Purchaser a certificate of insurance for such Fidelity Bond and Errors and Omissions Insurance Policy and a statement from the surety and the insurer that such Fidelity Bond and Errors and Omissions Insurance Policy shall in no event be terminated or materially modified without 30 days' prior written notice to the Purchaser. Section 4.13. Inspections. If any Mortgage Loan is more than sixty (60) days delinquent, the Company immediately shall inspect the Mortgaged Property and shall conduct subsequent inspections in accordance with Accepted Servicing Practices or as may be required by the primary mortgage guaranty insurer. The Company shall keep a record of each such inspection and, upon request, shall provide the Purchaser with such information. Section 4.14. Restoration of Mortgaged Property. The Company need not obtain the approval of the Purchaser prior to releasing any Insurance Proceeds or Condemnation Proceeds to the Mortgagor to be applied to the restoration or repair of the Mortgaged Property if such release is in accordance with Accepted Servicing Practices. For claims greater than $15,000, at a minimum the Company shall comply with the following conditions in connection with any such release of Insurance Proceeds or Condemnation Proceeds: (i) the Company shall receive satisfactory independent verification of completion of repairs and issuance of any required approvals with respect thereto; (ii) the Company shall take all steps necessary to preserve the priority of the lien of the Mortgage, including, but not limited to requiring waivers with respect to mechanics' and materialmen's liens; (iii) the Company shall verify that the Mortgage Loan is not in default; and (iv) pending repairs or restoration, the Company shall place the Insurance Proceeds or Condemnation Proceeds in the Escrow Account. If the Purchaser is named as an additional loss payee, the Company is hereby empowered to endorse any loss draft issued in respect of such a claim in the name of the Purchaser. 51 Section 4.15. Maintenance of PMI Policy and LPMI Policy; Claims. Except as indicated on the Mortgage Loan Schedule, with respect to each Mortgage Loan with an LTV greater than 80% at the time of origination, the Company shall, without any cost to the Purchaser maintain in full force and effect a PMI Policy or LPMI Policy insuring a portion of the unpaid principal balance of the Mortgage Loan as to payment defaults. If the Mortgage Loan is insured by a PMI Policy for which the Mortgagor pays all premiums, the coverage will remain in place until (i) the LTV decreases to 78% or (ii) the PMI Policy is otherwise terminated pursuant to the Homeowners Protection Act of 1998, 12 USC SS.4901, et seq. In the event that such PMI Policy shall be terminated other than as required by law, the Company shall obtain from another Qualified Insurer a comparable replacement policy, with a total coverage equal to the remaining coverage of such terminated PMI Policy. If the insurer shall cease to be a Qualified Insurer, the Company shall determine whether recoveries under the PMI Policy are jeopardized for reasons related to the financial condition of such insurer, it being understood that the Company shall in no event have any responsibility or liability for any failure to recover under the PMI Policy for such reason. If the Company determines that recoveries are so jeopardized, it shall notify the Purchaser and the Mortgagor, if required, and obtain from another Qualified Insurer a replacement insurance policy. The Company will maintain or cause to be maintained in full force and effect any LPMI Policy issued by a Qualified Insurer with respect to each Mortgage Loan for which such coverage is in existence or is obtained. The Purchaser shall notify the Company of any Mortgage Loan covered under an LPMI Policy. The Company shall not take any action which would result in noncoverage under any applicable PMI Policy or LPMI Policy of any loss which, but for the actions of the Company would have been covered thereunder. In connection with any assumption or substitution agreement entered into or to be entered into pursuant to Section 6.01, the Company shall promptly notify the insurer under the related PMI Policy or LPMI Policy, if any, of such assumption or substitution of liability in accordance with the terms of such PMI Policy or LPMI Policy and shall take all actions which may be required by such insurer as a condition to the continuation of coverage under such PMI Policy or LPMI Policy. If such PMI Policy or LPMI Policy is terminated as a result of such assumption or substitution of liability, the Company shall obtain a replacement PMI Policy or LPMI Policy as provided above. In connection with its activities as servicer, the Company agrees to prepare and present, on behalf of itself and the Purchaser, claims to the insurer under any PMI Policy or LPMI Policy in a timely fashion in accordance with the terms of such PMI Policy or LPMI Policy and, in this regard, to take such action as shall be necessary to permit recovery under any PMI Policy or LPMI Policy respecting a defaulted Mortgage Loan. Pursuant to Section 4.04, any amounts collected by the Company under any PMI Policy or LPMI Policy shall be deposited in the Custodial Account, subject to withdrawal pursuant to Section 4.05. Section 4.16. Title, Management and Disposition of REO Property. In the event that title to any Mortgaged Property is acquired in foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale shall be taken in the name of the Purchaser, or in the event the Purchaser is not authorized or permitted to hold title to real property in the state where the REO Property is located, or would be adversely affected under the "doing business" or tax laws of such state by so holding title, the deed or certificate of sale shall be taken in the name 52 of such Person or Persons as shall be consistent with an Opinion of Counsel obtained by the Company from any attorney duly licensed to practice law in the state where the REO Property is located. The Person or Persons holding such title other than the Purchaser shall acknowledge in writing that such title is being held as nominee for the Purchaser. The Purchaser shall have the option to manage and operate the REO Property provided the Purchaser gives written notice of its intention to do so within thirty (30) days after such REO Property is acquired in foreclosure or by deed in lieu of foreclosure. The election by the Purchaser to manage the REO Property shall not constitute a termination of any rights of the Company pursuant to Section 11.02. In the event the Purchaser does not elect to manage its own REO Property, the Company shall manage, conserve, protect and operate each REO Property for the Purchaser solely for the purpose of its prompt disposition and sale. The Company, either itself or through an agent selected by the Company, shall manage, conserve, protect and operate the REO Property in the same manner that it manages, conserves, protects and operates other foreclosed property for its own account, and in the same manner that similar property in the same locality as the REO Property is managed. The Company shall attempt to sell the same (and may temporarily rent the same for a period not greater than one year, except as otherwise provided below) on such terms and conditions as the Company deems to be in the best interest of the Purchaser. The Company shall use its best efforts to dispose of the REO Property as soon as possible and shall sell such REO Property in any event within prior to the close of the third calendar year beginning after the year in which title has been taken to such REO Property, unless (i) a REMIC election has not been made with respect to the arrangement under which the Mortgage Loans and the REO Property are held, and (ii) the Company determines, and gives an appropriate notice to the Purchaser to such effect, that a longer period is necessary for the orderly liquidation of such REO Property. If a period longer than three years is permitted under the foregoing sentence and is necessary to sell any REO Property, (i) the Company shall report monthly to the Purchaser as to the progress being made in selling such REO Property and (ii) if, with the written consent of the Purchaser, a purchase money mortgage is taken in connection with such sale, such purchase money mortgage shall name the Company as mortgagee, and such purchase money mortgage shall not be held pursuant to this Agreement, but instead a separate agreement among the Company and Purchaser shall be entered into with respect to such purchase money mortgage. The Company shall also maintain on each REO Property fire and hazard insurance with extended coverage in amount which is at least equal to the maximum insurable value of the improvements which are a part of such property, liability insurance and, to the extent required and available under the Flood Disaster Protection Act of 1973, as amended, flood insurance in the amount required above. The disposition of REO Property shall be carried out by the Company at such price, and upon such terms and conditions, as the Company deems to be in the best interests of the Purchaser. Notwithstanding any other provision in this Section 4.05, no REO Property shall be marketed for less than the appraisal value of the related Mortgaged Property without the prior consent of the Purchaser, and no REO Property shall be sold for less than ninety percent (90%) of its appraised value without the prior written consent of the Purchaser. The proceeds of sale of 53 the REO Property shall be promptly deposited in the Custodial Account. As soon as practical thereafter the expenses of such sale shall be paid and the Company shall reimburse itself for any related unreimbursed Servicing Advances, unpaid Servicing Fees and unreimbursed advances made pursuant to Section 5.03. On the Remittance Date immediately following the receipt of such sale proceeds, the net cash proceeds of such sale remaining in the Custodial Account shall be distributed to the Purchaser. The Company shall withdraw from the Custodial Account funds necessary for the proper operation management and maintenance of the REO Property, including the cost of maintaining any hazard insurance pursuant to Section 4.10 and the fees of any third party managing agent of the Company, or the Company itself. The REO management fee shall be the greater of one percent (1%) of the gross sales price of the REO Property or $1500.00 per REO Property, provided however, the REO management fee shall not exceed the net Liquidation Proceeds. The Company shall make monthly distributions on each Remittance Date to the Purchaser of the net cash flow from the REO Property (which shall equal the revenues from such REO Property net of the expenses described in this Section 4.16 and of any reserves reasonably required from time to time to be maintained to satisfy anticipated liabilities for such expenses). Section 4.17. Real Estate Owned Reports. Together with the statement furnished pursuant to Section 5.02, the Company shall furnish to the Purchaser on or before the Remittance Date each month a statement with respect to any REO Property covering the operation of such REO Property for the previous month and the Company's efforts in connection with the sale of such REO Property and any rental of such REO Property incidental to the sale thereof for the previous month. That statement shall be accompanied by such other information as the Purchaser shall reasonably request. Section 4.18. Liquidation Reports. Upon the foreclosure sale of any Mortgaged Property or the acquisition thereof by the Purchaser pursuant to a deed in lieu of foreclosure, the Company shall submit to the Purchaser a liquidation report with respect to such Mortgaged Property. Section 4.19. Reports of Foreclosures and Abandonments of Mortgaged Property. Following the foreclosure sale or abandonment of any Mortgaged Property, the Company shall report such foreclosure or abandonment as required pursuant to Section 6050J of the Code. The Company shall file information reports with respect to the receipt of mortgage interest received in a trade or business and information returns relating to cancellation of indebtedness income with respect to any Mortgaged Property as required by the Code. Such reports shall be in form and substance sufficient to meet the reporting requirements imposed by the Code. Section 4.20. Notification of Adjustments. With respect to each Adjustable Rate Mortgage Loan, the Company shall adjust the Mortgage Interest Rate on the related Adjustment Date in compliance with the requirements of applicable law and the related Mortgage and Mortgage Note. The Company shall execute and deliver any and all necessary notices required under applicable law and the terms of the related 54 Mortgage Note and Mortgage regarding the Mortgage Interest Rate adjustments. Upon the discovery by the Company or the receipt of notice from the Purchaser that the Company has failed to adjust a Mortgage Interest Rate in accordance with the terms of the related Mortgage Note, the Company shall immediately deposit in the Custodial Account from its own funds the amount of any interest loss or deferral caused the Purchaser thereby. Section 4.21. Credit Reporting; Gramm-Leach-Bliley Act. (a) The Company agrees to fully furnish, in accordance with the Fair Credit Reporting Act and its implementing regulations, accurate and complete information on its borrower credit files to Equifax, Experian, and Trans Union Credit Information Company (three of the credit repositories), on a monthly basis. (b) The Company agrees to transmit full file credit reporting data for each Mortgage Loan pursuant to Fannie Mae Guide Announcement 95-19 and for each Mortgage Loan, the Company shall report one of the following statuses each month: new origination, current, delinquent (30, 60, 90 days, etc.), bankruptcy, foreclosed or charged off. (c) The Company shall comply with Title V of the Gramm-Leach-Bliley Act of 1999 and all applicable regulations promulgated thereunder, relating to the Mortgage Loans and the related borrowers and shall provide all required notices thereunder. Section 4.22. Confidentiality/Protection of Customer Information. The Company shall keep confidential and shall not divulge to any party, without the Purchaser's prior written consent, the price paid by the Purchaser for the Mortgage Loans, except to the extent that it is reasonable and necessary for the Company to do so in working with legal counsel, auditors, taxing authorities or other governmental agencies. Each party agrees that it shall comply with all applicable laws and regulations regarding the privacy or security of Customer Information and shall maintain appropriate administrative, technical and physical safeguards to protect the security, confidentiality and integrity of Customer Information, including maintaining security measures designed to meet the objectives of the Interagency Guidelines Establishing Standards for Safeguarding Customer Information, 66 Fed. Reg. 8616 (the "Interagency Guidelines"). The Company shall promptly make available to the Purchaser's regulators information regarding such security measures as requested by such regulators. For purposes of this Section, the term "Customer Information" shall have the meaning assigned to it in the Interagency Guidelines. Each party further agrees that any Customer Information transmitted electronically by either party must be encrypted. Section 4.23 Disaster Recovery/Business Continuity Plan. The Company shall maintain contingency plans, recovery plans and proper risk controls to ensure Company's continued performance under this Agreement. The Company agrees to make available to the Purchaser's regulators information regarding such plans as requested by such regulators. Section 4.24 Quality Control Procedures. 55 The Company shall have an internal quality control program that verifies, on a regular basis, the existence and accuracy of the legal documents, credit documents, property appraisals, and underwriting decisions. The program shall include evaluating and monitoring the overall quality of the Company's loan production and the servicing activities of the Company in accordance with industry standards. Section 4.25 Application of Buydown Funds. With respect to each Buydown Mortgage Loan, the Company shall have deposited into the Escrow Account, no later than the last day of the month, Buydown Funds in an amount equal to the aggregate undiscounted amount of payments that, when added to the amount the Mortgagor on such Mortgage Loan is obligated to pay on all Due Dates in accordance with the terms of the Buydown Agreement, is equal to the full scheduled Monthly Payments which are required to be paid by the Mortgagor under the terms of the related Mortgage Note (without regard to the related Buydown Agreement as if the Mortgage Loan were not subject to the terms of the Buydown Agreement). With respect to each Buydown Mortgage Loan, the Company will distribute to the Purchaser on each Remittance Date an amount of Buydown Funds equal to the amount that, when added to the amount required to be paid on such date by the related Mortgagor, pursuant to and in accordance with the related Buydown Agreement, equals the full Monthly Payment that would otherwise be required to be paid on such Mortgage Loan by the related Mortgagor under the terms of the related Mortgage Note (as if the Mortgage Loan were not a Buydown Mortgage Loan and without regard to the related Buydown Agreement). If the Mortgagor on a Buydown Mortgage Loan defaults on such Mortgage Loan during the Buydown Period and the Mortgaged Property securing such Buydown Mortgage Loan is sold in the liquidation thereof (either by the Company or the insurer under any related Primary Insurance Policy) the Company shall, on the Remittance Date following the date upon which Liquidation Proceeds or REO Disposition proceeds are received with respect to any such Buydown Mortgage Loan, distribute to the Purchaser all remaining Buydown Funds for such Mortgage Loan then remaining in the Escrow Account. Pursuant to the terms of each Buydown Agreement, any amounts distributed to the Purchaser in accordance with the preceding sentence will be applied to reduce the outstanding principal balance of the related Buydown Mortgage Loan. If a Mortgagor on a Buydown Mortgage Loan prepays such Mortgage Loan in it entirety during the related Buydown Period, the Company shall be required to withdraw from the Escrow Account any Buydown Funds remaining in the Escrow Account with respect to such Buydown Mortgage Loan in accordance with the related Buydown Agreement. If a principal prepayment by a Mortgagor on a Buydown Mortgage Loan during the related Buydown Period, together with any Buydown Funds then remaining in the Escrow Account related to such Buydown Mortgage Loan, would result in a principal prepayment of the entire unpaid principal balance of the Buydown Mortgage Loan, the Company shall distribute to the Purchaser on the Remittance Date occurring in the month immediately succeeding the month in which such Principal Prepayment is received, all Buydown Funds related to such Mortgage Loan so remaining in the Escrow Account, together with any amounts required to be deposited into the Custodial Account. 56 Section 4.26 Establishment of and Deposits to Subsidy Account. (a) The Company shall segregate and hold all Subsidy Funds collected and received pursuant to the Subsidy Loans separate and apart from any of its own funds and general assets and shall establish and maintain one or more Subsidy Accounts, in the form of time deposit or demand accounts, titled "Wells Fargo Bank, N.A., in trust for Bank of America, National Association, its successors or assigns, and/or subsequent purchasers of Residential Mortgage Loans, and various Mortgagors." The Subsidy Account shall be an eligible deposit account established with an eligible institution. (b) The Company shall, from time to time, withdraw funds from the Subsidy Account for the following purposes: (i) to deposit in the Custodial Account in the amounts and in the manner provided for in Section 4.04(xi); (ii) to transfer funds to another eligible institution in accordance with Section 4.09 hereof; (iii) to withdraw funds deposited in error; and (iv) to clear and terminate the Subsidy Account upon the termination of this Agreement. (c) Notwithstanding anything to the contrary elsewhere in this Agreement, the Company may employ the Custodial Account as the Subsidy Account to the extent that the Company can separately identify any Subsidy Funds deposited therein. Section 4.27. Automated Servicing Systems. The Company shall establish, format, maintain and transmit to the Purchaser the Company's electronic mortgage servicing files and other electronic data storage and transmission systems related to the Mortgage Loans (collectively, the "Servicing Systems") in accordance with the guidelines and requirements set forth in Exhibit F attached hereto (the "Servicer Requirements") and the Company shall cooperate with the Purchaser to receive data from the Purchaser that is to be incorporated in the Servicing Systems in accordance with the Servicer Requirements. Section 4.28. Prepayment Penalties. To the extent consistent with the terms of this Agreement, the Company may waive (or permit a subservicer to waive) a Prepayment Penalty only under the following circumstances: (i) such waiver relates to a default or a reasonably forseeable default and would, in the reasonable judgment of the Company, maximize recovery of total proceeds, taking into account the value of such Prepayment Penalty and the related Mortgage Loan, (ii) such waiver is required under state 57 or federal law or (iii) the mortgage debt has been accelerated as a result of the Mortgagor's default in making its Monthly Payments. The Company shall not waive any Prepayment Penalty unless it is waived in accordance with this Section 4.28. The Company shall pay the amount of any Prepayment Penalty (to the extent not collected and remitted to the Purchaser) to the Purchaser or its assignees if (1) the representation in Section 3.02(ccc) is breached and such breach materially and adversely affects the interests of the Purchaser or its assigns, or (2) the Company waives any Prepayment Penalty other than as permitted under this Section 4.28. The Company shall pay the amount of such Prepayment Penalty, for the benefit of the Purchaser or any assignee of the Purchaser, by depositing such amount into the Custodial Account at the time that the amount prepaid on the related Mortgage Loan is required to be deposited into the Custodial Account. Section 4.29 Use of Subservicers and Subcontractors. The Company shall not hire or otherwise utilize the services of any Subservicer to fulfill any of the obligations of the Company under this Agreement or any Reconstitution Agreement unless the Company complies with the provisions of paragraph (a) of this Section 4.29. The Company shall not hire or otherwise utilize the services of any Subcontractor, and shall not permit any Subservicer to hire or otherwise utilize the services of any Subcontractor, to fulfill any of the obligations of the Company under this Agreement or any Reconstitution Agreement unless the Company complies with the provisions of paragraph (b) of this Section 4.29. (a) It shall not be necessary for the Company to seek the consent of the Purchaser or any Depositor to the utilization of any Subservicer. The Company shall cause any Subservicer used by the Company (or by any Subservicer) for the benefit of the Purchaser and any Depositor to comply with the provisions of this Section 4.29 and with Sections 6.04, 6.06, 9.01(e)(iii), 9.01(e)(v), 9.01(e)(vi) and 9.01(f) of this Agreement to the same extent as if such Subservicer were the Company, and to provide the information required with respect to such Subservicer under Section 9.01(e)(iv) of this Agreement. The Company shall be responsible for obtaining from each Subservicer and delivering to the Purchaser and any Depositor any servicer compliance statement required to be delivered by such Subservicer under Section 6.04 and any assessment of compliance and attestation required to be delivered by such Subservicer under Section 6.06 and any certification required to be delivered to the Person that will be responsible for signing the Sarbanes Certification under Section 6.06 as and when required to be delivered. (b) It shall not be necessary for the Company to seek the consent of the Purchaser or any Depositor to the utilization of any Subcontractor. The Company shall promptly upon request provide to the Purchaser and any Depositor (or any designee of the Depositor, such as a master servicer or administrator) a written description (in form and substance satisfactory to the Purchaser and such Depositor) of the role and function of each Subcontractor utilized by the Company or any Subservicer, specifying (i) the identity of each such Subcontractor, (ii) which (if any) of such Subcontractors are "participating in the servicing function" within the meaning of Item 1122 of Regulation AB, and (iii) which elements of the Servicing Criteria will be addressed in assessments of compliance provided by each Subcontractor identified pursuant to clause (ii) of this paragraph. 58 As a condition to the utilization of any Subcontractor determined to be "participating in the servicing function" within the meaning of Item 1122 of Regulation AB, the Company shall cause any such Subcontractor used by the Company (or by any Subservicer) for the benefit of the Purchaser and any Depositor to comply with the provisions of Sections 6.06 and 9.01(f) of this Agreement to the same extent as if such Subcontractor were the Company. The Company shall be responsible for obtaining from each Subcontractor and delivering to the Purchaser and any Depositor any assessment of compliance and attestation required to be delivered by such Subcontractor under Section 6.06, in each case as and when required to be delivered. ARTICLE V PAYMENTS TO PURCHASER Section 5.01. Remittances. On each Remittance Date, the Company shall remit by wire transfer of immediately available funds to the Purchaser (a) all amounts deposited in the Custodial Account as of the close of business on the Determination Date (net of charges against or withdrawals from the Custodial Account pursuant to Section 4.05), plus (b) all amounts, if any, which the Company is obligated to distribute pursuant to Section 5.03, minus (c) any amounts attributable to Principal Prepayments received after the applicable Principal Prepayment Period which amounts shall be remitted on the following Remittance Date, together with any additional interest required to be deposited in the Custodial Account in connection with such Principal Prepayment in accordance with Section 4.04(viii); and minus (d) any amounts attributable to Monthly Payments collected but due on a Due Date or Dates subsequent to the first day of the month of the Remittance Date, and minus (e) any amounts attributable to Buydown Funds being held in the Custodial Account, which amounts shall be remitted on the Remittance Date next succeeding the Due Period for such amounts. With respect to any remittance received by the Purchaser after the Business Day on which such payment was due, the Company shall pay to the Purchaser interest on any such late payment at an annual rate equal to the Prime Rate, adjusted as of the date of each change, plus three percentage points, but in no event greater than the maximum amount permitted by applicable law. Such interest shall be deposited in the Custodial Account by the Company on the date such late payment is made and shall cover the period commencing with the day following such Business Day and ending with the Business Day on which such payment is made, both inclusive. Such interest shall be remitted along with the distribution payable on the next succeeding Remittance Date. The payment by the Company of any such interest shall not be deemed an extension of time for payment or a waiver of any Event of Default by the Company. Section 5.02. Statements to Purchaser. Not later than the first (1st) Business Day of each month, the Company shall furnish to the Purchaser, with respect to the preceding month, a monthly collection report, a monthly paid in full report that summarizes Mortgage Loans paid in full during the related Due Period and a 59 monthly trial balance report that provides a trial balance as of the last day of the month preceding such Remittance Date in electronic format agreed upon by the Company and the Purchaser. Not later than the fifth (5th) Business Day of each month, the Company shall furnish to the Purchaser in either written or electronic format, a delinquency report and a monthly remittance advice containing the information set forth in Exhibit G, attached hereto, each in a form mutually acceptable to the Company and the Purchaser, as to the period ending on the last day of the preceding month. Section 5.03. Monthly Advances by Company. No later than the close of business on the Determination Date, the Company shall deposit in the Custodial Account from its own funds or from amounts held for future distribution an amount equal to all Monthly Payments (with interest adjusted to the Mortgage Loan Remittance Rate) which were due on the Mortgage Loans during the applicable Due Period and which were delinquent at the close of business on the immediately preceding Determination Date or which were deferred pursuant to Section 4.01. Any amounts held for future distribution and so used shall be replaced by the Company by deposit in the Custodial Account on or before any future Remittance Date if funds in the Custodial Account on such Remittance Date shall be less than payments to the Purchaser required to be made on such Remittance Date. The Company's obligation to make such Monthly Advances as to any Mortgage Loan will continue through the last Monthly Payment due prior to the payment in full of the Mortgage Loan, or through the last Remittance Date prior to the Remittance Date for the distribution of all Liquidation Proceeds and other payments or recoveries (including REO Disposition Proceeds, Insurance Proceeds and Condemnation Proceeds) with respect to the Mortgage Loan; provided, however, that the Company shall not make Monthly Advances or Servicing Advances if the Company determines, in its sole reasonable opinion, that advances with respect to such Mortgage Loan are non-recoverable by the Company from Liquidation Proceeds, REO Disposition Proceeds, Insurance Proceeds, Condemnation Proceeds, or otherwise with respect to a particular Mortgage Loan. In the event that the Company determines that any such advances are non-recoverable, the Company shall provide the Purchaser with a certificate signed by two officers of the Company evidencing such determination. ARTICLE VI GENERAL SERVICING PROCEDURES Section 6.01. Transfers of Mortgaged Property. The Company shall use its best efforts to enforce any "due-on-sale" provision contained in any Mortgage or Mortgage Note and to deny assumption by the person to whom the Mortgaged Property has been or is about to be sold whether by absolute conveyance or by contract of sale, and whether or not the Mortgagor remains liable on the Mortgage and the Mortgage Note. When the Mortgaged Property has been conveyed by the Mortgagor, the Company shall, to the extent it has knowledge of such conveyance, exercise its rights to accelerate the maturity of such Mortgage Loan under the "due-on-sale" clause applicable thereto, provided, however, that the Company shall not exercise such rights if prohibited by law from 60 doing so or if the exercise of such rights would impair or threaten to impair any recovery under the related PMI Policy, if any. If the Company reasonably believes it is unable under applicable law to enforce such "due-on-sale" clause, the Company shall enter into (i) an assumption and modification agreement with the person to whom such property has been conveyed, pursuant to which such person becomes liable under the Mortgage Note and the original Mortgagor remains liable thereon or (ii) in the event the Company is unable under applicable law to require that the original Mortgagor remain liable under the Mortgage Note and the Company has the prior consent of the primary mortgage guaranty insurer, a substitution of liability agreement with the purchaser of the Mortgaged Property pursuant to which the original Mortgagor is released from liability and the purchaser of the Mortgaged Property is substituted as Mortgagor and becomes liable under the Mortgage Note. If an assumption fee is collected by the Company for entering into an assumption agreement the fee will be retained by the Company as additional servicing compensation. In connection with any such assumption, neither the Mortgage Interest Rate borne by the related Mortgage Note, the term of the Mortgage Loan, the outstanding principal amount of the Mortgage Loan nor any other material terms shall be changed without Purchaser's consent. To the extent that any Mortgage Loan is assumable, the Company shall inquire diligently into the credit worthiness of the proposed transferee, and shall use the underwriting criteria for approving the credit of the proposed transferee which are used with respect to underwriting mortgage loans of the same type as the Mortgage Loan. If the credit worthiness of the proposed transferee does not meet such underwriting criteria, the Company diligently shall, to the extent permitted by the Mortgage or the Mortgage Note and by applicable law, accelerate the maturity of the Mortgage Loan. Section 6.02. Satisfaction of Mortgages and Release of Retained Mortgage Files. Upon the payment in full of any Mortgage Loan, or the receipt by the Company of a notification that payment in full will be escrowed in a manner customary for such purposes, the Company shall notify the Purchaser in the monthly remittance advice as provided in Section 5.02, and may request the release of any Mortgage Loan Documents. If the Company satisfies or releases a Mortgage without first having obtained payment in full of the indebtedness secured by the Mortgage or should the Company otherwise prejudice any rights the Purchaser may have under the mortgage instruments, upon written demand of the Purchaser, the Company shall repurchase the related Mortgage Loan at the Repurchase Price by deposit thereof in the Custodial Account within two (2) Business Days of receipt of such demand by the Purchaser. The Company shall maintain the Fidelity Bond and Errors and Omissions Insurance Policy as provided for in Section 4.12 insuring the Company against any loss it may sustain with respect to any Mortgage Loan not satisfied in accordance with the procedures set forth herein. 61 Section 6.03. Servicing Compensation. As compensation for its services hereunder, the Company shall be entitled to withdraw from the Custodial Account the amount of its Servicing Fee. The Servicing Fee shall be payable monthly and shall be computed on the basis of the same unpaid principal balance and for the period respecting which any related interest payment on a Mortgage Loan is received. The obligation of the Purchaser to pay the Servicing Fee is limited to, and payable solely from, the interest portion of such Monthly Payments. Notwithstanding the foregoing, with respect to the payment of the Servicing Fee for any month, the aggregate Servicing Fee shall be reduced (but not below zero) by an amount equal to the Prepayment Interest Shortfall for such Remittance Date relating to the Mortgage Loans. Additional servicing compensation in the form of assumption fees, to the extent provided in Section 6.01, and late payment charges shall be retained by the Company to the extent not required to be deposited in the Custodial Account. The Company shall be required to pay all expenses incurred by it in connection with its servicing activities hereunder and shall not be entitled to reimbursement thereof except as specifically provided for herein. Section 6.04. Annual Statement as to Compliance. (i) The Company shall deliver to the Purchaser, on or before February 28, 2006, an Officer's Certificate, stating that (x) a review of the activities of the Company during the preceding calendar year and of performance under this Agreement or similar agreements has been made under such officer's supervision, and (y) to the best of such officer's knowledge, based on such review, the Company has fulfilled all its obligations under this Agreement throughout such year, or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to such officer and the nature and status thereof and the action being taken by the Company to cure such default. (ii) On or before March 1 of each calendar year, commencing in 2007, the Company shall deliver to the Purchaser and any Depositor a statement of compliance addressed to the Purchaser and such Depositor and signed by an authorized officer of the Company, to the effect that (a) a review of the Company's activities during the immediately preceding calendar year (or applicable portion thereof) and of its performance under this Agreement and any applicable Reconstitution Agreement during such period has been made under such officer's supervision, and (b) to the best of such officers' knowledge, based on such review, the Company has fulfilled all of its obligations under this Agreement and any applicable Reconstitution Agreement in all material respects throughout such calendar year (or applicable portion thereof) or, if there has been a failure to fulfill any such obligation in any material respect, specifically identifying each such failure known to such officer and the nature and the status thereof. Section 6.05. Annual Independent Public Accountants' Servicing Report. Except with respect to a Securitization Transaction occurring on or after January 1, 2006, on or before February 28, of each year beginning February 28, 2006, the Company, at its expense, shall cause a firm of independent public accountants which is a member of the American Institute of Certified Public Accountants to furnish a statement to each Purchaser to 62 the effect that such firm has examined certain documents and records relating to the servicing of the mortgage loans similar in nature and that such firm is of the opinion that the provisions of this or similar agreements have been complied with, and that, on the basis of such examination conducted substantially in compliance with the Uniform Single Attestation Program for Mortgage Bankers, nothing has come to their attention which would indicate that such servicing has not been conducted in compliance therewith, except for (i) such exceptions as such firm shall believe to be immaterial, and (ii) such other exceptions as shall be set forth in such statement. By providing the Purchaser a copy of a Uniform Single Attestation Program Report from their independent public accountant's on an annual basis, the Company shall be considered to have fulfilled its obligations under this Section 6.05. Notwithstanding the foregoing, in connection with the final rules promulgated by the Securities and Exchange Commission related to asset-backed securities (Release Nos. 33-8518; 34-50905) (as such rules may be amended or modified from time to time, the "ABS Rules"), the Company shall cooperate with the Purchaser in providing such other statements and reports as are required by and in conformance with the ABS Rules. Section 6.06 Report on Assessment of Compliance and Attestation. With respect to any Mortgage Loans that are the subject of a Securitization Transaction occurring on or after January 1, 2006, on or before March 1 of each calendar year, commencing in 2007, the Company shall: (i) deliver to the Purchaser and any Depositor a report (in form and substance reasonably satisfactory to the Purchaser and such Depositor) regarding the Company's assessment of compliance with the Servicing Criteria during the immediately preceding calendar year, as required under Rules 13a-18 and 15d-18 of the Exchange Act and Item 1122 of Regulation AB. Such report shall be addressed to the Purchaser and such Depositor and signed by an authorized officer of the Company and shall address each of the Servicing Criteria specified substantially in the form of Exhibit H hereto delivered to the Purchaser at the time of any Securitization Transaction; (ii) deliver to the Purchaser and any Depositor a report of a registered public accounting firm reasonably acceptable to the Purchaser and such Depositor that attests to, and reports on, the assessment of compliance made by the Company and delivered pursuant to the preceding paragraph. Such attestation shall be in accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X under the Securities Act and the Exchange Act; (iii) cause each Subservicer and each Subcontractor, determined by the Company pursuant to Section 4.29(b) to be "participating in the servicing function" within the meaning of Item 1122 of Regulation AB, to deliver to the Purchaser and any Depositor an assessment of compliance and accountants' attestation as and when provided in paragraphs (i) and (ii) of this Section 6.06; and (iv) deliver to the Purchaser, any Depositor and any other Person that will be responsible for signing the certification (a "Sarbanes Certification") required by 63 Rules 13a-14(d) and 15d-14(d) under the Exchange Act (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002) on behalf of an asset-backed issuer with respect to a Securitization Transaction a certification in the form attached hereto as Exhibit I. The Company acknowledges that the parties identified in clause (iv) above may rely on the certification provided by the Company pursuant to such clause in signing a Sarbanes Certification and filing such with the Commission. Each assessment of compliance provided by a Subservicer pursuant to Section 6.06(i) shall address each of the Servicing Criteria specified substantially in the form of Exhibit H hereto delivered to the Purchaser concurrently with the execution of this Agreement or, in the case of a Subservicer subsequently appointed as such, on or prior to the date of such appointment. An assessment of compliance provided by a Subcontractor pursuant to Section 6.06(iii) need not address any elements of the Servicing Criteria other than those specified by the Company pursuant to Section 4.29. Section 6.07 Remedies. (i) Any failure by the Company, any Subservicer, any Subcontractor or any Third-Party Originator to deliver any information, report, certification, accountants' letter or other material when and as required under Article IX, Section 4.29, Section 6.04, Section 6.05 or Section 6.06, or any breach by the Company of a representation or warranty set forth in Section 9.01(e)(vi)(A), or in a writing furnished pursuant to Section 9.01(e)(vi)(B) and made as of a date prior to the closing date of the related Securitization Transaction, to the extent that such breach is not cured by such closing date, or any breach by the Company of a representation or warranty in a writing furnished pursuant to Section 9.01(e)(vi)(B) to the extent made as of a date subsequent to such closing date, shall, except as provided in sub-clause (ii) of this Section, immediately and automatically, without notice or grace period, constitute an Event of Default with respect to the Company under this Agreement and any applicable Reconstitution Agreement, and shall entitle the Purchaser or Depositor, as applicable, in its sole discretion to terminate the rights and obligations of the Company as servicer under this Agreement and/or any applicable Reconstitution Agreement without payment (notwithstanding anything in this Agreement or any applicable Reconstitution Agreement to the contrary) of any compensation to the Company; provided that to the extent that any provision of this Agreement and/or any applicable Reconstitution Agreement expressly provides for the survival of certain rights or obligations following termination of the Company as servicer, such provision shall be given effect. (ii) Any failure by the Company, any Subservicer or any Subcontractor to deliver any information, report, certification or accountants' letter when and as required under Section 6.04, Section 6.05 or Section 6.06, including any failure by the Company to identify any Subcontractor "participating in the servicing function" within the meaning of Item 1122 of Regulation AB, which continues unremedied for ten (10) calendar days after the date on which such information, report, certification or accountants' letter was required to be delivered shall constitute an Event of Default with respect to the Company under this Agreement and any applicable Reconstitution Agreement, and shall entitle the Purchaser or Depositor, as applicable, in its sole discretion to 64 terminate the rights and obligations of the Company under this Agreement and/or any applicable Reconstitution Agreement without payment (notwithstanding anything in this Agreement to the contrary) of any compensation to the Company; provided that to the extent that any provision of this Agreement and/or any applicable Reconstitution Agreement expressly provides for the survival of certain rights or obligations following termination of the Company as servicer, such provision shall be given effect. (iii) The Company shall promptly reimburse the Purchaser (or any designee of the Purchaser, such as a master servicer) and any Depositor, as applicable, for all reasonable expenses incurred by the Purchaser (or such designee) or such Depositor, as such are incurred, in connection with the termination of the Company as servicer and the transfer of servicing of the Mortgage Loans to a successor servicer. The provisions of this paragraph shall not limit whatever rights the Purchaser or any Depositor may have under other provisions of this Agreement and/or any applicable Reconstitution Agreement or otherwise, whether in equity or at law, such as an action for damages, specific performance or injunctive relief. Section 6.08 Right to Examine Company Records. The Purchaser, or its designee, shall have the right to examine and audit any and all of the books, records, or other information of the Company, whether held by the Company or by another on its behalf, with respect to or concerning this Agreement or the Mortgage Loans, during business hours or at such other times as may be reasonable under applicable circumstances, upon reasonable advance notice. The Purchaser shall pay its own travel expenses associated with such examination. Section 6.09 Compliance with REMIC Provisions. If a REMIC election has been made with respect to the arrangement under which the Mortgage Loans and REO Property are held, the Company shall not take any action, cause the REMIC to take any action or fail to take (or fail to cause to be taken) any action that, under the REMIC Provisions, if taken or not taken, as the case may be, could (i) endanger the status of the REMIC as a REMIC or (ii) result in the imposition of a tax upon the REMIC (including but not limited to the tax on "prohibited transactions" as defined in Section 860F(a) (2) of the Code and the tax on "contributions" to a REMIC set forth in Section 860G(d) of the Code) unless the Company has received an Opinion of Counsel (at the expense of the party seeking to take such action) to the effect that the contemplated action will not endanger such REMIC status or result in the imposition of any such tax. ARTICLE VII COMPANY TO COOPERATE Section 7.01. Provision of Information. During the term of this Agreement, the Company shall furnish to the Purchaser such periodic, special, or other reports or information, and copies or originals of any documents contained in the Servicing File for each Mortgage Loan provided for herein. All other special 65 reports or information not provided for herein as shall be necessary, reasonable, or appropriate with respect to the Purchaser or any regulatory agency will be provided at the Purchaser's expense. All such reports, documents or information shall be provided by and in accordance with all reasonable instructions and directions which the Purchaser may give. In addition, during the term of this Agreement, the Company shall provide to the OCC and to comparable regulatory authorities supervising the Purchaser or any of Purchaser's assigns (including beneficial owners of securities issued in Securitization Transactions backed by the Mortgage Loans) and the examiners and supervisory agents of the OCC and such other authorities, access to the documentation required by applicable regulations of the OCC and such other authorities with respect to the Mortgage Loans. Such access shall be afforded without charge, but only upon reasonable and prior written request and during normal business hours at the offices designated by the Company. The Company shall execute and deliver all such instruments and take all such action as the Purchaser may reasonably request from time to time, in order to effectuate the purposes and to carry out the terms of this Agreement. Section 7.02. Financial Statements; Servicing Facility. In connection with marketing the Mortgage Loans, the Purchaser may make available to a prospective Purchaser a Consolidated Statement of Operations of the Company for the most recently completed two (2) fiscal years for which such a statement is available, as well as a Consolidated Statement of Condition at the end of the last two (2) fiscal years covered by such Consolidated Statement of Operations. The Company also shall make available any comparable interim statements to the extent any such statements have been prepared by or on behalf of the Company (and are available upon request to members or stockholders of the Company or to the public at large). The Company also shall make available to the Purchaser or prospective purchasers a knowledgeable financial or accounting officer for the purpose of answering questions respecting recent developments affecting the Company or the financial statements of the Company, and to permit the Purchaser or any prospective purchaser to inspect the Company's servicing facilities for the purpose of satisfying the Purchaser or any prospective purchaser that the Company has the ability to service the Mortgage Loans as provided in this Agreement. ARTICLE VIII THE COMPANY Section 8.01. Indemnification; Third Party Claims. The Company shall indemnify the Purchaser (an "Indemnified Party") and hold them harmless against any and all claims, losses, damages, penalties, fines, forfeitures, reasonable and necessary legal fees and related costs, judgments, and any other costs, fees and expenses that the Indemnified Party may sustain in any way related to the failure of the Company to perform its duties and service the Mortgage Loans in strict compliance with the terms of this Agreement. The Company immediately shall notify the Purchaser if a claim is made by a third party with 66 respect to this Agreement or the Mortgage Loans, assume (with the prior written consent of the Purchaser) the defense of any such claim and pay all expenses in connection therewith, including counsel fees, and promptly pay, discharge and satisfy any judgment or decree which may be entered against it or the Purchaser in respect of such claim. The Company shall follow any written instructions received from the Purchaser in connection with such claim. The Purchaser promptly shall reimburse the Company for all amounts advanced by it pursuant to the preceding sentence except when the claim is in any way related to the Company's indemnification pursuant to Section 3.03, or the failure of the Company to service and administer the Mortgage Loans in strict compliance with the terms of this Agreement. Section 8.02. Merger or Consolidation of the Company. The Company shall keep in full effect its existence, rights and franchises and shall obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement or any of the Mortgage Loans and to perform its duties under this Agreement. Any person into which the Company may be merged or consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Company shall be a party, or any Person succeeding to the business of the Company, shall be the successor of the Company hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding, provided, however, that the successor or surviving Person shall be an institution (i) having a GAAP net worth of not less than $15,000,000 and (ii) which is a Fannie Mae/Freddie Mac-approved company in good standing. Furthermore, in the event the Company transfers or otherwise disposes of all or substantially all of its assets to an affiliate of the Company, such affiliate shall satisfy the condition above, and shall also be fully liable to the Purchaser for all of the Company's obligations and liabilities hereunder. Section 8.03. Limitation on Liability of Company and Others. Neither the Company nor any of the directors, officers, employees or agents of the Company shall be under any liability to the Purchaser for any action taken or for refraining from the taking of any action in good faith pursuant to this Agreement, or for errors in judgment, provided, however, that this provision shall not protect the Company or any such person against any breach of warranties or representations made herein, or failure to perform its obligations in strict compliance with any standard of care set forth in this Agreement or any other liability which would otherwise be imposed under this Agreement. The Company and any director, officer, employee or agent of the Company may rely in good faith on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising hereunder. The Company shall not be under any obligation to appear in, prosecute or defend any legal action which is not incidental to its duties to service the Mortgage Loans in accordance with this Agreement and which in its opinion may involve it in any expense or liability, provided, however, that the Company may, with the consent of the Purchaser, undertake any such action which it may deem necessary or desirable in respect to this Agreement and the rights and duties of the parties hereto. In such event, the Company shall be entitled to reimbursement from the Purchaser of the reasonable legal expenses and costs of such action, unless any such 67 costs result from a breach of the Company's representations and warranties made herein or its failure to perform its obligations in strict compliance with this Agreement. Section 8.04. Limitation on Resignation and Assignment by Company. The Purchaser has entered into this Agreement with the Company and subsequent purchasers will purchase the Mortgage Loans in reliance upon the independent status of the Company, and the representations as to the adequacy of its servicing facilities, personnel, records and procedures, its integrity, reputation and financial standing, and the continuance thereof. Therefore, the Company shall neither assign this Agreement or the servicing rights hereunder or delegate its rights or duties hereunder (other than pursuant to Section 4.01) or any portion hereof or sell or otherwise dispose of all of its property or assets without the prior written consent of the Purchaser, which consent shall not be unreasonably withheld. The Company shall not resign from the obligations and duties hereby imposed on it except by mutual consent of the Company and the Purchaser or upon the determination that its duties hereunder are no longer permissible under applicable law and such incapacity cannot be cured by the Company. Any such determination permitting the resignation of the Company shall be evidenced by an Opinion of Counsel to such effect delivered to the Purchaser which Opinion of Counsel shall be in form and substance acceptable to the Purchaser. No such resignation shall become effective until a successor shall have assumed the Company's responsibilities and obligations hereunder in the manner provided in Section 12.01. Without in any way limiting the generality of this Section 8.04, in the event that the Company either shall assign this Agreement or the servicing responsibilities hereunder or delegate its rights or duties hereunder (other than pursuant to Section 4.01) or any portion hereof or sell or otherwise dispose of all or substantially all of its property or assets, without the prior written consent of the Purchaser, then the Purchaser shall have the right to terminate this Agreement upon notice given as set forth in Section 10.01, without any payment of any penalty or damages and without any liability whatsoever to the Company or any third party. ARTICLE IX REMOVAL OF MORTGAGE LOANS FROM AGREEMENT Section 9.01. Removal of Mortgage Loans from Inclusion Under this Agreement. The Purchaser and the Company agree that with respect to some or all of the Mortgage Loans, the Purchaser, at its sole option, may effect Whole Loan Transfers, Agency Transfers or Securitization Transactions, retaining the Company as the servicer thereof or subservicer if a master servicer is employed, or as applicable the "seller/servicer." In the event that any Mortgage Loan transferred pursuant to this Section 9.01 is rejected by the transferee, the Company shall continue to service such rejected Mortgage Loan on behalf of the Purchaser in accordance with the terms and provisions of this Agreement. The Company shall cooperate with the Purchaser in connection with each Whole Loan Transfer, Agency Transfer or Securitization Transaction in accordance with this Section 9.01; provided that no such Whole Loan Transfer, Agency Transfer or Securitization Transaction shall 68 create a greater obligation or cost on the part of the Company than otherwise set forth in this Agreement. In connection therewith: (a) the Company shall make all representations and warranties with respect to the Mortgage Loans as of the Closing Date and with respect to the Company itself as of the closing date of each Whole Loan Transfer, Agency Transfer or Securitization Transaction; (b) the Company shall negotiate in good faith and execute any seller/servicer agreements required by the shelf registrant to effectuate the foregoing; (c) the Company shall make representations and warranties (1) that the Company has serviced the Mortgage Loans in accordance with the terms of this Agreement, provided accurate statements to the Purchaser pursuant to Section 5.02 of this Agreement, and otherwise complied with all covenants and obligations hereunder and, (2) that the Company has taken no action nor omitted to take any required action the omission of which would have the effect of impairing any mortgage insurance or guarantee on the Mortgage Loans; (d) the Company shall provide as applicable: (i) any and all information and appropriate verification of information which may be reasonably available to the Company, including the Company's foreclosure, delinquency experience and the Company's underwriting standards, whether through letters of its auditors and counsel or otherwise, as the Purchaser shall request; (ii) such additional representations, warranties, covenants, opinions of counsel, letters from auditors, and certificates of public officials or officers of the Company as are reasonably believed necessary by the trustee, any rating agency or the Purchaser, as the case may be, in connection with such Whole Loan Transfers, Agency Transfers or Securitization Transactions. The Purchaser shall pay all third party costs associated with the preparation of such information. The Company shall execute any seller/servicer agreements required within a reasonable period of time after receipt of such seller/servicer agreements which time shall be sufficient for the Company and the Company's counsel to review such seller/servicer agreements. Under this Agreement, the Company shall retain a Servicing Fee for each Mortgage Loan at a Servicing Fee Rate; (iii) at any time as required by any Rating Agency, such additional documents from the related Retained Mortgage File to the Custodian as may be required by such Rating Agency. (e) in connection with any Securitization Transaction occurring on or after January 1, 2006, the Company shall (1) within five (5) Business Days following request by the Purchaser or any Depositor, provide to the Purchaser and such Depositor (or, as applicable, cause each Third-Party Originator and each Subservicer to provide), in writing and in form and substance reasonably satisfactory to the Purchaser and such Depositor, the information and materials specified in paragraphs (i), (ii), (iii) 69 and (vii) of this subsection (e), and (2) as promptly as practicable following notice to or discovery by the Company, provide to the Purchaser and any Depositor (in writing and in form and substance reasonably satisfactory to the Purchaser and such Depositor) the information specified in paragraph (iv) of this subsection (e). (i) If so requested by the Purchaser or any Depositor, the Company shall provide such information regarding (1) the Company, as originator of the Mortgage Loans (including as an acquirer of Mortgage Loans from a Qualified Correspondent), or (2) each Third-Party Originator, and (3) as applicable, each Subservicer, as is requested for the purpose of compliance with Items 1103(a)(1), 1105, 1110, 1117 and 1119 of Regulation AB. Such information shall include, at a minimum: (A) the originator's form of organization; (B) a description of the originator's origination program and how long the originator has been engaged in originating residential mortgage loans, which description shall include a discussion of the originator's experience in originating mortgage loans of a similar type as the Mortgage Loans; information regarding the size and composition of the originator's origination portfolio; and information that may be material, in the good faith judgment of the Purchaser or any Depositor, to an analysis of the performance of the Mortgage Loans, including the originators' credit-granting or underwriting criteria for mortgage loans of similar type(s) as the Mortgage Loans and such other information as the Purchaser or any Depositor may reasonably request for the purpose of compliance with Item 1110(b)(2) of Regulation AB; (C) a description of any material legal or governmental proceedings pending (or known to be contemplated) against the Company, each Third-Party Originator and each Subservicer; and (D) a description of any affiliation or relationship between the Company, each Third-Party Originator, each Subservicer and any of the following parties to a Securitization Transaction, as such parties are identified to the Company by the Purchaser or any Depositor in writing in advance of a Securitization Transaction: (1) the sponsor; (2) the depositor; (3) the issuing entity; (4) any servicer; (5) any trustee; (6) any originator; (7) any significant obligor; 70 (8) any enhancement or support provider; and (9) any other material transaction party. (ii) If so requested by the Purchaser or any Depositor, the Company shall provide (or, as applicable, cause each Third-Party Originator to provide) Static Pool Information with respect to the mortgage loans (of a similar type as the Mortgage Loans, as reasonably identified by the Purchaser as provided below) originated by (1) the Company, if the Company is an originator of Mortgage Loans (including as an acquirer of Mortgage Loans from a Qualified Correspondent), and/or (2) each Third-Party Originator. Such Static Pool Information shall be prepared by the Company (or Third-Party Originator) on the basis of its reasonable, good faith interpretation of the requirements of Item 1105(a)(1)-(3) of Regulation AB. To the extent that there is reasonably available to the Company (or Third-Party Originator) Static Pool Information with respect to more than one mortgage loan type, the Purchaser or any Depositor shall be entitled to specify whether some or all of such information shall be provided pursuant to this paragraph. The content of such Static Pool Information may be in the form customarily provided by the Company, and need not be customized for the Purchaser or any Depositor. Such Static Pool Information for each vintage origination year or prior securitized pool, as applicable, shall be presented in increments no less frequently than quarterly over the life of the mortgage loans included in the vintage origination year or prior securitized pool. The most recent periodic increment must be as of a date no later than 135 days prior to the date of the prospectus or other offering document in which the Static Pool Information is to be included or incorporated by reference. The Static Pool Information shall be provided in an electronic format that provides a permanent record of the information provided, such as a portable document format (pdf) file, or other such electronic format reasonably required by the Purchaser or the Depositor, as applicable. Promptly following notice or discovery of a material error in Static Pool Information provided pursuant to the immediately preceding paragraph (including an omission to include therein information required to be provided pursuant to such paragraph), the Company shall provide corrected Static Pool Information to the Purchaser or any Depositor, as applicable, in the same format in which Static Pool Information was previously provided to such party by the Company. If so requested by the Purchaser or any Depositor, the Company shall provide (or, as applicable, cause each Third-Party Originator to provide), at the expense of the requesting party (to the extent of any additional incremental expense associated with delivery pursuant to this Agreement), such agreed-upon procedures letters of certified public accountants reasonably acceptable to the Purchaser or Depositor, as applicable, 71 pertaining to Static Pool Information relating to prior securitized pools for securitizations closed on or after January 1, 2006 or, in the case of Static Pool Information with respect to the Company's or Third-Party Originator's originations or purchases, to calendar months commencing January 1, 2006, as the Purchaser or such Depositor shall reasonably request. Such statements and letters shall be addressed to and be for the benefit of such parties as the Purchaser or such Depositor shall designate, which may include, by way of example, any sponsor, any Depositor and any broker dealer acting as underwriter, placement agent or initial purchaser with respect to a Securitization Transaction. Any such statement or letter may take the form of a standard, generally applicable document accompanied by a reliance letter authorizing reliance by the addressees designated by the Purchaser or such Depositor. (iii) If so requested by the Purchaser or any Depositor, the Company shall provide such information regarding the Company, as servicer of the Mortgage Loans, and each Subservicer (each of the Company and each Subservicer, for purposes of this paragraph, a "Servicer"), as is requested for the purpose of compliance with Items 1108 of Regulation AB. Such information shall include, at a minimum: (A) the Servicer's form of organization; (B) a description of how long the Servicer has been servicing residential mortgage loans; a general discussion of the Servicer's experience in servicing assets of any type as well as a more detailed discussion of the Servicer's experience in, and procedures for, the servicing function it will perform under this Agreement and any Reconstitution Agreements; information regarding the size, composition and growth of the Servicer's portfolio of residential mortgage loans of a type similar to the Mortgage Loans and information on factors related to the Servicer that may be material, in the good faith judgment of the Purchaser or any Depositor, to any analysis of the servicing of the Mortgage Loans or the related asset-backed securities, as applicable, including, without limitation: (1) whether any prior securitizations of mortgage loans of a type similar to the Mortgage Loans involving the Servicer have defaulted or experienced an early amortization or other performance triggering event because of servicing during the three-year period immediately preceding the related Securitization Transaction; (2) the extent of outsourcing the Servicer utilizes; 72 (3) whether there has been previous disclosure of material noncompliance with the applicable Servicing Criteria with respect to other securitizations of residential mortgage loans involving the Servicer as a servicer during the three-year period immediately preceding the related Securitization Transaction; (4) whether the Servicer has been terminated as servicer in a residential mortgage loan securitization, either due to a servicing default or to application of a servicing performance test or trigger; and (5) such other information as the Purchaser or any Depositor may reasonably request for the purpose of compliance with Item 1108(b)(2) of Regulation AB; (C) a description of any material changes during the three-year period immediately preceding the related Securitization Transaction to the Servicer's policies or procedures with respect to the servicing function it will perform under this Agreement and any Reconstitution Agreements for mortgage loans of a type similar to the Mortgage Loans; (D) information regarding the Servicer's financial condition, to the extent that there is a material risk that an adverse financial event or circumstance involving the Servicer could have a material adverse effect on the performance by the Company of its servicing obligations under this Agreement or any Reconstitution Agreement; (E) information regarding advances made by the Servicer on the Mortgage Loans and the Servicer's overall servicing portfolio of residential mortgage loans for the three-year period immediately preceding the related Securitization Transaction, which may be limited to a statement by an authorized officer of the Servicer to the effect that the Servicer has made all advances required to be made on residential mortgage loans serviced by it during such period, or, if such statement would not be accurate, information regarding the percentage and type of advances not made as required, and the reasons for such failure to advance; (F) a description of the Servicer's processes and procedures designed to address any special or unique factors involved in servicing loans of a similar type as the Mortgage Loans; 73 (G) a description of the Servicer's processes for handling delinquencies, losses, bankruptcies and recoveries, such as through liquidation of mortgaged properties, sale of defaulted mortgage loans or workouts; and (H) information as to how the Servicer defines or determines delinquencies and charge-offs, including the effect of any grace period, re-aging, restructuring, partial payments considered current or other practices with respect to delinquency and loss experience. (iv) If so requested by the Purchaser or any Depositor for the purpose of satisfying its reporting obligation under the Exchange Act with respect to any class of asset-backed securities, the Company shall (or shall cause each Subservicer and Third-Party Originator to) (1) notify the Purchaser and any Depositor in writing of (A) any material litigation or governmental proceedings pending against the Company, any Subservicer or any Third-Party Originator and (B) any affiliations or relationships that develop following the closing date of a Securitization Transaction between the Company, any Subservicer or any Third-Party Originator and any of the parties specified in Section 9.01(e)(i)(D) (and any other parties identified in writing by the requesting party) with respect to such Securitization Transaction, and (2) provide to the Purchaser and any Depositor a description of such proceedings, affiliations or relationships. (v) As a condition to the succession to the Company or any Subservicer as servicer or Subservicer under this Agreement or any Reconstitution Agreement by any Person (i) into which the Company or such Subservicer may be merged or consolidated, or (ii) which may be appointed as a successor to the Company or any Subservicer, the Company shall provide to the Purchaser and any Depositor, at least fifteen (15) calendar days prior to the effective date of such succession or appointment, (x) written notice to the Purchaser and any Depositor of such succession or appointment and (y) in writing and in form and substance reasonably satisfactory to the Purchaser and such Depositor, all information reasonably requested by the Purchaser or any Depositor in order to comply with is reporting obligation under Item 6.02 of Form 8-K with respect to any class of asset-backed securities. (vi) (A) The Company shall be deemed to represent to the Purchaser and to any Depositor, as of the date on which information is first provided to the Purchaser under this Section 9.01(e) that, except as disclosed in writing to the Purchaser or such Depositor prior to such date: (1) the Company is not aware and has not received notice that any default, early amortization or other performance triggering event has occurred as to any other securitization due to any act or failure to act of the Company; (2) the Company has not been terminated as servicer in a residential mortgage 74 loan securitization, either due to a servicing default or to application of a servicing performance test or trigger; (3) no material noncompliance with the applicable Servicing Criteria with respect to other securitizations of residential mortgage loans involving the Company as servicer has been disclosed or reported by the Company; (4) no material changes to the Company's policies or procedures with respect to the servicing function it will perform under this Agreement and any Reconstitution Agreement for mortgage loans of a type similar to the Mortgage Loans have occurred during the three-year period immediately preceding the related Securitization Transaction; (5) there are no aspects of the Company's financial condition that could have a material adverse effect on the performance by the Company of its servicing obligations under this Agreement or any Reconstitution Agreement; (6) there are no material legal or governmental proceedings pending (or known to be contemplated) against the Company, any Subservicer or any Third-Party Originator; and (7) there are no affiliations, relationships or transactions relating to the Company, any Subservicer or any Third-Party Originator with respect to any Securitization Transaction and any party thereto identified by the related Depositor of a type described in Item 1119 of Regulation AB. (B) If so requested by the Purchaser or any Depositor on any date following the date on which information is first provided to the Purchaser or any Depositor under this Section 9.01(e), the Company shall, within five (5) Business Days following such request, confirm in writing the accuracy of the representations and warranties set forth in sub clause (A) above or, if any such representation and warranty is not accurate as of the date of such request, provide reasonably adequate disclosure of the pertinent facts, in writing, to the requesting party. (vii) In addition to such information as the Company, as servicer, is obligated to provide pursuant to other provisions of this Agreement, if so requested by the Purchaser or any Depositor, the Company shall provide such information reasonably available to the Company regarding the performance or servicing of the Mortgage Loans as is reasonably required to facilitate preparation of distribution reports in accordance with Item 1121 of Regulation AB. (f) The Company shall indemnify the Purchaser, each affiliate of the Purchaser, and each of the following parties participating in a Securitization Transaction: each sponsor and issuing entity; each Person responsible for the preparation, execution or filing of any report required to be filed with the Commission with respect to such Securitization Transaction, or for execution of a certification pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect to such Securitization Transaction; each broker dealer acting as underwriter, placement agent or initial purchaser, each Person who controls any of such parties or the Depositor (within the meaning of Section 15 of the Securities Act and Section 20 75 of the Exchange Act); and the respective present and former directors, officers, employees and agents of each of the foregoing and of the Depositor, and shall hold each of them harmless from and against any losses, damages, penalties, fines, forfeitures, legal fees and expenses and related costs, judgments, and any other costs, fees and expenses that any of them may sustain arising out of or based upon: (i) (A) any untrue statement of a material fact contained or alleged to be contained in any information, report, certification, accountants' letter or other material provided under Sections 4.29, 6.04(ii), 6.06, 9.01(d) and (e) by or on behalf of the Company, or provided under Sections 4.29, 6.04(ii), 6.06, 9.01(d) and (e) by or on behalf of any Subservicer, Subcontractor or Third-Party Originator (collectively, the "Company Information"), or (B) the omission or alleged omission to state in the Company Information a material fact required to be stated in the Company Information or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, by way of clarification, that clause (B) of this paragraph shall be construed solely by reference to the Company Information and not to any other information communicated in connection with a sale or purchase of securities, without regard to whether the Company Information or any portion thereof is presented together with or separately from such other information; (ii) any failure by the Company, any Subservicer, any Subcontractor or any Third-Party Originator to deliver any information, report, certification, accountants' letter or other material when and as required under Sections 4.29, 6.04(ii), 6.06, 9.01(d) and (e), including any failure by the Company to identify any Subcontractor "participating in the servicing function" within the meaning of Item 1122 of Regulation AB; or (iii) any breach by the Company of a representation or warranty set forth in Section 9.01(e)(vi)(A) or in a writing furnished pursuant to Section 9.01(e)(vi)(B) and made as of a date prior to the closing date of the related Securitization Transaction, to the extent that such breach is not cured by such closing date, or any breach by the Company of a representation or warranty in a writing furnished pursuant to Section 9.01(e)(vi)(B) to the extent made as of a date subsequent to such closing date. In the case of any failure of performance described in sub-clause (ii) of this Section 9.01(f), the Company shall promptly reimburse the Purchaser, any Depositor, as applicable, and each Person responsible for the preparation, execution or filing of any report required to be filed with the Commission with respect to such Securitization Transaction, or for execution of a certification pursuant to Rule 13a-14(d) or Rule 15d-14(d) under the Exchange Act with respect to such Securitization Transaction, for all costs reasonably incurred by 76 each such party in order to obtain the information, report, certification, accountants' letter or other material not delivered as required by the Company, any Subservicer, any Subcontractor or any Third-Party Originator. (g) The Purchaser and each Person who controls the Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) shall indemnify the Company, each affiliate of the Company, each Person who controls any of such parties or the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) and the respective present and former directors, officers, employees and agents of each of the foregoing and of the Company, and shall hold each of them harmless from and against any losses, damages, penalties, fines, forfeitures, legal fees and expenses and related costs, judgments, and any other costs, fees and expenses that any of them may sustain arising out of or based upon: (i) (A) any untrue statement of a material fact contained or alleged to be contained in any offering materials related to a Securitization Transaction, including without limitation the registration statement, prospectus, prospectus supplement, any private placement memorandum, any offering circular, any computational materials, and any amendments or supplements to the foregoing (collectively, the "Securitization Materials") or (B) the omission or alleged omission to state in the Securitization Materials a material fact required to be stated in the Securitization Materials or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, but only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission is other than a statement or omission arising out of, resulting from, or based upon the Company Information. (h) the Company shall cooperate with the Purchaser in servicing the Mortgage Loans in accordance with the usual and customary requirements of any credit enhancement, risk management and other service providers and shall otherwise cooperate with the Purchaser in connection with such third party service providers and the provision of third party services relating to a Securitization Transaction; provided, however, that such requirements are reasonably acceptable to the Company and pose no greater risk, obligation or expense to the Company than otherwise set forth in this Agreement. Any additional costs and/or expenses will be paid by the requesting party; (i) with respect to any Mortgage Loans that are subject to a Securitization Transaction occurring on or before December 31, 2005, in which the filing of a Sarbanes-Oxley Certification directly with the Commission is required, by February 28, 2006, or in connection with any additional Sarbanes-Oxley Certification required to be filed upon thirty (30) days written request, an officer of the Seller shall execute and deliver an Officer's Certificate substantially in the form attached hereto as Exhibit J, to the Purchaser, any master servicer or any depositor for the benefit of each such entity and such 77 entity's affiliates and the officers, directors and agents of such entity and such entity's affiliates, and shall indemnify any such entity or persons arising out of any breach of Seller's obligations relating thereto as provided in such Officer's Certificate. The Purchaser and the Company acknowledge and agree that the purpose of Section 9.01(e) is to facilitate compliance by the Purchaser and any Depositor with the provisions of Regulation AB and related rules and regulations of the Commission. Neither the Purchaser nor any Depositor shall exercise its right to request delivery of information or other performance under these provisions other than in good faith, or for purposes other than compliance with the Securities Act, the Exchange Act and the rules and regulations of the Commission thereunder. The Company acknowledges that interpretations of the requirements of Regulation AB may change over time, whether due to interpretive guidance provided by the Commission or its staff, consensus among participants in the asset-backed securities markets, advice of counsel, or otherwise, and agrees to comply with requests made by the Purchaser or any Depositor in good faith for delivery of information under these provisions on the basis of evolving interpretations of Regulation AB. In connection with any Securitization Transaction, the Company shall cooperate fully with the Purchaser to deliver to the Purchaser (including any of its assignees or designees) and any Depositor, any and all statements, reports, certifications, records and any other information necessary in the good faith determination of the Purchaser or any Depositor to permit the Purchaser or such Depositor to comply with the provisions of Regulation AB, together with such disclosures relating to the Company, any Subservicer, any Third-Party Originator and the Mortgage Loans, or the servicing of the Mortgage Loans, reasonably believed by the Purchaser or any Depositor to be necessary in order to effect such compliance. In the event the Purchaser has elected to have the Company hold record title to the Mortgages, prior to the Reconstitution Date the Company shall prepare an Assignment of Mortgage in blank for each Mortgage Loan that is a part of a Whole Loan Transfer or Agency Transfer or prepare an Assignment of Mortgage in blank or to the trustee from the Company acceptable to the trustee for each Mortgage Loan that is part of a Securitization Transaction. The Purchaser shall pay all preparation and recording costs associated therewith if the Assignments of Mortgage have been previously prepared and recorded in Purchaser's name. The Company shall execute each Assignment of Mortgage, track such Assignments of Mortgage to ensure they have been recorded and deliver them as required by the trustee upon the Company's receipt thereof. Additionally, the Company shall prepare and execute, at the direction of the Purchaser, any note endorsements in connection with any and all seller/servicer agreements. If required at any time by a rating agency, Purchaser or successor purchaser in connection with any Whole Loan Transfer, Agency Transfer or Securitization Transaction, the Company shall deliver such additional document from its Retained Mortgage File within ten (10) days to the Custodian, successor purchaser or other designee of the Purchaser as said rating agency, Purchaser or successor purchaser may require. All Mortgage Loans (i) not sold or transferred pursuant to Whole Loan Transfers, Agency Transfers or Securitization Transactions or (ii) that are subject to a Securitization for which the related trust is terminated for any reason, shall remain subject to this Agreement and shall continue to be serviced in accordance with the terms of this Agreement and with respect thereto this Agreement shall remain in full force and effect. 78 ARTICLE X DEFAULT Section 10.01. Events of Default. Each of the following shall constitute an Event of Default on the part of the Company: (i) any failure by the Company to remit to the Purchaser any payment required to be made under the terms of this Agreement which continues unremedied for a period of one Business Day after the date upon which written notice of such failure, requiring the same to be remedied, shall have been given to the Company by the Purchaser; or (ii) failure by the Company duly to observe or perform in any material respect any other of the covenants or agreements on the part of the Company set forth in this Agreement or in the Custody Agreement which continues unremedied for a period of thirty days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Company by the Purchaser or by the Custodian; or (iii) failure by the Company to maintain its license to do business in any jurisdiction where the Mortgaged Property is located if such license is required; or (iv) a decree or order of a court or agency or supervisory authority having jurisdiction for the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, including bankruptcy, marshaling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, shall have been entered against the Company and such decree or order shall have remained in force undischarged or unstayed for a period of 60 days; or (v) the Company shall consent to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceedings of or relating to the Company or of or relating to all or substantially all of its property; or (vi) the Company shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of any applicable insolvency, bankruptcy or reorganization statute, make an assignment for the benefit of its creditors, voluntarily suspend payment of its obligations or cease its normal business operations for three Business Days; or (vii) the Company ceases to meet the qualifications of a Fannie Mae/Freddie Mac servicer; or 79 (viii) the Company attempts to assign its right to servicing compensation hereunder or to assign this Agreement or the servicing responsibilities hereunder or to delegate its duties hereunder or any portion thereof in violation of Section 8.04. If the Company obtains knowledge of an Event of Default, the Company shall promptly notify the Purchaser. In each and every such case, so long as an Event of Default shall not have been remedied, in addition to whatever rights the Purchaser may have at law or equity to damages, including injunctive relief and specific performance, the Purchaser, by notice in writing to the Company, may terminate all the rights and obligations of the Company under this Agreement and in and to the Mortgage Loans and the proceeds thereof. Upon receipt by the Company of such written notice, all authority and power of the Company under this Agreement, whether with respect to the Mortgage Loans or otherwise, shall pass to and be vested in the successor appointed pursuant to Section 12.01. Upon written request from any Purchaser, the Company shall prepare, execute and deliver to the successor entity designated by the Purchaser any and all documents and other instruments, place in such successor's possession all Retained Mortgage Files, and do or cause to be done all other acts or things necessary or appropriate to effect the purposes of such notice of termination, including but not limited to the transfer and endorsement or assignment of the Mortgage Loans and related documents, all at the Company's sole expense. The Company shall cooperate with the Purchaser and such successor in effecting the termination of the Company's responsibilities and rights hereunder, including without limitation, the transfer to such successor for administration by it of all cash amounts which shall at the time be credited by the Company to the Custodial Account or Subsidy Account or Escrow Account or thereafter received with respect to the Mortgage Loans. Section 10.02. Waiver of Defaults. By a written notice, the Purchaser may waive any default by the Company in the performance of its obligations hereunder and its consequences. Upon any waiver of a past default, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No such waiver shall extend to any subsequent or other default or impair any right consequent thereon except to the extent expressly so waived. ARTICLE XI TERMINATION Section 11.01. Termination. This Agreement shall terminate upon either: (i) the later of the final payment or other liquidation (or any advance with respect thereto) of the last Mortgage Loan or the disposition of any REO Property with respect to the last Mortgage Loan and the remittance of all funds due hereunder; or (ii) mutual consent of the Company and the Purchaser in writing. The representations and warranties and indemnification provisions contained herein shall survive the termination of this Agreement. 80 Upon written request from the Purchaser in connection with any such termination, the Company shall prepare, execute and deliver, any and all documents and other instruments, place in the Purchaser's possession all Retained Mortgage Files, and do or accomplish all other acts or things necessary or appropriate to effect the purposes of such notice of termination, whether to complete the transfer and endorsement or assignment of the Mortgage Loans and related documents, or otherwise, at the Company's sole expense. The Company agrees to cooperate with the Purchaser and such successor in effecting the termination of the Company's responsibilities and rights hereunder as servicer, including, without limitation, the transfer to such successor for administration by it of all cash amounts which shall at the time be credited by the Company to the Custodial Account or Subsidy Account or Escrow Account or thereafter received with respect to the Mortgage Loans. Section 11.02. Termination Without Cause. The Purchaser may terminate, at its sole option, any rights the Company may have hereunder, without cause as provided in this Section 11.02. Any such notice of termination shall be in writing and delivered to the Company by registered mail as provided in Section 12.05. The Company shall be entitled to receive, as liquidated damages, upon the transfer of the servicing rights, an amount equal to 2.25% of the aggregate outstanding principal amount of the transferred Mortgage Loans as of the termination date. ARTICLE XII MISCELLANEOUS PROVISIONS Section 12.01. Successor to Company. Prior to termination of the Company's responsibilities and duties under this Agreement pursuant to Sections 8.04, 10.01, 11.01 (ii) or pursuant to Section 11.02 the Purchaser shall, (i) succeed to and assume all of the Company's responsibilities, rights, duties and obligations under this Agreement, or (ii) appoint a successor having the characteristics set forth in Section 8.02 and which shall succeed to all rights and assume all of the responsibilities, duties and liabilities of the Company under this Agreement prior to the termination of Company's responsibilities, duties and liabilities under this Agreement. In connection with such appointment and assumption, the Purchaser may make such arrangements for the compensation of such successor out of payments on Mortgage Loans as it and such successor shall agree. In the event that the Company's duties, responsibilities and liabilities under this Agreement should be terminated pursuant to the aforementioned sections, the Company shall discharge such duties and responsibilities during the period from the date it acquires knowledge of such termination until the effective date thereof with the same degree of diligence and prudence which it is obligated to exercise under this Agreement, and shall take no action whatsoever that might impair or prejudice the rights or financial condition of its successor. The resignation or removal of the Company pursuant to the aforementioned sections shall not become effective until a successor shall be appointed pursuant to this Section 12.01 and shall in no event relieve the Company of the representations and warranties made pursuant to Sections 3.01 and 3.02 and the remedies available to the Purchaser under Section 3.03, it being understood and agreed that the provisions of such Sections 3.01, 81 3.02, 3.03 and 8.01 shall be applicable to the Company notwithstanding any such sale, assignment, resignation or termination of the Company, or the termination of this Agreement. Any successor appointed as provided herein shall execute, acknowledge and deliver to the Company and to the Purchaser an instrument accepting such appointment, wherein the successor shall make the representations and warranties set forth in Section 3.01, except for subsection (h) with respect to the sale of the Mortgage Loans and subsections (i) and (k) thereof, whereupon such successor shall become fully vested with all the rights, powers, duties, responsibilities, obligations and liabilities of the Company, with like effect as if originally named as a party to this Agreement. Any termination or resignation of the Company or termination of this Agreement pursuant to Sections 8.04, 10.01, 11.01 or 11.02 shall not affect any claims that any Purchaser may have against the Company arising out of the Company's actions or failure to act prior to any such termination or resignation. The Company shall deliver promptly to the successor servicer the funds in the Custodial Account, Subsidy Account and Escrow Account and all Retained Mortgage Files and related documents and statements held by it hereunder and the Company shall account for all funds and shall execute and deliver such instruments and do such other things as may reasonably be required to more fully and definitively vest in the successor all such rights, powers, duties, responsibilities, obligations and liabilities of the Company. If the Company is terminated pursuant to Sections 8.04 and 10.01, the Purchaser shall be entitled to be reimbursed from the Company for all costs associated with the transfer of servicing, including, without limitation, any costs or expenses associated with the complete transfer of all servicing data and the completion, correction or manipulation of such servicing data as may be required by the Purchaser to correct any errors or insufficiencies in the servicing data or otherwise to enable the Purchaser to service the Mortgage Loans properly and effectively. Upon a successor's acceptance of appointment as such, the Company shall notify by mail the Purchaser of such appointment in accordance with the procedures set forth in Section 12.05. Section 12.02. Amendment. This Agreement may be amended from time to time by written agreement signed by the Company and the Purchaser. Section 12.03. Governing Law. This Agreement shall be construed in accordance with the laws of the State of New York and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. Each of the Company and the Purchaser hereby knowingly, voluntarily and intentionally waives any and all rights it may have to a trial by jury in respect of any litigation based on, or arising out of, under, or in connection with this Agreement, or any other documents and instruments executed in connection herewith, or any course of conduct, course of dealing, statements (whether oral or written), or actions of the Company or the Purchaser. This provision is a material inducement for the Purchaser to enter into this Agreement. 82 Section 12.04. Arbitration. In the event a claim or controversy arises concerning the interpretation or enforcement of the terms of this Agreement, the Purchaser and the Company agree that such claim or controversy may be settled by final, binding arbitration if the Purchaser and the Company, as applicable, consent to such arbitration at the time such claim or controversy arises which consent may be withheld by the Purchaser or the Company in each party's sole discretion. Section 12.05. Duration of Agreement. This Agreement shall continue in existence and effect until terminated as herein provided. This Agreement shall continue notwithstanding transfers of the Mortgage Loans by the Purchaser. Section 12.06. Notices. All demands, notices and communications hereunder shall be in writing and shall be deemed to have been duly given if personally delivered at or mailed by registered mail, postage prepaid, addressed as follows: (i) if to the Company with respect to servicing issues: Wells Fargo Bank, N.A. 1 Home Campus Des Moines, Iowa 50328-0001 Attention: John B. Brown, MAC X2401-042 Fax: 515/213-7121 if to the Company with respect to all other issues: Wells Fargo Bank, N.A. 7430 New Technology Way Frederick, Maryland 21703 Attention: Structured Finance Manager, MAC X3906-012 Fax: (301)846-8152 In each instance with a copy to: Wells Fargo Bank, N.A. 1 Home Campus Des Moines, Iowa 50328-0001 Attention: General Counsel MAC X2401-06T or such other address as may hereafter be furnished to the Purchaser in writing by the Company; (ii) if to Purchaser: 83 Bank of America, National Association Hearst Tower NC1-027-21-04 214 North Tryon Street, 21st Floor Charlotte, North Carolina 28255 Attention: Managing Director Telephone: (704) 388-8708 Fax: (704) 386-3215 or such other address as may hereafter be furnished to the Company in writing by the Purchaser; Section 12.07. Severability of Provisions. If any one or more of the covenants, agreements, provisions or terms of this Agreement shall be held invalid for any reason whatsoever, then such covenants, agreements, provisions or terms shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement. Section 12.08. Relationship of Parties. Nothing herein contained shall be deemed or construed to create a partnership or joint venture between the parties hereto and the services of the Company shall be rendered as an independent contractor and not as agent for the Purchaser. Section 12.09. Execution; Successors and Assigns. This Agreement may be executed in one or more counterparts and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed to be an original; such counterparts, together, shall constitute one and the same agreement. Subject to Section 8.04, this Agreement shall inure to the benefit of and be binding upon the Company and the Purchaser and their respective successors and assigns. Section 12.10. Recordation of Assignments of Mortgage. To the extent permitted by applicable law, each of the Assignments of Mortgage is subject to recordation in all appropriate public offices for real property records in all the counties or other comparable jurisdictions in which any or all of the Mortgaged Properties are situated, and in any other appropriate public recording office or elsewhere, such recordation to be effected at the Company's expense in the event recordation is either necessary under applicable law or requested by the Purchaser at its sole option. 84 Section 12.11. Assignment by Purchaser. The Purchaser shall have the right, without the consent of the Company to assign, in whole or in part, its interest under this Agreement with respect to some or all of the Mortgage Loans, and designate any person to exercise any rights of the Purchaser hereunder, by executing an Assignment, Assumption and Recognition Agreement, and the assignee or designee shall accede to the rights and obligations hereunder of the Purchaser with respect to such Mortgage Loans. All references to the Purchaser in this Agreement shall be deemed to include its assignee or designee. In the event the Purchaser assigns this Agreement, and the assignee assumes any and all of the Purchaser's obligations hereunder, the Company acknowledges and agrees to look solely to such assignee, and not the Purchaser, for performance of the obligations so assumed and the Purchaser shall be relieved from any liability to the Company with respect thereto. Section 12.12. Solicitation of Mortgagor. Neither party shall, after the related Closing Date, take any action to solicit the refinancing of any Mortgage Loan. It is understood and agreed that neither (i) promotions undertaken by either party or any affiliate which are directed to the general public at large, including, without limitation, mass mailings based upon commercially acquired mailing lists, newspaper, radio, television advertisements nor (ii) serving the refinancing needs of a Mortgagor who, without solicitation, contacts either party in connection with the refinance of such Mortgage or Mortgage Loan, shall constitute solicitation under this Section. Section 12.13. Further Agreements. The Purchaser and the Company each agree to execute and deliver to the other such additional documents, instruments or agreements as may be necessary or appropriate to effectuate the purposes of this Agreement. Section 12.14. Confidential Information. The Company shall keep confidential and shall not divulge to any party, without the Purchaser's prior written consent, the price paid by the Purchaser for the Mortgage Loans, except to the extent that it is reasonable and necessary for the Company to do so in working with legal counsel, auditors, taxing authorities or other governmental agencies. Section 12.15. Counterparts. This Agreement may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument. Section 12.16. Exhibits. The exhibits to this Agreement are hereby incorporated and made a part hereof and are an integral part of this Agreement. 85 Section 12.17. General Interpretive Principles. For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender; (b) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP; (c) references herein to "Articles," "Sections," "Subsections," "Paragraphs," and other subdivisions without reference to a document are to designated Articles, Sections, Subsections, Paragraphs and other subdivisions of this Agreement; (d) a reference to a Subsection without further reference to a Section is a reference to such Subsection as contained in the same Section in which the reference appears, and this rule shall also apply to Paragraphs and other subdivisions; (e) the words "herein," "hereof," "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular provision; and (f) the term "include" or "including" shall mean without limitation by reason of enumeration. Section 12.18. Reproduction of Documents. This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications which may hereafter be executed, (b) documents received by any party at the closing, and (c) financial statements, certificates and other information previously or hereafter furnished, may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The parties agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. Section 12.19. Buydown Loan Aggregate Limitation. The aggregate outstanding principal balance of all Buydown Mortgage Loans in a Loan Package (the "Actual Buydown Balance") shall not, at any time, be greater than an amount equal to one-half percent (1/2%) of the aggregate outstanding principal balance of all Mortgage Loans in such Loan Package (the "Buydown Limit"). In the event that, at any time, the Actual Buydown Balance is greater than an amount equal to the Buydown Limit, the Company shall, upon the request of the Purchaser, repurchase at the Repurchase Price within (10) Business Days of such request any Buydown Mortgage Loan(s) in such Loan Package; provided, however, that the Actual Buydown Balance immediately after such repurchase shall be no greater than the 86 Buydown Loan Limit. The Company shall promptly provide notice to the Purchaser whenever the Actual Buydown Balance is greater than the Buydown Limit. [Intentionally Blank - Next Page Signature Page] 87 IN WITNESS WHEREOF, the Company and the Purchaser have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the day and year first above written. BANK OF AMERICA, NATIONAL WELLS FARGO BANK, N.A. ASSOCIATION, PURCHASER COMPANY By: /s/ Bruce W. Good By: /s/ Susan Hughes ---------------------------- ---------------------------- Name: Bruce W. Good Name: Susan Hughes -------------------------- -------------------------- Title: Vice President Title: Vice President ------------------------- ------------------------- STATE OF ) ) ss: COUNTY OF ____________ ) On the _____ day of _______________, 20___ before me, a Notary Public in and for said State, personally appeared Susan Hughes, known to me to be Vice President of Wells Fargo Bank, N.A., the national banking association that executed the within instrument and also known to me to be the person who executed it on behalf of said bank, and acknowledged to me that such bank executed the within instrument. IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the day and year in this certificate first above written. Notary Public My Commission expires STATE OF NORTH CAROLINA ) ) ss: COUNTY OF MECKLENBURG ) On the _____ day of _______________, 20___ before me, a Notary Public in and for said State, personally appeared Bruce W. Good, known to me to be the Vice President of Bank of America, National Association, the national banking association that executed the within instrument and also known to me to be the person who executed it on behalf of said bank, and acknowledged to me that such bank executed the within instrument. IN WITNESS WHEREOF, I have hereunto set my hand affixed my office seal the day and year in this certificate first above written. Notary Public My Commission expires EXHIBIT A FORM OF ASSIGNMENT AND CONVEYANCE AGREEMENT On this _____ day of __________ 20___, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, _______________________ (the "Seller") as the Seller under that certain Amended and Restated Master Mortgage Loan Purchase Agreement, ("Purchase Agreement") and as the Company under that certain Amended and Restated Master Seller's Warranties and Servicing Agreement (the "Servicing Agreement") each dated as of December 1, 2005, (collectively, the "Agreements") does hereby sell, transfer, assign, set over and convey to ___________________________ as the Purchaser (the "Purchaser") under the Purchase Agreement, and Purchaser hereby accepts from Seller, without recourse, but subject to the terms of the Agreements, all right, title and interest of, in and to each of the Mortgage Loans listed on the related Mortgage Loan Schedule attached hereto as Exhibit A, together with the Custodial Mortgage Files and all rights and obligations arising under the documents contained therein. Pursuant to Section 2.03 of the Servicing Agreement, the Seller has delivered to the Custodian the documents required to be delivered under the Agreements for each Mortgage Loan to be purchased. The Servicing Files and the Retained Mortgage Files retained by the Seller pursuant to Section 2.01 of the Servicing Agreement shall be appropriately marked to clearly reflect the sale of the related Mortgage Loans to the Purchaser. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Agreements. ____________________________________ ____________________________________ PURCHASER COMPANY By: ________________________________ By: ________________________________ Name: ______________________________ Name: ______________________________ Title: _____________________________ Title: _____________________________ EXHIBIT A-1 EXHIBIT A MORTGAGE LOAN SCHEDULE Exhibit A-1 EXHIBIT B FORM OF ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT ____________, 20__ ASSIGNMENT, ASSUMPTION AND RECOGNITION AGREEMENT (this "Agreement"), dated ___________________, 20__ among _________________, a _________________ corporation having an office at _________________ ("Assignor") and _________________, having an office at _________________ ("Assignee") and Wells Fargo Bank, N.A. (the "Company"), having an office at 1 Home Campus, Des Moines, Iowa 50328-0001: For and in consideration of the sum of one dollar ($1.00) and other valuable consideration the receipt and sufficiency of which are hereby acknowledged, and of the mutual covenants herein contained, the parties hereto hereby agree as follows: 1. The Assignor hereby grants, transfers and assigns to Assignee all of the right, title and interest of Assignor, as Purchaser, in, to and under (i) that certain Seller's Warranties and Servicing Agreement (the "Seller's Warranties and Servicing Agreement"), dated as of _________________, by and between _________________ (the "Purchaser"), and _________________ (the "Company"), (ii) that certain Mortgage Loan Purchase Agreement (the "Mortgage Loan Purchase Agreement" and, together with the Seller's Warranties and Servicing Agreement, the "Purchase and Servicing Agreements"), dated as of _______, by and between the Purchaser and the Company, (iii) the mortgage loans delivered thereunder by the Company to the Assignor set forth on Exhibit 1 attached hereto (the "Mortgage Loans"), and (iv) that certain Custody Agreement (the "Custody Agreement" and, together with the Purchase and Servicing Agreements, the "Assigned Agreements"), dated as of _________________, by and among the Purchaser and _________________ (the "Custodian"). Simultaneously with the execution of this Agreement, on the date hereof, the Assignee shall pay to the Assignor for each Mortgage Loan the purchase price as calculated pursuant to the [Commitment Letter], dated as of _______, 200_ (the "[Commitment Letter]"), by and between the Assignee and the Assignor. The Assignee shall pay the purchase price payable under the Commitment Letter by wire transfer of immediately available funds to the account specified by the Assignor. The Assignee shall be entitled to (i) all payments and other recoveries of principal on the Mortgage Loans received after ______, 200_ or such other date mutually agreeable to the Assignor and the Assignee (the "Mortgage Loans Cut-off Date") and (ii) all payments of interest on the Mortgage Loans at the related Mortgage Loan Remittance Rate. 2. The Assignor warrants and represents to, and covenants with, the Assignee that: a. The Assignor is the lawful owner of the Mortgage Loans with the full right to transfer the Mortgage Loans free from any and all claims and encumbrances whatsoever; Exhibit B-1 b. The Assignor has not received notice of, and has no knowledge of, any offsets, counterclaims or other defenses available to the Company with respect to the Assigned Agreements or the Mortgage Loans; c. The Assignor has not waived or agreed to any waiver under, or agreed to any amendment or other modification of, the Assigned Agreements, the Custody Agreement or the Mortgage Loans, including without limitation the transfer of the servicing obligations under the Seller's Warranties and Servicing Agreement. The Assignor has no knowledge of, and has not received notice of, any waivers under or amendments or other modifications of, or assignments of rights or obligations under, the Purchase and Servicing Agreements or the Mortgage Loans; and d. Neither the Assignor nor anyone acting on its behalf has offered, transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any interest in the Mortgage Loans or any other similar security to, or solicited any offer to buy or accept a transfer, pledge or other disposition of the Mortgage Loans, any interest in the Mortgage Loans or any other similar security from, or otherwise approached or negotiated with respect to the Mortgage Loans, any interest in the Mortgage Loans or any other similar security with, any person in any manner, or made any general solicitation by means of general advertising or in any other manner, or taken any other action which would constitute a distribution of the Mortgage Loans under the Securities Act of 1933 (the "1933 Act") or which would render the disposition of the Mortgage Loans a violation of Section 5 of the 1933 Act or require registration pursuant thereto. 3. That Assignee warrants and represent to, and covenants with, the Assignor and the Company pursuant to Section 12.10 of the Seller's Warranties and Servicing Agreement that: a. The Assignee agrees to be bound, as Purchaser, by all of the terms, covenants and conditions of the Seller's Warranties and Servicing Agreement, the Mortgage Loans and the Custody Agreement, and from and after the date hereof, the Assignee assumes for the benefit of each of the Company and the Assignor all of the Assignor's obligations as purchaser thereunder; b. The Assignee understands that the Mortgage Loans have not been registered under the 1933 Act or the securities laws of any state; c. The purchase price being paid by the Assignee for the Mortgage Loans are in excess of $250,000.00 and will be paid by cash remittance of the full purchase price within 60 days of the sale; d. The Assignee is acquiring the Mortgage Loans for investment for its own account only and not for any other person. In this connection, neither the Assignee nor any person authorized to act therefor has offered to sell the Mortgage Loans by means of any general advertising or general solicitation within the meaning of Rule 502(c) of U.S. Securities and Exchange Commission Regulation D, promulgated under the 1933 Act; e. The Assignee considers itself a substantial sophisticated institutional investor having such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of investment in the Mortgage Loans; Exhibit B-2 f. The Assignee has been furnished with all information regarding the Mortgage Loans that it has requested from the Assignor or the Company; g. Neither the Assignee nor anyone acting on its behalf has offered, transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any interest in the Mortgage Loans or any other similar security to, or solicited any offer to buy or accepted a transfer, pledge or other disposition of the Mortgage Loans, any interest in the Mortgage Loans or any other similar security from, or otherwise approached or negotiated with respect to the Mortgage Loans, any interest in the Mortgage Loans or any other similar security with, any person in any manner which would constitute a distribution of the Mortgage Loans under the 1933 Act or which would render the disposition of the Mortgage Loans a violation of Section 5 of the 1933 Act or require registration pursuant thereto, nor will it act, nor has it authorized or will it authorize any person to act, in such manner with respect to the Mortgage Loans; and h. Either (1) the Assignee is not an employee benefit plan ("Plan") within the meaning of section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or a plan (also a "Plan") within the meaning of section 4975(e)(1) of the Internal Revenue Code of 1986 ("Code"), and the Assignee is not directly or indirectly purchasing the Mortgage Loans on behalf of, investment manager of, as named fiduciary of, as Trustee of, or with assets of, a Plan; or (2) the Assignee's purchase of the Mortgage Loans will not result in a prohibited transaction under section 406 of ERISA or section 4975 of the Code. i. The Assignee's address for purposes of all notices and correspondence related to the Mortgage Loans and the Assigned Agreements is: ________________________________ ________________________________ ________________________________ Attention: The Assignee's wire transfer instructions for purposes of all remittances and payments related to the Mortgage Loans and the Seller's Warranties and Servicing Agreement is: ________________________________ ________________________________ Attention: 4. From and after the date hereof, the Company shall note the transfer of the Mortgage Loans to the Assignee in its books and records, the Company shall recognize the Exhibit B-3 Assignee as the owner of the Mortgage Loans and the Company shall service the Mortgage Loans for the benefit of the Assignee pursuant to the Seller's Warranties and Servicing Agreement, the terms of which are incorporated herein by reference. It is the intention of the Assignor, the Company and the Assignee that the Assigned Agreements shall be binding upon and inure to the benefit of the Company and the Assignee and their respective successors and assigns. [Signatures Follow] Exhibit B-4 IN WITNESS WHEREOF, the parties have caused this Assignment, Assumption and Recognition Agreement to be executed by their duly authorized officers as of the date first above written. Assignor Assignee By: ________________________________ By: Name: ______________________________ Name: Its: _______________________________ Its: Taxpayer Identification No.: Taxpayer Identification No.: Acknowledged this ___ day of ________________, 20___ WELLS FARGO BANK, N.A. Company By: Name: Exhibit B-5 EXHIBIT C CUSTODY AGREEMENT Exhibit C-1 EXHIBIT D CONTENTS OF EACH RETAINED MORTGAGE FILE, CUSTODIAL MORTGAGE FILE AND SERVICING FILE With respect to each Mortgage Loan, the Retained Mortgage File and Custodial Mortgage File shall include each of the following items, which shall be available for inspection by the Purchaser and any prospective Purchaser, and which shall be retained by the Company in the Retained Mortgage File or Servicing File or delivered to the Custodian pursuant to Sections 2.01 and 2.03 of the Master Seller's Warranties and Servicing Agreement to which this Exhibit is attached (the "Agreement"): WITH RESPECT TO EACH CUSTODIAL MORTGAGE FILE: 1. (a) The original Mortgage Note bearing all intervening endorsements, endorsed "Pay to the order of without recourse" and signed in the name of the Company by an authorized officer (in the event that the Mortgage Loan was acquired by the Company in a merger, the signature must be in the following form: "[Company], successor by merger to [name of predecessor]"; and in the event that the Mortgage Loan was acquired or originated by the Company while doing business under another name, the signature must be in the following form: "[Company], formerly known as [previous name]"). The Mortgage Note must contain all necessary intervening endorsements showing a complete chain of endorsement from the originator (each such endorsement being sufficient to transfer all right, title and interest of the party so endorsing, as noteholder or assignee thereof, in and to that Mortgage Note); or (b) With respect to no more than 1% of the unpaid principal balance of the Mortgage Loans as of the related Cut-off Date, a certified copy of the Mortgage Note (endorsed as provided above) together with a lost note affidavit, providing indemnification to the holder thereof for any losses incurred due to the fact that the original Mortgage Note is missing. 2. the originals or certified true copies of any document sent for recordation of all assumption, modification, consolidation or extension agreements, with evidence of recording thereon. 3. The original Assignment of Mortgage for each Mortgage Loan, in form and substance acceptable for recording (except for the insertion of the name of the assignee and recording information). The Assignment of Mortgage must be duly recorded only if recordation is either necessary under applicable law or commonly required by private institutional mortgage investors in the area where the Mortgaged Property is located or on direction of the Purchaser. If the Assignment of Mortgage is to be recorded, the Mortgage shall be assigned to the Purchaser. If the Assignment of Mortgage is not to be recorded, the Assignment of Mortgage shall be delivered in blank. If the Mortgage Loan was acquired by the Company in a merger, the Assignment of Mortgage must be made by "[Company], Exhibit D-1 successor by merger to [name of predecessor]." If the Mortgage Loan was acquired or originated by the Company while doing business under another name, the Assignment of Mortgage must be by "[Company], formerly know as [previous name]." Subject to the foregoing and where permitted under the applicable laws of the jurisdiction wherein the Mortgaged property is located, such Assignments of Mortgage may be made by blanket assignments for Mortgage Loans secured by the Mortgaged Properties located in the same county. If the related Mortgage has been recorded in the name of Mortgage Electronic Registration Systems, Inc. ("MERS") or its designee, no Assignment of Mortgage will be required to be prepared or delivered and instead, the Company shall take all actions as are necessary to cause the Purchaser to be shown as the owner of the related Mortgage Loan on the records of MERS for purposes of the system of recording transfers of beneficial ownership of mortgages maintained by MERS. 4. The original of any guarantee executed in connection with the Mortgage Note (if any). 5. Original or certified copy of power of attorney, if applicable. WITH RESPECT TO EACH RETAINED MORTGAGE FILE: 6. The original Mortgage, with evidence of recording thereon or a certified true and correct copy of the Mortgage sent for recordation. If in connection with any Mortgage Loan, the Company cannot deliver or cause to be delivered the original Mortgage with evidence of recording thereon on or prior to the Closing Date because of a delay caused by the public recording office where such Mortgage has been delivered for recordation or because such Mortgage has been lost or because such public recording office retains the original recorded Mortgage, the Company shall deliver or cause to be delivered to the Custodian, a photocopy of such Mortgage, together with (i) in the case of a delay caused by the public recording office, an Officer's Certificate of the Company stating that such Mortgage has been dispatched to the appropriate public recording office for recordation and that the original recorded Mortgage or a copy of such Mortgage certified by such public recording office to be a true and complete copy of the original recorded Mortgage will be promptly delivered to the Custodian upon receipt thereof by the Company; or (ii) in the case of a Mortgage where a public recording office retains the original recorded Mortgage or in the case where a Mortgage is lost after recordation in a public recording office, a copy of such Mortgage certified by such public recording office or by the title insurance company that issued the title policy to be a true and complete copy of the original recorded Mortgage. 7. For any Mortgage Loan not recorded in the name of MERS, originals or certified true copies of documents sent for recordation of all intervening assignments of the Mortgage with evidence of recording thereon, or if any such intervening assignment has not been returned from the applicable recording office or has been lost or if such public recording office retains the original recorded assignments of mortgage, the Company shall deliver or cause to be delivered to the Custodian, a Exhibit D-2 photocopy of such intervening assignment, together with (i) in the case of a delay caused by the public recording office, an Officer's Certificate of the Company stating that such intervening assignment of mortgage has been dispatched to the appropriate public recording office for recordation and that such original recorded intervening assignment of mortgage or a copy of such intervening assignment of mortgage certified by the appropriate public recording office or by the title insurance company that issued the title policy to be a true and complete copy of the original recorded intervening assignment of mortgage will be promptly delivered to the Custodian upon receipt thereof by the Company; or (ii) in the case of an intervening assignment where a public recording office retains the original recorded intervening assignment or in the case where an intervening assignment is lost after recordation in a public recording office, a copy of such intervening assignment certified by such public recording office to be a true and complete copy of the original recorded intervening assignment. 8. The original mortgagee policy of title insurance (or in the case of any Mortgage Loan secured by a Mortgaged Property located in a jurisdiction where such policies are generally not available, an opinion of counsel of the type customarily rendered in such jurisdiction in lieu of title insurance). 9. Any security agreement, chattel mortgage or equivalent executed in connection with the Mortgage. 10. For each Cooperative Loan, the original or a seller certified true copy of the following: The original Pledge Agreement entered into by the Mortgagor with respect to such Cooperative Loan; UCC-3 assignment in blank (or equivalent instrument), sufficient under the laws of the jurisdiction where the related Cooperative Apartment is located to reflect of record the sale and assignment of the Cooperative Loan to the Purchaser; Original assignment of Pledge Agreement in blank showing a complete chain of assignment from the originator of the related Cooperative Loan to the Company; Original Form UCC-1 and any continuation statements with evidence of filing thereon with respect to such Cooperative Loan; Cooperative Shares with a Stock Certificate in blank attached; Original Proprietary Lease; Original Assignment of Proprietary Lease, in blank, and all intervening assignments thereof; Exhibit D-3 Original recognition agreement of the interests of the mortgagee with respect to the Cooperative Loan by the Cooperative, the stock of which was pledged by the related Mortgagor to the originator of such Cooperative Loan; and Originals of any assumption, consolidation or modification agreements relating to any of the items specified above. With respect to each Mortgage Loan, the Servicing File shall include each of the following items to the extent in the possession of the Company or in the possession of the Company's agent(s): 11. The original hazard insurance policy and, if required by law, flood insurance policy, in accordance with Section 4.10 of the Agreement. 12. Fully executed residential loan application. 13. Fully executed Mortgage Loan closing statement (Form HUD-1) and any other truth in lending or real estate settlement procedure forms required by law. 14. Verification of employment and income, unless originated under the Company's Limited Documentation program, Fannie Mae Timesaver Plus. 15. Verification of acceptable evidence of source and amount of down payment. 16. Credit report on the Mortgagor. 17. Residential Appraisal report. 18. Photograph of the Mortgaged Property. 19. Survey of the Mortgaged Property, if required by the title company or applicable law. 20. Copy of each instrument necessary to complete identification of any exception set forth in the exception schedule in the title policy, i.e. map or plat, restrictions, easements, sewer agreements, home association declarations, etc. 21. All fully executed required disclosure statements required by state and federal law. 22. If available, termite report, structural engineer's report, water potability and septic certification. 23. Sales contract, if applicable. 24. Evidence of payment of taxes and insurance premiums, insurance claim files, correspondence, current and historical computerized data files, and all other processing, underwriting and closing papers and records which are customarily Exhibit D-4 contained in a mortgage loan file and which are required to document the Mortgage Loan or to service the Mortgage Loan. 25. Amortization schedule, if available. 26. Payment history for any Mortgage Loan that has been closed for more than 90 days. In the event an Officer's Certificate of the Company is delivered to the Custodian because of a delay caused by the public recording office in returning any recorded document, the Company shall deliver to the Custodian, within 240 days of the Closing Date, an Officer's Certificate which shall (i) identify the recorded document, (ii) state that the recorded document has not been delivered to the Custodian due solely to a delay caused by the public recording office, (iii) state the amount of time generally required by the applicable recording office to record and return a document submitted for recordation, and (iv) specify the date the applicable recorded document will be delivered to the Custodian. The Company shall be required to deliver to the Custodian the applicable recorded document by the date specified in (iv) above. An extension of the date specified in (iv) above may be requested from the Purchaser, which consent shall not be unreasonably withheld. Exhibit D-5 EXHIBIT E DATA FILE Loan Number Channel Property City Property State Property Zip Property County Note Date First Payment Date Last Payment Date Maturity Date Original Loan Amount Purchase Price Appraised Value Current Balance Sale Balance Current Interest Rate Current PANDI Product Type Remaining Term LTV MI Code Property Type Occupancy Code Purpose Code Stream Code Conforming Client Name LEX Number Employer Name Subsidy Code Initial Interest Rate Rate Change Date Margin Rate Cap Max Interest Rate Convertible Index Periodic Rate Cap Relo Indicator Temp Buydown Servicing Fee Exhibit E-1 Master Service Fee Servicer Name TLTV ECS Raw Score ECS Score Code FICO Raw Score FICO Score Code ECS Version Number Leasehold Indicator No Ratio Indicator Alt A Indicator Citizen Type Code Program Code Credit Grade Lien Status Terminal Didget Prepayment Penalty Period (years) Servicer Code Loan Term Number Loan MI Certificate Number Loan MI Coverage Percent Borrower Last Name Borrower First Name Borrower Street Address Pledged Asset Indicator Loan Effect LTV Percent Timesaver Indicator Interest Only Indicator Exhibit E-2 Exhibit B-1 EXHIBIT F SERVICING SYSTEM GUIDELINES AND REQUIREMENTS Loading/Updating Investor Headers 1. Bank of America will provide investor header matrix for input on MSP by Servicer. Updates/additions will occur monthly, including new investor header detail for each new deal that is settled. 2. The Servicer will load investor headers upon receipt or before month end. The following fields will need to be updated on IN03: MS OPT, MS INV CNTRL NO, MS MO DELQ, and MS JUST FL. 3. The Servicer will update the investor headers on the first business day of the next/following month to ensure that the correct loan accounts will appear on the corresponding 413 file that will represent the new month's activity. Loading Account Numbers 1. Upon receipt of a funding schedule, Bank of America will deliver a cross reference of Servicer-to-Bank of America account numbers to the servicer. The account numbers will be delivered in the tran 55 layout for loading in the next Servicer MSP cycle. 2. The Servicer will load account numbers on the first business day of the month to ensure that the correct Bank of America account numbers will appear on the corresponding 413 file that will represent the new month's activity. Automated Monetary Transaction File - 413 1. Call Fidelity PowerCell and request installation of IP 770 2. On the first business day of the month, the financial transactions for the LSBO portfolio will transmit from the Servicer MSP system to the Bank of America MSP system. Monthly Servicer File - Automated 1. Call Fidelity PowerCell and initiate an SSR for the installation of IP 1804 and the interchange set-up required to host and transmit this file. This enhancement will provide an automated month-end feed from the Servicer to Bank of America for the LSBO portfolio identified by the corresponding investor headers. The feed will include all new loans purchased by Bank of America in the previous month, as well as a maintenance file for all existing loans in the LSBO portfolio 2. Once installed, populate XX flag on the IN03 screen. This flag will assist with synchronizing the feeds received in the Monthly Servicer File and the corresponding 413 file. 3. Bank of America will receive and process the electronic file on the first business day of the month for the previous month-end file. Note: This file comes from the servicer automatically with the installation of the IP. Exhibit F-1 Monthly Servicer File - Manual For testing purposes, and in the event that the IP is not installed prior to initial conversion, a manual process is in place to provide the Monthly Servicer File data feed for REMOTE MSP clients. 1. The Servicer will load/update investor header information received from Bank of America. 2. The Servicer will send an email granting permission to Fidelity to provide the manual feed of accounts in the assigned investor headers identified. The email will contain the MSP client and corresponding investor/categories to be included in the feed. 3. Bank of America will receive and process the file on the first business day of the month for the previous month-end file. Note: For LICENSED MSP clients, the servicer will install and use the existing work-around EZTrieve process. (This will require the installation, testing, and implementation of the EZTrieve until the IP is ready.) The servicer will be required to develop a test file and production files until the IP is available. Reporting Requirements Required reports for the LSBO project are as follows: o S215 - Report summarizes the collections made during the reporting period o S214 - Report summarizes paid in full loans made during the reporting period o P139 - Monthly statement of mortgage accounts or a trial balance as of the cutoff date o SCHEDULED REMITTANCE REPORTS - Servicers send on a monthly basis. We would like this report by the 5th business day. o DELINQUENCY REPORT - Report from the servicer to be sent by the 5th business day. If the servicer is a Fidelity client, we would like a P4DL report. Otherwise, a similar report will suffice. LSBO would like this report sent via e-mail or fax. NOTE: These S215, S214, and P139 reports will be provided in an electronic format. These reports are automatically generated when the 951/139 cutoff is calendared. The reports are required for the LSBO project; reports in addition to these may be reasonably required in a format mutually agreed by the Purchaser and the Company. Exhibit F-2 EXHIBIT G MONTHLY REMITTANCE ADVICE Exhibit G-1 EXHIBIT H SERVICING CRITERIA TO BE ADDRESSED IN ASSESSMENT OF COMPLIANCE The assessment of compliance to be delivered by [the Company][Name of Subservicer] shall address, as a minimum, the criteria identified below as "Applicable Servicing Criteria" ----------------------------------------------------------------------------------------------------------------------------------- REG AB SERVICING CRITERIA APPLICABLE INAPPLICABLE REFERENCE SERVICING CRITERIA SERVICING CRITERIA ----------------------------------------------------------------------------------------------------------------------------------- GENERAL SERVICING CONSIDERATIONS ----------------------------------------------------------------------------------------------------------------------------------- Policies and procedures are instituted to monitor any performance or other triggers and events of default in accordance with the 1122(d)(1)(i) transaction agreements. ----------------------------------------------------------------------------------------------------------------------------------- If any material servicing activities are outsourced to third parties, policies and procedures are instituted to monitor the third party's performance and compliance with such servicing 1122(d)(1)(ii) activities. ----------------------------------------------------------------------------------------------------------------------------------- Any requirements in the transaction agreements to maintain a 1122(d)(1)(iii) back-up servicer for the mortgage loans are maintained. ----------------------------------------------------------------------------------------------------------------------------------- A fidelity bond and errors and omissions policy is in effect on the party participating in the servicing function throughout the reporting period in the amount of coverage required by and otherwise in accordance with the terms of the transaction 1122(d)(1)(iv) agreements. ----------------------------------------------------------------------------------------------------------------------------------- CASH COLLECTION AND ADMINISTRATION ----------------------------------------------------------------------------------------------------------------------------------- Payments on mortgage loans are deposited into the appropriate custodial bank accounts and related bank clearing accounts no more than two business days following receipt, or such other 1122(d)(2)(i) number of days specified in the transaction agreements. ----------------------------------------------------------------------------------------------------------------------------------- Disbursements made via wire transfer on behalf of an obligor or 1122(d)(2)(ii) to an investor are made only by authorized personnel. ----------------------------------------------------------------------------------------------------------------------------------- Advances of funds or guarantees regarding collections, cash flows or distributions, and any interest or other fees charged for such advances, are made, reviewed and approved as specified in the 1122(d)(2)(iii) transaction agreements. ----------------------------------------------------------------------------------------------------------------------------------- The related accounts for the transaction, such as cash reserve accounts or accounts established as a form of overcollateralization, are separately maintained (e.g., with respect to commingling of cash) as set forth in the transaction 1122(d)(2)(iv) agreements. ----------------------------------------------------------------------------------------------------------------------------------- Each custodial account is maintained at a federally insured depository institution as set forth in the transaction agreements. For purposes of this criterion, "federally insured depository institution" with respect to a foreign financial institution means a foreign financial institution that meets the 1122(d)(2)(v) requirements of Rule 13k-1(b)(1) of the Securities Exchange Act. ----------------------------------------------------------------------------------------------------------------------------------- Unissued checks are safeguarded so as to prevent unauthorized 1122(d)(2)(vi) access. ----------------------------------------------------------------------------------------------------------------------------------- Reconciliations are prepared on a monthly basis for all asset-backed securities related bank accounts, including custodial accounts and related bank clearing accounts. These reconciliations are (A) mathematically accurate; (B) prepared within 30 calendar days after the bank statement cutoff date, or such other number of days specified in the transaction agreements; (C) reviewed and approved by someone other than the person who prepared the reconciliation; and (D) contain explanations for reconciling items. These reconciling items are resolved within 90 calendar days of their original identification, or such other number of days specified in the 1122(d)(2)(vii) transaction agreements. ----------------------------------------------------------------------------------------------------------------------------------- INVESTOR REMITTANCES AND REPORTING ----------------------------------------------------------------------------------------------------------------------------------- Reports to investors, including those to be filed with the Commission, are maintained in accordance with the transaction agreements and applicable Commission requirements. Specifically, such reports (A) are prepared in accordance with timeframes and other terms set forth in the transaction agreements; (B) provide information calculated in accordance with the terms specified in the transaction agreements; (C) are filed with the Commission as required by its rules and regulations; and (D) agree with investors' or the trustee's records as to the total unpaid principal balance and number of mortgage loans serviced by the 1122(d)(3)(i) Servicer. ----------------------------------------------------------------------------------------------------------------------------------- Amounts due to investors are allocated and remitted in accordance with timeframes, distribution priority and other terms set forth 1122(d)(3)(ii) in the transaction agreements. ----------------------------------------------------------------------------------------------------------------------------------- Disbursements made to an investor are posted within two business days to the Servicer's investor records, or such other number of 1122(d)(3)(iii) days specified in the transaction agreements. ----------------------------------------------------------------------------------------------------------------------------------- Amounts remitted to investors per the investor reports agree with cancelled checks, or other form of payment, or custodial bank 1122(d)(3)(iv) statements. ----------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------- REG AB SERVICING CRITERIA APPLICABLE INAPPLICABLE REFERENCE SERVICING CRITERIA SERVICING CRITERIA ----------------------------------------------------------------------------------------------------------------------------------- POOL ASSET ADMINISTRATION ----------------------------------------------------------------------------------------------------------------------------------- Collateral or security on mortgage loans is maintained as required by the transaction agreements or related mortgage loan 1122(d)(4)(i) documents. ----------------------------------------------------------------------------------------------------------------------------------- Mortgage loan and related documents are safeguarded as required 1122(d)(4)(ii) by the transaction agreements ----------------------------------------------------------------------------------------------------------------------------------- Any additions, removals or substitutions to the asset pool are made, reviewed and approved in accordance with any conditions or 1122(d)(4)(iii) requirements in the transaction agreements. ----------------------------------------------------------------------------------------------------------------------------------- Payments on mortgage loans, including any payoffs, made in accordance with the related mortgage loan documents are posted to the Servicer's obligor records maintained no more than two business days after receipt, or such other number of days specified in the transaction agreements, and allocated to principal, interest or other items (e.g., escrow) in accordance 1122(d)(4)(iv) with the related mortgage loan documents. ----------------------------------------------------------------------------------------------------------------------------------- The Servicer's records regarding the mortgage loans agree with the Servicer's records with respect to an obligor's unpaid 1122(d)(4)(v) principal balance. ----------------------------------------------------------------------------------------------------------------------------------- Changes with respect to the terms or status of an obligor's mortgage loans (e.g., loan modifications or re-agings) are made, reviewed and approved by authorized personnel in accordance with 1122(d)(4)(vi) the transaction agreements and related pool asset documents. ----------------------------------------------------------------------------------------------------------------------------------- Loss mitigation or recovery actions (e.g., forbearance plans, modifications and deeds in lieu of foreclosure, foreclosures and repossessions, as applicable) are initiated, conducted and concluded in accordance with the timeframes or other requirements 1122(d)(4)(vii) established by the transaction agreements. ----------------------------------------------------------------------------------------------------------------------------------- Records documenting collection efforts are maintained during the period a mortgage loan is delinquent in accordance with the transaction agreements. Such records are maintained on at least a monthly basis, or such other period specified in the transaction agreements, and describe the entity's activities in monitoring delinquent mortgage loans including, for example, phone calls, letters and payment rescheduling plans in cases where delinquency 1122(d)(4)(viii) is deemed temporary (e.g., illness or unemployment). ----------------------------------------------------------------------------------------------------------------------------------- Adjustments to interest rates or rates of return for mortgage loans with variable rates are computed based on the related 1122(d)(4)(ix) mortgage loan documents. ----------------------------------------------------------------------------------------------------------------------------------- Regarding any funds held in trust for an obligor (such as escrow accounts): (A) such funds are analyzed, in accordance with the obligor's mortgage loan documents, on at least an annual basis, or such other period specified in the transaction agreements; (B) interest on such funds is paid, or credited, to obligors in accordance with applicable mortgage loan documents and state laws; and (C) such funds are returned to the obligor within 30 calendar days of full repayment of the related mortgage loans, or such other number of days specified in the transaction 1122(d)(4)(x) agreements. ----------------------------------------------------------------------------------------------------------------------------------- Payments made on behalf of an obligor (such as tax or insurance payments) are made on or before the related penalty or expiration dates, as indicated on the appropriate bills or notices for such payments, provided that such support has been received by the servicer at least 30 calendar days prior to these dates, or such 1122(d)(4)(xi) other number of days specified in the transaction agreements. ----------------------------------------------------------------------------------------------------------------------------------- Any late payment penalties in connection with any payment to be made on behalf of an obligor are paid from the Servicer's funds and not charged to the obligor, unless the late payment was due 1122(d)(4)(xii) to the obligor's error or omission. ----------------------------------------------------------------------------------------------------------------------------------- Disbursements made on behalf of an obligor are posted within two business days to the obligor's records maintained by the servicer, or such other number of days specified in the 1122(d)(4)(xiii) transaction agreements. ----------------------------------------------------------------------------------------------------------------------------------- Delinquencies, charge-offs and uncollectible accounts are recognized and recorded in accordance with the transaction 1122(d)(4)(xiv) agreements. ----------------------------------------------------------------------------------------------------------------------------------- Any external enhancement or other support, identified in Item 1114(a)(1) through (3) or Item 1115 of Regulation AB, is 1122(d)(4)(xv) maintained as set forth in the transaction agreements. ----------------------------------------------------------------------------------------------------------------------------------- EXHIBIT I SARBANES CERTIFICATION Re: The [ ] agreement dated as of [ ], 200[ ] (the "Agreement"), among [IDENTIFY PARTIES] I, ________________________________, the _______________________ of [Name of Servicer] (the "Servicer"), certify to [the Purchaser], [the Depositor], and the [Master Servicer] [Securities Administrator] [Trustee], and their officers, with the knowledge and intent that they will rely upon this certification, that: (1) I have reviewed the servicer compliance statement of the Servicer provided in accordance with Item 1123 of Regulation AB (the "Compliance Statement"), the report on assessment of the Servicer's compliance with the servicing criteria set forth in Item 1122(d) of Regulation AB (the "Servicing Criteria"), provided in accordance with Rules 13a-18 and 15d-18 under Securities Exchange Act of 1934, as amended (the "Exchange Act") and Item 1122 of Regulation AB (the "Servicing Assessment"), the registered public accounting firm's attestation report provided in accordance with Rules 13a-18 and 15d-18 under the Exchange Act and Section 1122(b) of Regulation AB (the "Attestation Report"), and all servicing reports, officer's certificates and other information relating to the servicing of the Mortgage Loans by the Servicer during 200[ ] that were delivered by the Servicer to the [Depositor] [Master Servicer] [Securities Administrator] [Trustee] pursuant to the Agreement (collectively, the "Servicer Servicing Information"); (2) Based on my knowledge, the Servicer Servicing Information, taken as a whole, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in the light of the circumstances under which such statements were made, not misleading with respect to the period of time covered by the Servicer Servicing Information; (3) Based on my knowledge, all of the Servicer Servicing Information required to be provided by the Servicer under the Agreement has been provided to the [Depositor] [Master Servicer] [Securities Administrator] [Trustee]; (4) I am responsible for reviewing the activities performed by the Servicer under the Agreement, and based on my knowledge and the compliance review conducted in preparing the Compliance Statement and except as disclosed in the Compliance Statement, the Servicing Assessment or the Attestation Report, the Servicer has fulfilled its obligations under the Agreement in all material respects; and (5) The Compliance Statement required to be delivered by the Servicer pursuant to the Agreement, and the Servicing Assessment and Attestation Report required to be provided by the Servicer and by each Subservicer and Subcontractor pursuant to the Agreement have been provided to the [Depositor] [Master Servicer]. Any material instances of noncompliance described in such reports have been disclosed to the [Depositor] [Master Servicer]. Any material instance of noncompliance with the Servicing Criteria has been disclosed in such reports. Date: By: ____________________________ Name: __________________________ Title: _________________________ EXHIBIT J FORM OF SARBANES-OXLEY BACK-UP CERTIFICATE I, __________________________, certify to ____________________________, and its officers, directors, agents and affiliates (the "[ ]") , and with the knowledge and intent that they will rely upon this certification, that: (i) Based on my knowledge, the information relating to the Mortgage Loans and the servicing thereof submitted by the Servicer to the [ ] which is used in connection with preparation of the reports on Form 8-K and the annual report on Form 10-K filed with the SEC with respect to the Transaction, taken as a whole, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading as of the date of this certification; (ii) The servicing information required to be provided to the [ ] by the Servicer under this Servicing Agreement has been provided to the [ ]; (iii) I am responsible for reviewing the activities performed by the Servicer under the Servicing Agreement and based upon the review required by this Servicing Agreement, and except as disclosed in the Annual Statement of Compliance, the Annual Independent Public Accountant's Servicing Report and all servicing reports, officer's certificates and other information relating to the servicing of the Mortgage Loans submitted to the [ ], the Servicer has, as of the date of this certification fulfilled its obligations under this Servicing Agreement; and (iv) I have disclosed to the [ ] all significant deficiencies relating to the Servicer's compliance with the minimum servicing standards in accordance with a review conducted in compliance with the Uniform Single Attestation Program for Mortgage Bankers or similar standard as set forth in the Servicing Agreement. (v) The Servicer shall indemnify and hold harmless the [ ] and its officers, directors, agents and affiliates from and against any losses, damages, penalties, fines, forfeitures, reasonable legal fees and related costs, judgments and other costs and expenses arising out of or based upon a breach by the Servicer or any of its officers, directors, agents or affiliates of its obligations under this Certification or the negligence, bad faith or willful misconduct of the Servicer in connection therewith. If the indemnification provided for herein is unavailable or insufficient to hold harmless the [ ], then the Servicer agrees that it shall contribute to the amount paid or payable by the [ ] as a result of the losses, claims, damages or liabilities of the [ ] in such proportion as is appropriate to reflect the relative fault of the [ ] on the one hand and the Servicer on the other in connection with a breach of the Servicer's obligations under this Certification or the Servicer's negligence, bad faith or willful misconduct in connection therewith. IN WITNESS WHEREOF, I have hereunto signed by name and affixed the seal of the Company. Dated: _________________________________ By: Name: Title: E Exhibit H-1

Gaither   Petroleum    Corporation [ex101gaitheragreement002.gif] [ex101gaitheragreement002.gif] David V. DeMarco                                                                                                                                        Telephone (281) 994-5400 Land Manager                                                                                                                                                      Direct (281) 994-5428 18000 Groschke, Bldg A-1, Suite 200                                                                                                                     Fax (281) 994-5410 Houston, Texas 77084-5642                                                                                               E Mail: [email protected] February 6, 2006 Mr. Bill Stinson Quest Oil Corporation 11200 Westheimer, Suite 900 Houston, Texas 77042 Re: Ratification of Participation Agreement and Election To Participate in the Carrizo Oil & Gas, Inc. Odom (Martin) Ranch 1H Prospect Parker County, Texas Dear Mr. Stinson, THIS AGREEMENT is made and entered into this 6th day of February 2006, by and between Gaither Asset Management, a Delaware Corporation, having its offices at 18000 Groschke Road, Building A-1, Suite 200, Houston, TX 77084-5642 (hereinafter called “GAM”), and Quest Oil Corporation, a Nevada Limited Liability Corporation, having its offices at 11200 Westheimer suite 900, Houston, Texas 77042 (hereinafter called “QUEST”) pertaining to the Carrizo Oil & Gas, Inc. operated Odom (Martin) Ranch 1H Prospect (“the Prospect”) and QUEST’s desire to participate in the Prospect, as more particularly set out herein below.  GAM and QUEST may hereinafter sometimes be referred to individually as “Party” or collectively as “Parties”. I. WITNESSETH: WHEREAS, GAM has agreed to participate in the Prospect, by paying 50% of all costs to drill the well and place it on production and thereby receive an assignment of Oil, Gas and Mineral Leases, included within the drilling unit, representing 42.5% of 8/8ths Leasehold Working Interest before payout and 35% of 8/8ths Leasehold Working Interest After Payout, as more particularly set out in that certain Letter agreement dated January 26, 2006 between GAM, NTX Resources, LLC (“NTX”) and MJGG, LLC. (“MJGG”), hereinafter referred to as the “GAM/NTX/MJGG Agreement”); and WHEREAS, the GAM/NTX/MJGG Agreement (i) sets out the terms and conditions of the agreement between GAM, NTX and MJGG, including the obligation for GAM to participate in and to the Initial Test Well known as the Odom (Martin) Ranch 1H Well (“the Well”) and,  (ii) includes the following agreements as Exhibits; (i) Exhibit “A”- Letter Agreement, dated December 15, 2005, Barnett Shale Wells, NTX & MJGG “Hyponex” et al. Oil and Gas Leases, Triad/Carrizo “Martin Ranch” Oil & Gas Leases, Parker County, Texas (“the Agreement”); and -------------------------------------------------------------------------------- (ii) (ii) Exhibit “B”- Drilling Proposal, dated December 19, 2005, Odom (Martin) Ranch No. 1H Well, Martin Hyponex Prospect, J.M. Lay Survey, A-2399, Parker County, Texas, and   (iii) (iii) Exhibit “C”- Amended Drilling Proposal, dated January 5, 2006, Odom (Martin) Ranch No. 1H Well, Martin Hyponex Prospect, J.M. Lay Survey, A-2399, Parker County, Texas; and (iv) (iv) Exhibit “D”-Joint Operating Agreement, dated December 15, 2005, for the Martin –Hyponex Prospect, between the Sauder Management Company, as operator and NTX Resources, LLC et al, as non-operators.  A copy of the GAM/NTX/MJGG Agreement with Exhibits “A”-“D” is attached hereto and made a part hereof as Exhibit 1; and   WHEREAS, GAM desires to convey to QUEST and QUEST desires to acquire from GAM a 4.25% of 8/8ths After Casing Point Leasehold Working Interest in the Prospect under the same terms as set forth in the GAM/NTX/MJGG Agreement. II. CONSIDERATION NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) and other Valuable consideration the receipt and sufficiency which is hereby acknowledged, and for the obligations, duties and responsibilities of QUEST, to be kept and performed as hereinafter set forth, and in accordance with the Agreement, it is mutually agreed between the Parties as follows: 1. Subject to the terms herein and the agreements attached hereto as Exhibits, Gaither hereby agrees to sell, transfer and convey a 4.25% Before Payout Leasehold Working Interest, subject to be reduced to a 3.5% After Payout Leasehold Working Interest in and to the Prospect under the same terms and in the same form of Assignment as received by GAM from NTX and MJGG.  The assignment will be finalized after QUEST has delivered it Cash Call Monies and after the final survey for the unit has been prepared. 2. QUEST shall within 4 days from Gaither’s execution of this agreement deliver to GAM; A. A check or wire transfer for $73,903.01 (“Cash Call Monies”). Such Cash Call Monies represent the following; i. Upfront Cost (Land and Seismic) of 5% times $82,283.06 to the 50% = $8,228.31, and ii.  Dry hole cost of 5% times $ 1,313,494.00 = $65,674.70 and B. An executed original of this Ratification of Participation Agreement and Election to Participate in the Prospect. III. RATIFICATION QUEST by its execution hereof agrees that it has ratified (i) the GAM/NTX/MJGG Agreement and all of its Exhibits and (ii) the Authority For Expenditure attached hereto as Exhibit 2.  QUEST agrees to pay all of its 5% of 8/8ths of all costs and expenses associated with preparation and drilling of the well, and if applicable, all costs and expenses associated with completing the well and placing of the well on line.  In addition QUEST agrees to pay all of its 4.25% of 8/8ths of all costs and expenses associated with the drilling, completing and placing of the well on line and its 3.5% of 8/8ths of all costs and expenses After Payout of the well as defined in the GAM/NTX/MJGG Agreement. IV. ENTIRE AGREEMENT This Agreement (including the Exhibits attached hereto) constitutes the entire understanding between the Parties with respect to the Prospect, superseding all negotiations, prior discussions and prior agreements and understandings relating to the Prospect.  This Agreement may be supplemented, altered, amended, modified or revoked in writing only, signed by the Parties hereto. V. BINDING EFFECT This Agreement shall constitute a binding and enforceable agreement between the Parties and shall inure to the benefit of the Parties hereto and their respective successors and assigns. VI. INTERPRETATION The Agreement shall be interpreted and construed in accordance with the laws of the State of Texas. VII. LIABILITIES The rights and liabilities of the parties hereto shall be several and not joint or collective. VIII. CONTROLLING AGREEMENT This Agreement is to be construed in harmony with the ”Agreement”.  However, in the event there is a conflict in the terms and/or conditions of this Agreement conflict with those of the Agreement, it is expressly agreed the terms and/or conditions in this Agreement shall control.   IX. TERMINATION In the event this Agreement is not executed by QUEST and received by GAM with the Cash Call Monies on or before February 10, 2006, this Agreement shall expire and be considered as having never been in effect and for all purposes not be in force and effect.  X.   PARTNERSHIPS OR TAXATION This Agreement is not intended to create, and shall not be construed to create, a relationship, a partnership, or an association for profit, or otherwise, between or among the Parties hereto.  Notwithstanding any provisions herein contained to the contrary, the rights and liabilities hereunder are several and not joint or collective. Additionally, this Agreement and operations hereunder shall not constitute a partnership, of any sort, for Federal Income tax purposes. XI. INDEMNIFICATION BY QUEST QUEST AGREES TO INDEMNIFY, RELEASE, DEFEND AND HOLD HARMLESS GAM, ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, REPRESENTATIVES, AFFILIATES, SUBSIDIARIES, SUCCESSORS (COLLECTIVELY, THE “GAM INDEMNITEES”) FROM AND AGAINST ANY AND ALL CLAIMS, INCLUDING, WITHOUT LIMITATION, DAMAGE TO PROPERTY, OR INJURY TO OR DEATH OF PERSONS OCCURRING AND ATTRIBUTABLE TO QUEST’S OWNERSHIP IN THE PROSPECT. THE EFFECTIVE DATE, AND COURT COSTS AND REASONABLE ATTORNEYS’ FEES, CAUSED BY, ARISING FROM, ATTRIBUTABLE TO, OR ALLEGED TO BE CAUSED BY, ARISING FROM OR ATTRIBUTABLE TO (I) THE ASSUMED OBLIGATIONS, (II) THE OWNERSHIP AND OPERATION OF THE PROPERTIES ON AND AFTER THE EFFECTIVE DATE, OR (III) THE BREACH BY QUEST OF ANY OF ITS COVENANTS OR AGREEMENTS HEREUNDER. THE TERM “CLAIMS” AS USED IN THIS AGREEMENT SHALL MEAN ALL CLAIMS, LIABILITIES, LOSSES, DAMAGES, COSTS AND EXPENSES. THE OBLIGATIONS CONTAINED IN THIS SECTION 10(B) ARE INTEGRALLY RELATED TO THE OWNERSHIP OF THE PROPERTIES AND SHALL BE COVENANTS THAT RUN WITH THE OWNERSHIP OF THE PROPERTIES. THE FOREGOING INDEMNITY, RELEASE, DEFENSE AND HOLD HARMLESS OBLIGATIONS SHALL APPLY WHETHER OR NOT THE CLAIMS ARISE OUT OF (i) NEGLIGENCE (INCLUDING SOLE NEGLIGENCE, SINGLE NEGLIGENCE, CONCURRENT NEGLIGENCE, ACTIVE OR PASSIVE NEGLIGENCE) OF ANY GAM INDEMNITEE, OR (ii) STRICT LIABILITY OF ANY GAM INDEMNITEE, BUT SHALL NOT APPLY TO THE EXTENT CLAIMS ARISE OUT OF INTENTIONAL ACTS COMMITTED BY GAM OR ITS EMPLOYEES OR GROSS NEGLIGENCE OF GAM OR ITS EMPLOYEES. IN WITNESS WHEREOF, this instrument is executed effective as of the date first written above. Gaither Asset Management By: _____________________________ Name:    David V. DeMarco Title:       Land Manager Date______________________________ Quest Oil Corporation By:________________________________ Name: Title:    Managing Partner Date:  __________________________

Exhibit 10.2   IRVINE SENSORS CORP.   AMENDED AND RESTATED CONSULTING AGREEMENT   This Amended and Restated Consulting Agreement (this “Agreement”) is entered into as of December 30, 2005 by and between Irvine Sensors Corporation (the “Company”), and CTC Aero, LLC, a limited liability company (“CTC”) and Chris Toffales, the manager of CTC (“Toffales”). CTC and Toffales are sometimes collectively referred to herein as the “Consultant.”   RECITALS   1. Consultant has expertise in the area of the Company’s business and is willing to provide consulting services to the Company.   2. The Company is willing to engage Consultant as an independent contractor, and not as an employee, on the terms and conditions set forth herein.   3. This Agreement is intended to amend and restate in its entirety that certain Consulting Agreement dated August 10, 2005 between the Company and Consultant.   AGREEMENT   In consideration of the foregoing and of the mutual promises set forth herein, and intending to be legally bound, the parties hereto agree as follows:   1. Engagement.   (a) The Company hereby engages Consultant to render, as an independent contractor, the consulting services described in Exhibit A hereto and such other services as may be agreed to in writing by the Company and Consultant from time to time.   (b) Consultant hereby accepts the engagement to provide consulting services to the Company on the terms and conditions set forth herein.   2. Term. This Agreement will be effective from December 30, 2005 and unless modified by the mutual written agreement of the parties, shall continue until December 30, 2008. Company may terminate this Agreement upon 730 days prior written notice to Consultant. Consultant may terminate this Agreement upon 365 days written notice to Company.   3. Compensation.   (a) In consideration of the services to be performed by Consultant, the Company agrees to pay Consultant in the manner and at the rates set forth in Exhibit A.   (b) The Company shall reimburse all out-of-pocket, reasonable and itemized business expenses directly incurred by Consultant and directly related to services conducted pursuant to this Agreement, provided however, that any expense greater than $5,000 must be approved by the CEO or CFO of the Company in writing or by email in advance of being incurred. -------------------------------------------------------------------------------- 4. Consultant’s Business Activities.   (a) During the term of this Agreement, Consultant will engage in no business or other activities, which are or may be directly competitive with the business activities of the Company, other than in connection with activities relating to Isonics Corporation with respect to Uncooled Mems imaging business efforts, (the “Isonics Business”). The Company acknowledges that Toffales, consistent with his duties to the Company, has provided the Company with an opportunity to participate in the Isonics Business which the Company is in the process of considering. The Company has no claim against Toffales relating to this corporate opportunity.(b) It is anticipated that the Consultant shall devote seven (7) days per month to the business and the activities set forth in Section 1(a) of Exhibit A and shall be compensated as set forth in Exhibit A.   (c) Consultant shall keep and periodically provide to the Company a log describing the work activities performed by and hours of Consultant.   5. Confidential Information and Assignments. Consultant is simultaneously executing a Confidential Information and Invention Assignment Agreement for Consultants in the form of Exhibit B (the “Confidential Information and Invention Assignment Agreement”). The obligations under the Confidential Information and Invention Assignment Agreement shall survive termination of this Agreement for any reason.   6. Interference with the Company’s Business.   (a) Notwithstanding any other provision of this Agreement, for a period of one year after termination of this Agreement, Consultant shall not, directly or indirectly, employ, solicit for employment, or advise or recommend to any other person that such other person employ or solicit for employment, any person employed or under contract (whether as a consultant, employee or otherwise) by or to the Company during the period of such person’s association with the Company and one year thereafter.   (b) Notwithstanding any other provision of this Agreement, and to the fullest extent permitted by law, for a period of one year after termination of this Agreement, Consultant shall not, directly or indirectly, solicit any clients or customers of the Company. Consultant agrees that such solicitation would necessarily involve disclosure or use of confidential information in breach of the Confidential Information and Invention Assignment Agreement.   7. Representations and Warranties. Consultant represents and warrants (i) that Consultant has no obligations, legal or otherwise, inconsistent with the terms of this Agreement or with Consultant’s undertaking this relationship with the Company, (ii) that the performance of the services called for by this Agreement do not and will not violate any applicable law, rule or regulation or any proprietary or other right of any third party, (iii) that Consultant will not use in the performance of his responsibilities under this Agreement any confidential information or trade secrets of any other person or entity and (iv) that Consultant has not entered into or will enter into any agreement (whether oral or written) in conflict with this Agreement.   8. Indemnification. Consultant hereby indemnifies and agrees to defend and hold harmless the Company from and against any and all claims, demands and actions, and any liabilities, damages or expenses resulting therefrom, including court costs and reasonable attorneys’ fees, arising out of or relating to the services performed by Consultant under this Agreement or the representations and warranties made by Consultant pursuant to paragraph 7 hereof. Consultant’s obligations under this paragraph 8 hereof shall survive the termination, for any reason, of this Agreement.   9. Attorney’s Fees. Should either party hereto, or any heir, personal representative, successor or assign of either party hereto, resort to litigation to enforce this Agreement, the party or parties prevailing in such litigation shall be entitled, in addition to such other relief as may be granted, to recover its or their reasonable attorneys’ fees and costs in such litigation from the party or parties against whom enforcement was sought. -------------------------------------------------------------------------------- 10. Entire Agreement. This Agreement contains the entire understanding and agreement between the parties hereto with respect to its subject matter and supersedes in its entirety the Original Agreement and any other prior or contemporaneous written or oral agreements, representations or warranties between them respecting the subject matter hereof.   11. Amendment. This Agreement may be amended only by a writing signed by Consultant and by an executive officer of the Company or by a representative of the Company duly authorized by the Company’s Board of Directors.   12. Severability. If any term, provision, covenant or condition of this Agreement, or the application thereof to any person, place or circumstance, shall be held by a court of competent jurisdiction to be invalid, unenforceable or void, the remainder of this Agreement and such term, provision, covenant or condition as applied to other persons, places and circumstances shall remain in full force and effect.   13. Rights Cumulative. The rights and remedies provided by this Agreement are cumulative, and the exercise of any right or remedy by either party hereto (or by its successors), whether pursuant to this Agreement, to any other agreement, or to law, shall not preclude or waive its right to exercise any or all other rights and remedies.   14. Nonwaiver. No failure or neglect of either party hereto in any instance to exercise any right, power or privilege hereunder or under law shall constitute a waiver of any other right, power or privilege or of the same right, power or privilege in any other instance. All waivers by either party hereto must be contained in a written instrument signed by the party to be charged and, in the case of the Company, by an executive officer of the Company or other person duly authorized by the Board of Directors of the Company.   15. Remedy for Breach. The parties hereto agree that, in the event of breach or threatened breach of this Agreement, the damage or imminent damage to the value and the goodwill of the Company’s business will be inestimable, and that therefore any remedy at law or in damages shall be inadequate. Accordingly, the parties hereto agree that the Company shall be entitled to injunctive relief against Consultant in the event of any breach or threatened breach by Consultant, in addition to any other relief (including damages and the right of the Company to stop payments hereunder which is hereby granted) available to the Company under this Agreement or under law.   16. Agreement to Perform Necessary Acts. Consultant agrees to perform any further acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement.   17. Assignment. This Agreement may not be assigned by Consultant without the Company’s prior written consent. This Agreement may be assigned by the Company in connection with a merger of the Company, the sale of all or substantially all of the Company’s assets, and in other instances approved by the Consultant, which approval shall not be unreasonably withheld or delayed.   18. Compliance with Law. In connection with his services rendered hereunder, Consultant agrees to abide by all applicable federal, state, and local laws, ordinances and regulations.   19. Independent Contractor. The relationship between Consultant and the Company is that of independent contractor under a “work for hire” arrangement. All work product developed by Consultant shall be deemed owned and assigned to Company. This Agreement is not authority for Consultant to act for the Company as its agent or make commitments for the Company. Consultant will not be eligible for any employee benefits, nor will the company make deductions from fees to the consultant for taxes, insurance, bonds or the like. Consultant retains the discretion in performing the tasks assigned, within the scope of work specified.   20. Taxes. Consultant agrees to pay all appropriate local, state and federal taxes as a result fees paid under this Agreement. The Company shall supply the 1099 misc documents with fee’s paid. -------------------------------------------------------------------------------- Expenses will be excluded from the 1099 misc. form. The Company agrees to deduct these expenses as business expenses.   21. Governing Law. This Agreement shall be construed in accordance with, and all actions arising hereunder shall be governed by, the laws of the State of California.   22. Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given and received by the party to be notified (i) upon personal delivery to the party to be notified; (ii) three (3) business days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iii) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All such notices shall be sent to the parties hereto at the addresses below or at such other address as such party may provide in writing to the other parties hereto in accordance with this Section 22:   If to the Company: Irvine Sensors Corporation 3001 Redhill Avenue, Building 4-108 Costa Mesa, CA 92626 Attention: Chief Executive Officer   If to Consultant: Chris Toffales Irvine Sensors Corporation 3001 Redhill Avenue, Building -#4-108 Costa Mesa, CA 92626   IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.   Company       Consultant IRVINE SENSORS CORPORATION       CTC AERO, LLC By:   /s/ JOHN J. STUART, JR.       By:   /s/ CHRIS TOFFALES     John J. Stuart, Jr., CFO           Chris Toffales, Manager             /s/ CHRIS TOFFALES             Chris Toffales -------------------------------------------------------------------------------- Exhibit A   1. Description of Services to be Rendered   (a) Consultant will provide strategic planning and business development support. Statement of work for such consulting services will be provided by John Carson.   (b) Consultant will also provide leadership, negotiation, financing and analytical services for potential acquisition activities of the Company as agreed upon with the Company’s CEO and CFO.   2. Compensation   (a) It is anticipated that Toffales will work with Irvine Sensors approximately 7 days per month in the provisions of services identified in 1(a) above. In consideration of the services contemplated herein, CTC shall bill at the rate of $21,000.00 per month. If Toffales provides more than or less than 7 days of service per month, CTC shall roll forward to the days to the next month.   (b) CTC will be compensated for services as contemplated by 1(b) above only in the event of a successful acquisition by the Company or any of its subsidiaries of all or substantially all of the assets or stock of another entity or upon the merger of the Company or its subsidiary with another entity (an “Acquisition”) as a result of an introduction of such Acquisition by Consultant. At the close of such an Acquisition, CTC will earn a success fee as a percentage of the total purchase price paid by the Company for the Acquisition, not including the success fee itself. The percentage of the total price that comprises the success fee will be as follows, unless a written exception to such success fee schedule is agreed to by both parties prior to initiation of formal due diligence with respect to a given acquisition target, subject to the limitation that the minimum success fee shall be $150,000.00 .   Success Fee Percentage --------------------------------------------------------------------------------    Increment of total Price (millions of dollars) -------------------------------------------------------------------------------- 5    0-20 4    20-40 3    40-80 2    80-160 1    Greater than 160   The success fee will be paid in the Company’s stock, valued on the agreed upon conversion rate within the terms of the acquisition. An additional amount equal to 35% of the success fee will be paid to Consultant in cash. -------------------------------------------------------------------------------- Exhibit B   CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT FOR CONSULTANT   This CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT (the “Agreement”) is made between Irvine Sensors Corporation, a Delaware corporation (the “Company”) and the CTC Aero, LLC, a limited liability company (“CTC”) and Chris Toffales, the manager of CTC (“Toffales”). CTC and Toffales are sometimes collectively referred to herein as the “Consultant.”   In consideration of my relationship with the Company (which for purposes of this Agreement shall be deemed to include any subsidiaries or Affiliates* of the Company), the receipt of confidential information while associated with the Company, and other good and valuable consideration, I, the undersigned individual, agree that:   1. Term of Agreement. This Agreement shall continue in full force and effect for the duration of my relationship with the Company and shall continue thereafter until terminated through a written instrument signed by both parties.   2. Confidentiality.   (a) Definitions. “Proprietary Information” is all information and any idea whatever form, tangible or intangible, pertaining in any manner to the business of the Company, or any of its Affiliates, or its employees, clients, consultants, or business associates, which was produced by any employee or consultant of the Company in the course of his or her employment or consulting relationship or otherwise produced or acquired by or on behalf of the Company. All Proprietary Information not generally known outside of the Company’s organization, and all Proprietary Information so known only through improper means, shall be deemed “Confidential Information.” By example and without limiting the foregoing definition, Proprietary and Confidential Information shall include, but not be limited to:   (1) formulas, research and development techniques, processes, trade secrets, computer programs, software, electronic codes, mask works, inventions, innovations, patents, patent applications, discoveries, improvements, data, know-how, formats, test results, and research projects;   (2) information about costs, profits, markets, sales, contracts and lists of customers, and distributors;   (3) business, marketing, and strategic plans;   (4) forecasts, unpublished financial information, budgets, projections, and customer identities, characteristics and agreements; and   (5) employee personnel files and compensation information.   Confidential Information is to be broadly defined, and includes all information that has or could have commercial value or other utility in the business in which the Company is engaged or contemplates engaging, and all information of which the unauthorized disclosure could be detrimental to the interests of the Company, whether or not such information is identified as Confidential Information by the Company.   -------------------------------------------------------------------------------- * For purposes of this Agreement, “Affiliate” shall mean any person or entity that shall directly or indirectly controls, is controlled by, or is under common control with the Company. -------------------------------------------------------------------------------- Confidential Information does not include information which (i) is in the possession of the recipient at the time of disclosure,or (ii) becomes publicly available not as a direct or indirect result of any improper inaction or action of recipient, or (iii) was acquired by recipient before receiving such information from Company by a party having the legal right to make such disclosure. Information shall be deemed “publicly available” if it becomes a matter of public knowledge or is contained in materials available to the public or is obtained from any source other than the Company (or its directors, officers, employees, agents, representatives oradvisors), provided that such source has not to recipient’s knowledge entered into a confidentiality agreement with the Company with respect to such information or obtained the information from an entity or person party to a confidentiality agreement with the Company.   b) Existence of Confidential Information. The Company owns and has developed and compiled, and will develop and compile, certain trade secrets, proprietary techniques and other Confidential Information which have great value to its business. This Confidential Information includes not only information disclosed by the Company to me, but also information developed or learned by me during the course of my relationship with the Company.   (c) Protection of Confidential Information. I will not, directly or indirectly, use, make available, sell, disclose or otherwise communicate to any third party, other than in my assigned duties and for the benefit of the Company, any of the Company’s Confidential Information, either during or after my relationship with the Company. In the event I desire to publish the results of my work for the Company through literature or speeches, I will submit such literature or speeches to the President of the Company at least 10 days before dissemination of such information for a determination of whether such disclosure may alter trade secret status, may be prejudicial to the interests of the Company, or may constitute an invasion of its privacy. I agree not to publish, disclose or otherwise disseminate such information without prior written approval of the President of the Company. I acknowledge that I am aware that the unauthorized disclosure of Confidential Information of the Company may be highly prejudicial to its interests, an invasion of privacy, and an improper disclosure of trade secrets.   (d) Delivery of Confidential Information. Upon request or when my relationship with the Company terminates, I will immediately deliver to the Company all copies of any and all materials and writings received from, created for, or belonging to the Company including, but not limited to, those which relate to or contain Confidential Information.   (e) Location and Reproduction. I shall maintain at my workplace only such Confidential Information as I have a current “need to know.” I shall return to the appropriate person or location or otherwise properly dispose of Confidential Information once that need to know no longer exists. I shall not make copies of or otherwise reproduce Confidential Information unless there is a legitimate business need of the Company for reproduction.   (f) Prior Actions and Knowledge. I represent and warrant that from the time of my first contact with the Company I held in strict confidence all Confidential Information and have not disclosed any Confidential Information, directly or indirectly, to anyone outside the Company, or used, copied, published, or summarized any Confidential information, except to the extent otherwise permitted in this Agreement.   (g) Third-Party Information. I acknowledge that the Company has received and in the future will receive from third parties their confidential information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. I agree that I will at all times hold all such confidential information in the strictest confidence and not to disclose or use it, except as necessary to perform my obligations hereunder and as is consistent with the Company’s agreement with such third parties.   (h) Third Parties. I represent that my relationship with the Company does not and will not breach any agreements with or duties to a former employer or any other third party. I will not -------------------------------------------------------------------------------- disclose to the Company or use on its behalf any confidential information belonging to others and I will not bring onto the premises of the Company any confidential information belonging to any such party unless consented to in writing by such party.   3. Proprietary Rights, Inventions and New Ideas.   (a) Definition. The term “Subject Ideas or Inventions” includes any and all ideas, processes, trademarks, service marks, inventions, designs, technologies, computer hardware or software, original works of authorship, formulas, discoveries, patents, copyrights, copyrightable works products, marketing and business ideas, and all improvements, know-how, data, rights, and claims related to the foregoing that, whether or not patentable, which are conceived, developed or created which: (1) relate to the Company’s current or contemplated business; (2) relate to the Company’s actual or demonstrably anticipated research or development; (3) result from any work performed by me for the Company; (4) involve the use of the Company’s equipment, supplies, facilities or trade secrets; (5) result from or are suggested by any work done by the Company or at the Company’s request, or any projects specifically assigned to me; or (6) result from my access to any of the Company’s memoranda, notes, records, drawings, sketches, models, maps, customer lists, research results, data, formulae, specifications, inventions, processes, equipment or other materials (collectively, “Company Materials”).   (b) Company Ownership. All right, title and interest in and to all Subject Ideas and Inventions, including but not limited to all registrable and patent rights which may subsist therein, shall be held and owned solely by the Company, and where applicable, all Subject Ideas and Inventions shall be considered works made for hire. I shall mark all Subject Ideas and Inventions with the Company’s copyright or other proprietary notice as directed by the Company and shall take all actions deemed necessary by the Company to protect the Company’s rights therein. In the event that the Subject Ideas and Inventions shall be deemed not to constitute works made for hire, or in the event that I should otherwise, by operation of law, be deemed to retain any rights (whether moral rights or otherwise) to any Subject Ideas and Inventions, I agree to assign to the Company, without further consideration, my entire right, title and interest in and to each and every such Subject Idea and Invention.   (c) Disclosure. I agree to disclose promptly to the Company full details of any and all Subject Ideas and Inventions.   (d) Maintenance of Records. I agree to keep and maintain adequate and current written records of all Subject Ideas and Inventions and their development made by me (solely or jointly with others) during the term of my relationship with the Company. These records will be in the form of notes, sketches, drawings, and any other format that may be specified by the Company. These records will be available to and remain the sole property of the Company at all times.   (e) Determination of Subject Ideas and Inventions. I further agree that all information and records pertaining to any idea, process, trademark, service mark, invention, technology, computer hardware or software, original work of authorship, design, formula, discovery, patent, copyright, product, and all improvements, know-how, rights, and claims related to the foregoing (“Intellectual Property”), that I do not believe to be a Subject Idea or Invention, but that is conceived, developed, or reduced to practice by the Company (alone by me or with others) during my relationship with the Company and for one (1) year thereafter, shall be disclosed promptly by me to the Company. The Company shall examine such information to determine if in fact the Intellectual Property is a Subject Idea or Invention subject to this Agreement.   (f) Access. Because of the difficulty of establishing when any Subject Ideas or Inventions are first conceived by me, or whether it results from my access to Confidential Information or Company Materials, I agree that any Subject Idea and Invention shall, among other circumstances, be deemed to have resulted from my access to Company Materials if: (1) it grew -------------------------------------------------------------------------------- out of or resulted from my work with the Company or is related to the business of the Company, and (2) it is made, used, sold, exploited or reduced to practice, or an application for patent, trademark, copyright or other proprietary protection is filed thereon, by me or with my significant aid, within one year after termination of my relationship with the Company.   (g) Assistance. I further agree to assist the Company in every proper way (but at the Company’s expense) to obtain and from time to time enforce patents, copyrights or other rights or registrations on said Subject Ideas and Inventions in any and all countries, and to that end will execute all documents necessary:   (1) to apply for, obtain and vest in the name of the Company alone (unless the Company otherwise directs) letters patent, copyrights or other analogous protection in any country throughout the world and when so obtained or vested to renew and restore the same; and   (2) to defend any opposition proceedings in respect of such applications and any opposition proceedings or petitions or applications for revocation of such letters patent, copyright or other analogous protection; and   (3) to cooperate with the Company (but at the Company’s expense) in any enforcement or infringement proceeding on such letters patent, copyright or other analogous protection.   (h) Authorization to Company. In the event the Company is unable, after reasonable effort, to secure my signature on any patent, copyright or other analogous protection relating to a Subject Idea and Invention, whether because of my physical or mental incapacity or for any other reason whatsoever, I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney-in-fact, to act for and on my behalf and stead to execute and file any such application, applications or other documents and to do all other lawfully permitted acts to further the prosecution, issuance, and enforcement of letters patent, copyright or other analogous rights or protections thereon with the same legal force and effect as if executed by me. My obligation to assist the Company in obtaining and enforcing patents and copyrights for Subject Ideas and Inventions in any and all countries shall continue beyond the termination of my relationship with the Company, but the Company shall compensate me at a reasonable rate after such termination for time actually spent by me at the Company’s request on such assistance.   (i) Acknowledgement. I acknowledge that there are no currently existing ideas, processes, inventions, discoveries, marketing or business ideas or improvements which I desire to exclude from the operation of this Agreement. To the best of my knowledge, there is no other contract to assign inventions, trademarks, copyrights, ideas, processes, discoveries or other intellectual property that is now in existence between me and any other person (including any business or governmental entity).   (j) No Use of Name. I shall not at any time use the Company’s name or any the Company trademark(s) or trade name(s) in any advertising or publicity without the prior written consent of the Company.   4. Competitive Activity.   (a) Acknowledgment. I acknowledge that the pursuit of the activities forbidden by Section 4(b) below would necessarily involve the use, disclosure or misappropriation of Confidential Information.   (b) Prohibited Activity. To prevent the above-described disclosure, misappropriation and breach, I agree that during my relationship and for a period of one (1) year thereafter, without the Company’s express written consent, I shall not, directly or indirectly, (i) employ, solicit for -------------------------------------------------------------------------------- employment, or recommend for employment any person employed by the Company (or any Affiliate); and (ii) engage in any present or contemplated business activity that is or may be competitive with the Company (or any Affiliate) in any state where the Company conducts its business, unless I can prove that any action taken in contravention of this subsection (ii) was done without the use in any way of Confidential Information.   5. Representations and Warranties. I represent and warrant (i) that I have no obligations, legal or otherwise, inconsistent with the terms of this Agreement or with my undertaking a relationship with the Company; (ii) that the performance of the services called for by this Agreement do not and will not violate any applicable law, rule or regulation or any proprietary or other right of any third party; (iii) that I will not use in the performance of my responsibilities for the Company any confidential information or trade secrets of any other person or entity; and (iv) that I have not entered into or will enter into any agreement (whether oral or written) in conflict with this Agreement.   6. Termination Obligations.   (a) Upon the termination of my relationship with the Company or promptly upon the Company’s request, I shall surrender to the Company all equipment, tangible Proprietary Information, documents, books, notebooks, records, reports, notes, memoranda, drawings, sketches, models, maps, contracts, lists, computer disks (and other computer-generated files and data), any other data and records of any kind, and copies thereof (collectively, “Company Records”), created on any medium and furnished to, obtained by, or prepared by myself in the course of or incident to my relationship with the Company, that are in my possession or under my control.   (b) My representations, warranties, and obligations contained in this Agreement shall survive the termination of my relationship with the Company.   (c) Following any termination of my relationship with the Company, I will fully cooperate with the Company in all matters relating to my continuing obligations under this Agreement.   (d) I hereby grant consent to notification by the Company to any of my future employers or companies I consult with about my rights and obligations under this Agreement.   (e) Upon termination of my relationship with the Company, I will execute a Certificate acknowledging compliance with this Agreement in the form reasonably requested by the Company.   7. Injunctive Relief. I acknowledge that my failure to carry out any obligation under this Agreement, or a breach by me of any provision herein, will constitute immediate and irreparable damage to the Company, which cannot be fully and adequately compensated in money damages and which will warrant preliminary and other injunctive relief, an order for specific performance, and other equitable relief. I further agree that no bond or other security shall be required in obtaining such equitable relief and I hereby consent to the issuance of such injunction and to the ordering of specific performance. I also understand that other action may be taken and remedies enforced against me.   8. Modification. No modification of this Agreement shall be valid unless made in writing and signed by both parties. -------------------------------------------------------------------------------- 9. Binding Effect. This Agreement shall be binding upon me, my heirs, executors, assigns and administrators and is for the benefit of the Company and its successors and assigns.   10. Governing Law. This Agreement shall be construed in accordance with, and all actions arising under or in connection therewith shall be governed by, the internal laws of the State of California (without reference to conflict of law principles).   11. Integration. This Agreement sets forth the parties’ mutual rights and obligations with respect to proprietary information, prohibited competition, and intellectual property. It is intended to be the final, complete, and exclusive statement of the terms of the parties’ agreements regarding these subjects. This Agreement supersedes all other prior and contemporaneous agreements and statements on these subjects, and it may not be contradicted by evidence of any prior or contemporaneous statements or agreements. To the extent that the practices, policies, or procedures of the Company, now or in the future, apply to myself and are inconsistent with the terms of this Agreement, the provisions of this Agreement shall control unless changed in writing by the Company.   12. Not Employment. This Agreement is not an employment agreement as I am an independent consultant. I understand that the Company may terminate my association with it at any time, with or without cause, subject to the terms of any separate written consulting agreement executed by a duly authorized officer of the Company.   13. Construction. This Agreement shall be construed as a whole, according to its fair meaning, and not in favor of or against any party. By way of example and not limitation, this Agreement shall not be construed against the party responsible for any language in this Agreement. The headings of the paragraphs hereof are inserted for convenience only, and do not constitute part of and shall not be used to interpret this Agreement.   14. Attorneys’ Fees. Should either I or the Company, or any heir, personal representative, successor or permitted assign of either party, resort to legal proceedings to enforce this Agreement, the prevailing party (as defined in California statutory law) in such legal proceeding shall be awarded, in addition to such other relief as may be granted, attorneys’ fees and costs incurred in connection with such proceeding.   15. Severability. If any term, provision, covenant or condition of this Agreement, or the application thereof to any person, place or circumstance, shall be held to be invalid, unenforceable or void, the remainder of this Agreement and such term, provision, covenant or condition as applied to other persons, places and circumstances shall remain in full force and effect.   16. Rights Cumulative. The rights and remedies provided by this Agreement are cumulative, and the exercise of any right or remedy by either the Company or me (or by that party’s successor), whether pursuant hereto, to any other agreement, or to law, shall not preclude or waive that party’s right to exercise any or all other rights and remedies. This Agreement will inure to the benefit of the Company and its successors and assigns.   17. Nonwaiver. The failure of either the Company or me, whether purposeful or otherwise, to exercise in any instance any right, power or privilege under this Agreement or under law shall not constitute a waiver of any other right, power or privilege, nor of the same right, power or privilege in any other instance. Any waiver by the Company or by me must be in writing and signed by either myself, if I am seeking to waive any of my rights under this Agreement, or by an officer of the Company (other than me) or some other person duly authorized by the Company.   18. Notices. Any notice, request, consent or approval required or permitted to be given under this Agreement or pursuant to law shall be sufficient if it is in writing, and if and when it is hand delivered or sent by regular mail, with postage prepaid, to my residence (as noted in the Company’s records), or to the Company’s principal office, as the case may be. -------------------------------------------------------------------------------- 19. Agreement to Perform Necessary Acts. I agree to perform any further acts and execute and deliver any documents that may be reasonably necessary to carry out the provisions of this Agreement.   20. Assignment. This Agreement may not be assigned without the Company’s prior written consent.   21. Compliance with Law. I agree to abide by all federal, state, and local laws, ordinances and regulations.   22. Acknowledgment. I acknowledge that I have had the opportunity to consult legal counsel in regard to this Agreement, that I have read and understand this Agreement, that I am fully aware of its legal effect, and that I have entered into it freely and voluntarily and based on my own judgment and not on any representations or promises other than those contained in this Agreement.   IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the dates set forth below.   CAUTION: THIS AGREEMENT CREATES IMPORTANT OBLIGATIONS OF TRUST AND AFFECTS THE CONSULTANT’S RIGHTS TO INVENTIONS AND OTHER INTELLECTUAL PROPERTY THE CONSULTANT MAY DEVELOP.   Consultant CTC AERO, LLC By:   /s/ CHRIS TOFFALES     Chris Toffales, Manager

  EXHIBIT 10.3 EMPLOYMENT AGREEMENT      THIS EMPLOYMENT AGREEMENT (this “Agreement”), effective as of this 4th day of January, 2006 (the “Effective Date”), is entered into by and between True Religion Apparel, Inc., a Delaware corporation (“TRA”), and Kymberly Lubell (“Executive”).      WHEREAS, TRA and Executive desire to enter into this Agreement to assure TRA of the continuing and exclusive services of Executive and to set forth the rights and the duties of the parties hereto.      NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, terms and conditions contained herein, it is hereby agreed as follows:      1. Employment Period. Subject to the provisions for earlier termination hereinafter provided, Executive’s employment hereunder shall be for a term (the “Employment Period”) commencing on the Effective Date and ending on the third anniversary of the Effective Date (the “Initial Termination Date”); provided, however, that this Agreement shall be automatically extended for one additional year on the Initial Termination Date and on each subsequent anniversary of the initial Termination Date, unless either Executive or TRA elects not to so extend the term of the Agreement by notifying the other party, in writing, of such election not less than ninety (90) days prior to the last day of the term as then in effect. For the avoidance of doubt, non-renewal of this Agreement pursuant to the proviso contained in the preceding sentence shall not be deemed to give rise to any payment to Executive as might be the case in connection with a termination of this Agreement.      2. Terms of Employment.           (a) Position and Duties.                (i) During the Employment Period, Executive shall serve as Vice President, Women’s Design, of TRA and shall perform such employment duties as are usual and customary for such positions and such other duties as the Board of Directors of TRA (the “Board”) shall from time to time reasonably assign to Executive. Executive shall report to the Chief Executive Officer of TRA. At TRA’s request, Executive shall serve TRA and/or its subsidiaries and affiliates in other offices and capacities in addition to the foregoing. In the event that Executive, during the Employment Period, serves in any one or more of such additional capacities, Executive’s compensation shall not be increased beyond that specified in Section 2(b) of this Agreement. In addition, in the event Executive’s service in one or more of such additional capacities is subsequently terminated, Executive’s compensation, as specified in Section 2(b) of this Agreement, shall not be diminished or reduced in any manner as a result of such termination for so long as Executive otherwise remains employed under the terms of this Agreement. During the Employment Period, Executive shall perform his duties at the Company’s offices in the Los Angeles metropolitan area.                (ii) During the Employment Period, and excluding any periods of vacation and sick leave to which Executive is entitled, Executive agrees to devote substantially all of his business time, energy, skill and best efforts to the performance of his duties hereunder in a manner that will faithfully and diligently further the business and interests of TRA. Notwithstanding the foregoing, during the Employment Period it shall not be a violation of this Agreement for Executive to (A) serve on corporate, civic or charitable boards or committees consistent with TRA’s conflicts of interests policies   --------------------------------------------------------------------------------   and corporate governance guidelines in effect from time to time, (B) deliver lectures or fulfill speaking engagements or (C) manage his personal investments, so long as such activities do not interfere with the performance of Executive’s responsibilities as an executive officer of TRA. It is expressly understood and agreed that to the extent that any such activities have been conducted by Executive prior to the Effective Date and fully disclosed in writing and agreed to by TRA in writing, the continued conduct of such activities subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of Executive’s responsibilities to TRA; provided, however, that no such activity shall be permitted that violates any written non-competition agreement between the parties or prevents Executive from devoting substantially all of his business time to the fulfillment of his duties hereunder.                (iii) Executive agrees that he will not take personal advantage of any business opportunity that arises during his employment by TRA which may be of benefit to TRA unless all material facts regarding such opportunity are promptly reported by Executive to the Board for consideration by TRA and the disinterested members of the Board determine to reject the opportunity and to approve Executive’s participation therein.           (b) Compensation.                (i) Base Salary. During the Employment Period, Executive shall receive a base salary (the “Base Salary”) of $300,000 per annum, as the same may be increased thereafter (or thereafter decreased, but not below the then-current Base Salary). The Base Salary shall be paid at such intervals as TRA pays executive salaries generally. During the Employment Period, the Base Salary shall be reviewed at least annually for possible increase (but not decrease) in TRA’s sole discretion, as determined by TRA’s compensation committee or full Board; provided, however, that Executive shall be entitled to any annual cost-of-living increases in Base Salary that are granted to senior executives of TRA generally. Any increase in Base Salary shall not serve to limit or reduce any other obligation to Executive under this Agreement. The term “Base Salary” as utilized in this Agreement shall refer to Base Salary as so adjusted.                (ii) Annual Bonus. In addition to the Base Salary, Executive shall be eligible to earn, for each fiscal year of TRA ending during the Employment Period, an annual cash performance bonus (an “Annual Bonus”). For 2006, the amount and target performance goals for such Annual Bonus are set forth on Schedule A attached hereto. The amount of Annual Bonus and target performance goals for future years during the Term shall be determined by TRA’s compensation committee in its sole discretion.                (iii) Equity Incentive Award. Concurrently herewith, the Company is granting Executive an award consisting of 65,000 shares of restricted stock pursuant to the Company’s 2005 Stock Incentive Plan. Such shares of restricted stock shall vest 25% immediately, 50% on the first anniversary of the date of grant, and 25% on the second anniversary of the date of grant and shall be granted pursuant to the Company’s standard restricted stock award agreement.                (iv) Incentive, Savings and Retirement Plans. During the Employment Period, Executive shall be eligible to participate in all other incentive plans, policies and programs, and all savings and retirement plans, policies and programs, in each case that are applicable generally to senior executives of TRA.                (v) Welfare Benefit Plans. During the Employment Period, Executive and Executive’s eligible family members shall be eligible for participation in the welfare benefit plans, practices, policies and programs (including, if applicable, medical, dental, disability, employee life, group life and accidental death insurance plans and programs) maintained by TRA for its senior executives. 2 --------------------------------------------------------------------------------                  (vi) Expenses. During the Employment Period, Executive shall be entitled to receive prompt reimbursement for all reasonable business expenses incurred by Executive in accordance with the policies, practices and procedures of TRA provided to senior executives of TRA.                (vii) Fringe Benefits. During the Employment Period, Executive shall be entitled to such fringe benefits and perquisites as are provided by TRA to its senior executives from time to time, in accordance with the policies, practices and procedures of TRA.                (viii) Vacation. During the Employment Period, Executive shall be entitled to paid vacation in accordance with the plans, policies, programs and practices of TRA applicable to its senior executives.                (ix) Indemnification Agreement. On the Effective Date, TRA and Executive shall, if they have not done so previously, enter into an indemnification agreement in the form adopted by the Board for the officers of TRA and which contains customary terms and conditions for a public company.                (x) Automobile. Executive shall be entitled to an automobile allowance of Two Thousand Dollars ($2,000) per month.           (c) Additional Agreements. As a condition to TRA entering into this Agreement, Executive shall concurrently herewith enter into a Confidentiality and Non-Disclosure Agreement with TRA (the “Non-Disclosure Agreement”), a form of which is set forth as Exhibit B hereto, and a Non-Competition Agreement (the “Non-Competition Agreement”), a form of which is set forth as Exhibit C hereto.      3. Termination of Employment.           (a) Death or Disability. Executive’s employment will terminate automatically upon Executive’s death. Executive’s employment may be terminated if Executive suffers a Disability. For purposes of this Agreement, “Disability” means Executive’s inability by reason of physical or mental illness to fulfill his obligations hereunder for 90 consecutive days or on a total of 150 days in any 12-month period which, in the reasonable opinion of an independent physician selected by TRA or its insurers and reasonably acceptable to Executive or Executive’s legal representative, renders Executive unable to perform the essential functions of his job, even after reasonable accommodations are made by TRA. TRA is not, however, required to make unreasonable accommodations for Executive or accommodations that would create an undue hardship on TRA.           (b) Cause. TRA may terminate Executive’s employment during the Employment Period for Cause or without Cause. For purposes of this Agreement, “Cause” shall mean the occurrence of any one or more of the following events:                (i) Executive’s willful failure to perform or gross negligence in performing Executive’s duties owed to TRA, after ten (10) days following written notice delivered to Executive by the Board, which notice specifies such failure or negligence;                (ii) Executive’s commission of an act of fraud or dishonesty in the performance of Executive’s duties; 3 --------------------------------------------------------------------------------                  (iii) Executive’s conviction of, or entry by Executive of a guilty or no contest plea to, any (x) felony or (y) misdemeanor involving moral turpitude;                (iv) Any breach by Executive of Executive’s fiduciary duty or duty of loyalty to TRA; or                (v) Executive’s material breach of any of the provisions of this Agreement, which is not cured within ten (10) days following written notice thereof from TRA.           The termination of employment of Executive shall not be deemed to be for Cause unless and until there shall have been delivered to Executive a copy of a resolution duly adopted by the affirmative vote of a majority the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to Executive and Executive is given an opportunity to be heard before the Board), finding that, in the good faith opinion of the Board, sufficient Cause exists to terminate Executive pursuant to this Section 3(b); provided, that if Executive is a member of the Board, Executive shall not participate in the deliberations regarding such resolution, vote on such resolution, nor shall Executive be counted in determining a majority of the Board.           (c) Good Reason. Executive’s employment may be terminated by Executive for Good Reason or without Good Reason. For purposes of this Agreement, “Good Reason” shall mean the occurrence of any one or more of the following events without Executive’s prior written consent, unless TRA fully cures the circumstances constituting Good Reason (provided such circumstances are capable of cure) prior to the Date of Termination (as defined below):                (i) A material reduction in Executive’s titles, duties, authority and responsibilities, or the assignment to Executive of any duties materially inconsistent with Executive’s position, authority, duties or responsibilities without the written consent of Executive;                (ii) TRA’s reduction of Executive’s annual base salary or bonus opportunity, each as in effect on the date hereof or as the same may be increased from time to time;                (iii) The relocation of TRA’s headquarters to a location more than thirty-five (35) miles from TRA’s current headquarters in Los Angeles, California; or                (iv) TRA’s failure to cure a material breach of its obligations under the Agreement within fifteen (15) business days after written notice is delivered to the Board by Executive which specifically identifies the manner in which Executive believes that TRA has breached its obligations under the Agreement.           (d) Notice of Termination. Any termination by TRA for Cause, or by Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 9(c) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty days after the giving of such notice). The failure by Executive or TRA to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of Executive or TRA, respectively, hereunder or preclude Executive or TRA, respectively, from asserting such fact or circumstance in enforcing Executive’s or TRA’s rights hereunder. 4 --------------------------------------------------------------------------------             (e) Date of Termination. “Date of Termination” means (i) if Executive’s employment is terminated by TRA for Cause, or by Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein (which date shall not be more than 30 days after the giving of such notice), as the case may be, (ii) if Executive’s employment is terminated by TRA other than for Cause or Disability, the Date of Termination shall be the date on which TRA notifies Executive of such termination, (iii) if Executive’s employment is terminated by Executive without Good Reason, the Date of Termination shall be the thirtieth day after the date on which Executive notifies TRA of such termination, unless otherwise agreed by TRA and Executive, and (iv) if Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death or Disability of Executive, as the case may be.      4. Obligation of TRA Upon Termination.           (a) Without Cause or For Good Reason. If, during the Employment Period, TRA shall terminate Executive’s employment without Cause or Executive shall terminate his employment for Good Reason:                (i) Executive shall be paid, in two lump sum payments (A) Executive’s earned but unpaid Base Salary and accrued but unpaid vacation pay through the Date of Termination, and any Annual Bonus required to be paid to Executive pursuant to Section 2(b)(ii) above for any fiscal year of TRA that ends on or before the Date of Termination to the extent not previously paid (the “Accrued Obligations”), and (B) an amount (the “Severance Amount”) equal to one and one-half (1.5) (the “Severance Multiple”) times the sum of (x) the Base Salary in effect on the Date of Termination plus (y) either (1) the average Annual Bonus received by Executive for the two complete fiscal years (or such lesser number of years as Executive has been employed by TRA) of TRA immediately prior to the Termination Date, or (2) if the Date of Termination occurs before the end of the first complete fiscal year after the Effective Date, the amount of the Pro-Rated Annual Bonus (defined below) for such partial fiscal year; provided, however, if less than one (1) year remains in the Employment Period after the Date of Termination, the Severance Multiple shall equal one (1); provided, further, that the Accrued Obligations shall be paid when due under California law and the Severance Amount shall be paid no later than 60 days after the Date of Termination;                (ii) At the time when annual bonuses are paid to TRA’s other senior executives for the fiscal year of TRA in which the Date of Termination occurs, Executive shall be paid an Annual Bonus in an amount equal to the product of (x) the amount of the Annual Bonus to which Executive would have been entitled if Executive’s employment had not been terminated, and (y) a fraction, the numerator of which is the number of days in such fiscal year through the Date of Termination and the denominator of which is the total number of days in such fiscal year (a “Pro-Rated Annual Bonus”);                (iii) For a period of eighteen months following the Date of Termination, TRA shall continue to provide Executive and Executive’s eligible family members with group health insurance coverage at least equal to that which would have been provided to them if Executive’s employment had not been terminated (or at TRA’s election, pay the applicable COBRA premium for such coverage); provided, however, that if Executive becomes re-employed with another employer and is eligible to receive group health insurance coverage under another employer’s plans, TRA’s obligations under this Section 4(a)(iii) shall terminate and any such coverage shall be reported by Executive to TRA;                (iv) All outstanding stock options, restricted stock and other equity awards granted to Executive under any of TRA’s equity incentive plans (or awards substituted therefore covering 5 --------------------------------------------------------------------------------   the securities of a successor company) shall be modified to reflect an additional twelve (12) months of vesting; and                (v) To the extent not theretofore paid or provided, TRA shall timely pay or provide to Executive any vested benefits and other amounts or benefits required to be paid or provided or which Executive is eligible to receive as of the Date of Termination under any plan, contract or agreement of TRA and its affiliates (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”) to which Executive is a party. Notwithstanding the foregoing, it shall be a condition to Executive’s right to receive the amounts provided for in Sections 4(a)(i)(B) and 4(a)(ii) and (iii) above that Executive execute, deliver to TRA and not revoke a release of claims in substantially the form attached hereto as Exhibit A.           (b) For Cause or Without Good Reason. If Executive’s employment shall be terminated by TRA for Cause or by Executive without Good Reason during the Employment Period, TRA shall have no further obligations to Executive under this Agreement other than pursuant to Section 7 hereof, and the obligation to pay to Executive the Accrued Obligations when due under California law and to provide the Other Benefits.           (c) Death or Disability. If Executive’s employment is terminated by reason of Executive’s death or Disability during the Employment Period:                (i) The Accrued Obligations shall be paid to Executive’s estate or beneficiaries or to Executive, as applicable, in cash within 30 days of the Date of Termination;                (ii) 100% of Executive’s then current annual Base Salary, as in effect on the Date of Termination, shall be paid to Executive’s estate or beneficiaries or to Executive, as applicable, in cash when due under California law;                (iii) The Pro-Rated Annual Bonus shall be paid to Executive’s estate or beneficiaries or to Executive, as applicable, at the time when annual bonuses are paid to TRA’s other senior executives for the fiscal year of TRA in which the Date of Termination occurs;                (iv) For a period of eighteen months following the Date of Termination, Executive and Executive’s eligible family members shall continue to be provided with group health insurance coverage at least equal to that which would have been provided to them if Executive’s employment had not been terminated (or at TRA’s election, pay the applicable COBRA premium for such coverage); provided, however, that if Executive becomes re-employed with another employer and is eligible to receive group health insurance coverage under another employer’s plans, TRA’s obligations under this Section 4(d)(iv) shall terminate, and any such coverage shall be reported by Executive to TRA; and                (v) The Other Benefits shall be paid or provided to Executive’s estate or beneficiaries or to Executive, as applicable, on a timely basis.      5. Change in Control. If a Change in Control (as defined herein) occurs during the Employment Period, and the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason, in each case within one (1) year after the effective date of the Change in Control, then the Executive shall be entitled to the payments and benefits provided in Section 4(a), subject to the terms and conditions thereof; provided, that for purposes of this Section 5, (a) the Severance Multiple shall equal three (3) and (b) all outstanding stock options, restricted stock and other equity awards granted to Executive under any of TRA’s equity incentive plans (or awards substituted 6 --------------------------------------------------------------------------------   therefore covering the securities of a successor company) shall become immediately vested and exercisable in full. For purposes of this Agreement, “Change in Control” shall mean the occurrence of any of the following events:           (a) Any transaction, whether effected directly or indirectly, resulting in any “person” or “group” (as those terms are defined in Sections 3(a)(9), 13(d), and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules thereunder) having “beneficial ownership” (as determined pursuant to Rule 13d-3 under the Exchange Act) of securities entitled to vote generally in the election of directors (“voting securities”) of TRA that represent greater than 35% of the combined voting power of TRA’s then outstanding voting securities, other than                (i) any transaction or event resulting in the beneficial ownership of voting securities by a trustee or other fiduciary holding securities under any employee benefit plan (or related trust) sponsored or maintained by TRA or any Person controlled by TRA or by any employee benefit plan (or related trust) sponsored or maintained by TRA or any Person controlled by TRA, or                (ii) any transaction or event resulting in the beneficial ownership of voting securities by TRA or a corporation owned, directly or indirectly, by the stockholders of TRA in substantially the same proportions as their ownership of the stock of TRA, or                (iii) any transaction or event resulting in the beneficial ownership of voting securities pursuant to a transaction described in clause (c) below that would not be a Change in Control under clause (c), or                (iv) any transaction or event resulting solely from the transfer or acquisition of the beneficial ownership of voting securities by Jeffery Lubell, or an Immediate Family Member or Affiliate thereof (collectively, the “Lubell Affiliates”);           (b) Individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election by TRA’s stockholders, or nomination for election by the Board, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an election contest with respect to the election or removal of directors or other solicitation of proxies or consents by or on behalf of a Person other than the Board;           (c) The consummation by TRA (whether directly involving TRA or indirectly involving TRA through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of TRA’s assets or (z) the acquisition of assets or stock of another entity, in each case, other than a transaction:                (i) which results in TRA’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of TRA or the Person that, as a result of the transaction, controls, directly or indirectly, TRA or owns, directly or indirectly, all or substantially all of TRA’s assets or otherwise succeeds to the business of TRA (TRA or such person, the “Successor Entity”)) directly or indirectly, greater than 50% of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and 7 --------------------------------------------------------------------------------                  (ii) after which no Person or group beneficially owns voting securities representing greater than 50% of the combined voting power of the Successor Entity; provided, however, that no Person or group shall be treated for purposes of this clause (c) as beneficially owning greater than 50% of combined voting power of the Successor Entity solely as a result of the voting power held in TRA prior to the consummation of the transaction; or           (d) the approval by TRA’s stockholders of a liquidation or dissolution of TRA.           For purposes of clause (a) above, the calculation of voting power shall be made as if the date of the acquisition were a record date for a vote of TRA’s stockholders, and for purposes of clause (c) above, the calculation of voting power shall be made as if the date of the consummation of the transaction were a record date for a vote of TRA’s stockholders.           The following terms shall have the following meanings for purposes of this Section 5:                (i) “Affiliate” shall mean, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with such Person. Control of any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities or other interests, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.                (ii) “Immediate Family Member” shall mean a natural person’s estate or heirs or current spouse or former spouse, parents, parents-in-law, children (whether natural, adopted or by marriage), siblings and grandchildren and any trust or estate, all of the beneficiaries of which consist of such person or such person’s spouse, or former spouse, parents, parents-in-law, children, siblings or grandchildren.                (iii) “Person” shall mean an individual or a corporation, partnership, limited liability company, trust, unincorporated organization, association or other entity.      6. Full Settlement. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement and except as expressly provided, such amounts shall not be reduced whether or not Executive obtains other employment. If any party to this Agreement institutes any action, suit, counterclaim, appeal, arbitration or mediation for any relief against another party, declaratory or otherwise (collectively an “Action”), to enforce the terms hereof or to declare rights hereunder, then the Prevailing Party in such Action shall be entitled to recover from the other party all costs and expenses of the Action, including reasonable attorneys’ fees and costs (at the Prevailing Party’s attorneys’ then-prevailing rates) incurred in bringing and prosecuting or defending such Action and/or enforcing any judgment, order, ruling or award (collectively, a “Decision”) granted therein, all of which shall be deemed to have accrued on the commencement of such Action and shall be paid whether or not such Action is prosecuted to a Decision. Any Decision entered in such Action shall contain a specific provision providing for the recovery of attorneys’ fees and costs incurred in enforcing such Decision. A court or arbitrator shall fix the amount of reasonable attorneys’ fees and costs upon the request of either party. Any judgment or order entered in any final judgment shall contain a specific provision providing for the recovery of all costs and expenses of suit, including reasonable attorneys’ fees and expert fees and costs incurred in enforcing, perfecting and executing such judgment. For the purposes of this paragraph, costs shall include, without limitation, in addition to Costs incurred in prosecution or defense of the underlying action, reasonable attorneys’ fees, costs, expenses and expert fees and costs incurred in the following: (a) post judgment motions and collection actions; (b) contempt proceedings; (c) garnishment, levy, debtor and third party examinations; (d) discovery; (e) bankruptcy litigation; and (f) appeals of any 8 --------------------------------------------------------------------------------   order or judgment. “Prevailing Party” within the meaning of this Section includes, without limitation, a party who agrees to dismiss an Action in consideration for the other party’s payment of the amounts allegedly due or performance of the covenants allegedly breached, or obtains substantially the relief sought by such party.      7. Certain Additional Payments by TRA.           (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any Payment would be subject to the Excise Tax, then Executive shall be entitled to receive an additional payment (the “Excise Tax Gross-Up Payment”) in an amount such that, after payment by Executive of all taxes (and any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Excise Tax Gross-Up Payment, Executive retains an amount of the Excise Tax Gross-Up Payment equal to the Excise Tax imposed upon the Payments.           (b) Subject to the provisions of Section 7(c), all determinations required to be made under this Section 7, including whether and when an Excise Tax Gross-Up Payment is required, the amount of such Excise Tax Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by such nationally recognized accounting firm as may be selected by TRA and reasonably acceptable to Executive (the “Accounting Firm”); provided, that the Accounting Firm’s determination shall be made based upon “substantial authority” within the meaning of Section 6662 of the Code; provided, further, that Executive may waive the requirement that the determination be made by the Accounting Firm and may elect to have the determination made by TRA. The Accounting Firm shall provide detailed supporting calculations both to TRA and Executive within 15 business days of the receipt of notice from Executive that there has been a Payment or such earlier time as is requested by TRA. All fees and expenses of the Accounting Firm shall be borne solely by TRA. Any Excise Tax Gross-Up Payment, as determined pursuant to this Section 7, shall be paid by TRA to Executive within five days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon TRA and Executive, unless TRA obtains an opinion of outside legal counsel, based upon at least “substantial authority” within the meaning of Section 6662 of the Code, reaching a different determination, in which event such legal opinion shall be binding upon TRA and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Excise Tax Gross-Up Payments that will not have been made by TRA should have been made (the “Underpayment”), consistent with the calculations required to be made hereunder. In the event TRA exhausts its remedies pursuant to Section 7(c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by TRA to or for the benefit of Executive.           (c) Executive shall notify TRA in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by TRA of the Excise Tax Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than 10 business days after Executive is informed in writing of such claim. Executive shall apprise TRA of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which Executive gives such notice to TRA (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If TRA notifies Executive in writing prior to the expiration of such period that TRA desires to contest such claim, Executive shall: 9 --------------------------------------------------------------------------------                  (i) give TRA any information reasonably requested by TRA relating to such claim,                (ii) take such action in connection with contesting such claim as TRA shall reasonably request in writing from time to-time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by TRA,                (iii) cooperate with TRA in good faith in order effectively to contest such claim, and                (iv) permit TRA to participate in any proceedings relating to such claim;      provided, however, that TRA shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such-contest, and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 7(c), TRA shall control all proceedings taken in connection with such contest, and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing authority in respect of such claim and may, at its sole discretion, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as TRA shall determine; provided, however, that, if TRA directs Executive to pay such claim and sue for a refund, TRA shall advance the amount of such payment to Executive, on an interest-free basis, and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties) imposed with respect to such advance or with respect to any imputed income in connection with such advance; and provided, further, that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, TRA’s control of the contest shall be limited to issues with respect to which the Excise Tax Gross-Up Payment would be payable hereunder, and Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.           (d) If, after the receipt by Executive of an Excise Tax Gross-Up Payment or an amount advanced by TRA pursuant to Section 7(c), Executive becomes entitled to receive any refund with respect to the Excise Tax to which such Excise Tax Gross-Up Payment relates or with respect to such claim, Executive shall (subject to TRA’s complying with the requirements of Section 7(c), if applicable) promptly pay to TRA the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by TRA pursuant to Section 7(c), a determination is made that Executive shall not be entitled to any refund with respect to such claim and TRA does not notify Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Excise Tax Gross-Up Payment required to be paid.           (e) Notwithstanding any other provision of this Section 7, TRA may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of Executive, all or any portion of any Excise Tax Gross-Up Payment, and Executive hereby consents to such withholding. 10 --------------------------------------------------------------------------------             (f) Any other liability for unpaid or unwithheld Excise Taxes shall be borne exclusively by TRA, in accordance with Section 3403 of the Code. The foregoing sentence shall not in any manner relieve TRA of any of its obligations under this Employment Agreement.           (g) Definitions. The following terms shall have the following meanings for purposes of this Section 7:                (i) “Code” shall mean the Internal Revenue Code of 1986, as amended.                (ii) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.                (iii) “Parachute Value” of a Payment shall mean the present value as of the date of the change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2), as determined by the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment.                (iv) A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive, whether paid or payable pursuant to this Agreement or otherwise.                (v) The “Safe Harbor Amount” shall mean 2.99 times Executive’s “base amount,” within the meaning of Section 280G(b)(3) of the Code.                (vi) “Value” of a Payment shall mean the economic present value of a Payment as of the date of the change of control for purposes of Section 280G of the Code, as determined by the Accounting Firm using the discount rate required by Section 280G(d)(4) of the Code.      8. Successors. This Agreement is personal to Executive and without the prior written consent of TRA shall not be assignable by Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives. This Agreement shall inure to the benefit of and be binding upon TRA and its successors and assigns.      9. Miscellaneous.           (a) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.           (b) Arbitration. To the fullest extent allowed by law, any controversy, claim or dispute between Executive and TRA (and/or any of its owners, directors, officers, employees, affiliates, or agents) relating to or arising out of Executive’s employment or the cessation of that employment will be submitted to final and binding arbitration in the County of Los Angeles, State of California, for determination in accordance with the American Arbitration Association’s (“AAA”) National Rules for the Resolution of Employment Disputes, as the exclusive remedy for such controversy, claim or dispute. In any such arbitration, the parties may conduct discovery in accordance with the applicable rules of the 11 --------------------------------------------------------------------------------   arbitration forum, except that the arbitrator shall have the authority to order and permit discovery as the arbitrator may deem necessary and appropriate in accordance with applicable state or federal discovery statutes. The arbitrator shall issue a reasoned, written decision, and shall have full authority to award all remedies which would be available in court. The parties shall share the filing fees required for the arbitration, provided that Executive shall not be required to pay an amount in excess of the filing fees required by a federal or state court with jurisdiction. TRA shall pay the arbitrator’s fees and any AAA administrative expenses. The award of the arbitrator shall be final and binding upon the parties and may be entered as a judgment in any California court of competent jurisdiction and the parties hereby consent to the exclusive jurisdiction of the courts of California. Possible disputes covered by the above include (but are not limited to) unpaid wages, breach of contract, torts, violation of public policy, discrimination, harassment, or any other employment-related claims under laws including but not limited to, Title VII of the Civil Rights Act of 1964, the Americans With Disabilities Act, the Age Discrimination in Employment Act, the California Fair Employment and Housing Act, the California Labor Code, and any other statutes or laws relating to an employee’s relationship with his/her employer, regardless of whether such dispute is initiated by the employee or TRA. Thus, this bilateral arbitration agreement applies to any and all claims that TRA may have against an employee, including but not limited to, claims for misappropriation of TRA property, disclosure of proprietary information or trade secrets, interference with contract, trade libel, gross negligence, or any other claim for alleged wrongful conduct or breach of the duty of loyalty by an employee. However, notwithstanding anything to the contrary contained herein, TRA and Executive shall have their respective rights to seek and obtain injunctive relief with respect to any controversy, claim or dispute to the extent permitted by law. Claims for workers’ compensation benefits and unemployment insurance (or any other claims where mandatory arbitration is prohibited by law) are not covered by this arbitration agreement, and such claims may be presented by either Executive or TRA to the appropriate court or government agency. BY AGREEING TO THIS BINDING ARBITRATION PROVISION, BOTH EXECUTIVE AND TRA GIVE UP ALL RIGHTS TO TRIAL BY JURY. This arbitration agreement is to be construed as broadly as is permissible under applicable law.           (c) Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:           If to Executive: at Executive’s most recent address on the records of TRA,           If to TRA:           True Religion Apparel, Inc.           1525 Rio Vista Avenue           Los Angeles, CA 90023           Attn: Chief Executive Officer           with a copy to:           Manatt, Phelps & Phillips, LLP           11355 W. Olympic Blvd.           Los Angeles, CA 90064           Attn: Mark J. Kelson, Esq.           or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. 12 --------------------------------------------------------------------------------             (d) Sarbanes-Oxley Act of 2002. Notwithstanding anything herein to the contrary, if TRA determines, in its good faith judgment, that any transfer or deemed transfer of funds hereunder is likely to be construed as a personal loan prohibited by Section 13(k) of the Exchange Act and the rules and regulations promulgated thereunder, then such transfer or deemed transfer shall not be made to the extent necessary or appropriate so as not to violate the Exchange Act and the rules and regulations promulgated thereunder.           (e) Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. In the event any provision or term hereof is deemed to have exceeded applicable legal authority or shall be in conflict with applicable legal limitations, such provision shall be reformed and rewritten as necessary to achieve consistency and compliance with such applicable law.           (f) Withholding. TRA may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation. In addition, notwithstanding any other provision of this Agreement, TRA may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of Executive, all or any portion of any Excise Tax Gross-Up Payment and Executive hereby consents to such withholding.           (g) No Waiver. Executive’s or TRA’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right Executive or TRA may have hereunder, including, without limitation, the right of Executive to terminate employment for Good Reason pursuant to Section 3(c) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.           (h) Entire Agreement. As of the Effective Date, this Agreement, the Non-Disclosure Agreement , the Non-Competition Agreement, each of which is being entered into between the parties concurrently herewith, and any equity award agreements entered into between TRA and Executive, constitute the final, complete and exclusive agreement between Executive and TRA with respect to the subject matter hereof and replaces and supersedes any and all other agreements, offers or promises, whether oral or written, made to Executive by TRA or any representative thereof.           (i) Consultation With Counsel. Executive acknowledges that Executive has had a full and complete opportunity to consult with counsel and other advisors of Executive’s own choosing concerning the terms, enforceability and implications of this Agreement, and that TRA has not made any representations or warranties to Executive concerning the terms, enforceability or implications of this Agreement other than as reflected in this Agreement.           (j) Counterparts. This Agreement may be executed simultaneously in two counterparts, each of which shall be deemed an original but which together shall constitute one and the same instrument. 13 --------------------------------------------------------------------------------        IN WITNESS WHEREOF, Executive has hereunto set Executive’s hand and, pursuant to the authorization from the Board, TRA has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.             “Executive”   “TRA”                   TRUE RELIGION APPAREL, INC.                   By:                   Name: Kymberly Lubell       Name: Jeffrey Lubell Title: Chief Executive Officer   14 --------------------------------------------------------------------------------   SCHEDULE A 2006 ANNUAL BONUS      During 2006, the Executive shall be entitled to receive an Annual Bonus based upon the following formula:               2006   Bonus     Annual EBIT*   Opportunity** Threshold   $36.8 million   27.5% of base salary Target   $46 million   65% of base salary Maximum   $69 million   165% of base salary   *   EBIT is defined as earnings before interest and taxes and is calculated as net income plus interest expense plus tax expense.   **   No Annual Bonus will be paid to the Executive if EBIT is below $36.8 million. All amounts above $36.8 million EBIT and below $69 million EBIT are interpolated. SCHEDULE A -1-   --------------------------------------------------------------------------------   EXHIBIT A RELEASE           For a valuable consideration, the receipt and adequacy of which are hereby acknowledged, the undersigned does hereby release and forever discharge the “Releasees” hereunder, consisting of True Religion Apparel, Inc. and each of its subsidiaries, associates, affiliates, successors, heirs, assigns, agents, directors, officers, employees, representatives, lawyers, insurers, and all persons acting by, through, under or in concert with them, or any of them, of and from any and all manner of action or actions, cause or causes of action, in law or in equity, suits, debts, liens, contracts, agreements, promises, liability, claims, demands, damages, losses, costs, attorneys’ fees or expenses, of any nature whatsoever, known or unknown, fixed or contingent to the extent permissible under applicable law (hereinafter called “Claims”), which the undersigned now has or may hereafter have against the Releasees, or any of them, by reason of any matter, cause, or thing whatsoever from the beginning of time to the date hereof. The Claims released herein include, without limiting the generality of the foregoing, any Claims in any way arising out of, based upon, or related to the employment or termination of employment of the undersigned by the Releasees, or any of them; any alleged breach of any express or implied contract of employment; any alleged torts or other alleged legal restrictions on Releasee’s right to terminate the employment of the undersigned; and any alleged violation of any federal, state or local statute or ordinance including, without limitation, Title VII of the Civil Rights Act of 1964, the Age Discrimination In Employment Act, the Americans With Disabilities Act, and the California Fair Employment and Housing Act.           THE UNDERSIGNED ACKNOWLEDGES THAT HE HAS BEEN ADVISED BY LEGAL COUNSEL AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:           “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”           THE UNDERSIGNED, BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHTS HE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.           IN ACCORDANCE WITH THE OLDER WORKERS BENEFIT PROTECTION ACT OF 1990, THE UNDERSIGNED IS HEREBY ADVISED AS FOLLOWS:           (A) HE HAS THE RIGHT TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS RELEASE;           (B) HE HAS TWENTY-ONE (21) DAYS TO CONSIDER THIS RELEASE BEFORE SIGNING IT; AND           (C) HE HAS SEVEN (7) DAYS AFTER SIGNING THIS RELEASE TO REVOKE THIS RELEASE, AND THIS RELEASE WILL BECOME EFFECTIVE UPON THE EXPIRATION OF THAT REVOCATION PERIOD. SCHEDULE A -1- --------------------------------------------------------------------------------             The undersigned represents and warrants that there has been no assignment or other transfer of any interest in any Claim which he may have against Releasees, or any of them, and the undersigned agrees to indemnify and hold Releasees, and each of them, harmless from any liability, Claims, demands, damages, costs, expenses and attorneys’ fees incurred by Releasees, or any of them, as the result of any such assignment or transfer or any rights or Claims under any such assignment or transfer. It is the intention of the parties that this indemnity does not require payment as a condition precedent to recovery by the Releasees against the undersigned under this indemnity.           The undersigned agrees that if he hereafter commences any suit arising out of, based upon, or relating to any of the Claims released hereunder or in any manner asserts against Releasees, or any of them, any of the Claims released hereunder, then the undersigned agrees to pay to Releasees, and each of them, in addition to any other damages caused to Releasees thereby, all attorneys’ fees incurred by Releasees in defending or otherwise responding to said suit or Claim.           The undersigned further understands and agrees that neither the payment of any sum of money nor the execution of this Release shall constitute or be construed as an admission of any liability whatsoever by the Releasees, or any of them, who have consistently taken the position that they have no liability whatsoever to the undersigned.           IN WITNESS WHEREOF, the undersigned has executed this Release this                      day of                     ,                     .               “Executive”                       Name:     EXHIBIT A -2-   --------------------------------------------------------------------------------   EXHIBIT B CONFIDENTIALITY & NON-DISCLOSURE AGREEMENT      This Confidentiality and Non-Disclosure Agreement (“Agreement”) is made as of this 4th of January, 2006 by and between True Religion Apparel, Inc., a Delaware corporation (“TRA”), and Kymberly Lubell (“Executive”).      WHEREAS, concurrently with the execution of this Agreement, TRA and Executive have entered into (i) an Employment Agreement, pursuant to which TRA has agreed to employ Executive, and Executive has agreed to be employed by TRA, as its Vice President, Women’s Design (the “Employment Agreement”) and (ii) a Non-Competition Agreement (the “Non-Competition Agreement”);      WHEREAS, TRA and Executive agree that, in connection with the execution of the Employment Agreement and Executive’s employment, Executive will not disclose TRA proprietary information pursuant to the terms and conditions hereof;      WHEREAS, capitalized terms used herein without definition shall have the meanings ascribed thereto in the Employment Agreement.      NOW, THEREFORE, in furtherance of the foregoing and in exchange for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto hereby agree as follows:      1. Proprietary Information. Executive acknowledges that during the course of Executive’s employment with TRA, Executive has had and will necessarily have access to and make use of proprietary information and confidential records of TRA and its Affiliates. Executive covenants that Executive shall not, during the term of his employment with TRA or at any time thereafter (irrespective of the circumstances under which Executive’s employment with TRA terminates), directly or indirectly, use for Executive’s own purpose or for the benefit of any Person other than TRA and its Affiliates, nor otherwise disclose, any proprietary information of which Executive has knowledge to any Person, unless such disclosure has been authorized in writing by TRA or such Affiliates or is otherwise required by law. Executive acknowledges and understands that the term “proprietary information” includes, but is not limited to, patents, copyrights and trade secrets such as: (a) designs, drawings, sketches, fabrics, accessories and ornaments utilized or incorporated in or proposed to be utilized or incorporated in any product of TRA or its Affiliates; (b) the software products, programs, applications and processes utilized by or on behalf of TRA and its Affiliates (other than off-the-shelf software programs); (c) the name and/or address of any customer or vendor of TRA and its Affiliates or any information concerning the transactions or relations of any customer or vendor of TRA and its Affiliates with TRA or any of its stockholders, principals, directors, officers, employees or agents; (d) any information concerning any product, technology or procedure employed by or on behalf of TRA and its Affiliates but not generally known to its customers, vendors or competitors, or under development by or being tested by or on behalf of TRA and its Affiliates but not at the time offered generally to customers or vendors; (e) any proprietary information relating to TRA’s computer software, computer systems, pricing or marketing methods, sales margins, cost or source of raw materials, supplies or goods, capital structure, operating results, borrowing arrangements or business plans; (f) any information which is generally regarded as confidential or proprietary in any line of business engaged in by or on behalf of TRA and its Affiliates; (g) any business plans, budgets, advertising or marketing plans of TRA or its Affiliates; (h) any information contained in any of the written or oral policies and procedures or manuals of TRA or its Affiliates; (i) any information belonging to customers, vendors or Affiliates of TRA and its Affiliates or any other individual or entity which TRA and its Affiliates has agreed to hold in confidence; and (j) all written, graphic and other EXHIBIT B -1-   --------------------------------------------------------------------------------   material (whether in writing on magnetic tape or in electronic or other form) relating to or containing any of the foregoing. Executive acknowledges and understands that information that is not novel or copyrighted or trademarked or patented may nonetheless be proprietary information. The term “proprietary information” shall not include information generally available to and known by the public, information developed independently by Executive or information that is or becomes available to Executive on a non-confidential basis from a source other than TRA (or any of its Affiliates) or TRA’s stockholders, principals, directors, officers, employees or agents (other than as a result of a breach of any obligation of confidentiality).      2. Confidentiality and Surrender of Records. Executive shall not during the term of his employment with TRA or at any time thereafter (irrespective of the circumstances under which Executive’s employment with TRA terminates), except as required by law or as is necessary for the performance of Executive’s duties hereunder, directly or indirectly, publish, make known or in any fashion disclose any confidential records to, or permit any inspection or copying of confidential records by, any individual or entity, nor shall Executive retain, and will deliver promptly to TRA, any of the same following termination of Executive’s employment hereunder for any reason or upon request by TRA. The term “confidential records” means all correspondence, memoranda, files, manuals, books, designs, sketches, lists, financial, operating, or marketing records, magnetic tape, or electronic or other media or equipment or records of any kind which may be in Executive’s possession or under Executive’s control or accessible to Executive which contain any proprietary information. All confidential records shall be and remain the sole property of TRA during the term of Executive’s employment and thereafter.      3. Disclosure Required by Law. In the event Executive is required by law or court order to disclose any proprietary information or confidential records of TRA, Executive shall provide TRA with prompt written notice so that TRA may seek a protective order or other appropriate remedy, and if such protective order or other remedy is not obtained, Executive shall furnish only that portion of the proprietary information or confidential records that is legally required.      4. No Other Obligations. Executive represents and warrants to TRA that Executive is not precluded or limited in Executive’s ability to undertake or perform the duties described herein by any contract, agreement or restrictive covenant. Executive covenants that Executive shall not employ the trade secrets or proprietary information of any other Person in connection with Executive’s employment by TRA.      5. Developments the Property of TRA. All discoveries, inventions, designs, drawings, sketches, products, processes, methods and improvements conceived, developed or otherwise made by Executive at any time, alone or with others, and in any way relating to the present or future business or products of TRA and its Affiliates, including fabric or other designs, whether or not subject to copyright protection and whether or not reduced to tangible form during the period of Executive’s employment with TRA (collectively referred to as “Developments”), shall be the sole property of TRA. Executive agrees to, and hereby does, assign to TRA all of Executive’s right, title and interest throughout the world in and to all Developments. Executive agrees that all such Developments that are copyrightable shall constitute works made for hire under the copyright laws of the United States and Executive hereby assigns to TRA all copyrights and other proprietary rights Executive may have in any such Developments to the extent that they might not be considered works made for hire. Any provision in this Agreement requiring Executive to assign Executive’s rights in all Developments shall not apply to an invention that qualifies fully under the provisions of California Labor Code section 2870, the terms of which are incorporated herein. Executive shall make and maintain adequate and current written records of all Developments, and shall disclose all Developments fully and in writing to TRA promptly after development of the same, and at any time upon request; provided, however, that Developments excluded under the preceding sentence shall be received by TRA in confidence. EXHIBIT B -2-   --------------------------------------------------------------------------------        6. Enforcement. Executive acknowledges and agrees that, by virtue of Executive’s position, Executive’s services, and access to and use of confidential records and proprietary information, any violation by Executive of any of the undertakings contained in this Agreement would cause TRA or its Affiliates immediate, substantial and irreparable injury for which it has no adequate remedy at law. Accordingly, Executive agrees that in the event of a breach by Executive of any said undertakings, TRA will be entitled to temporary and permanent injunctive relief in any court of competent jurisdiction (without the need to post any bond and without proving that damages would be inadequate).      7. Amendments. No amendment or modification to this Agreement shall be valid unless in writing signed by Executive and an authorized officer of TRA.      8. No Alteration of Employment Status. The execution of this Agreement shall not be construed in any manner to alter Executive’s employment with TRA as provided in Executive’s Employment Agreement.      9. Effect of Waiver. The waiver by any party of a breach of any provision of this Agreement will not operate or be construed as a waiver of any subsequent breach thereof or as a waiver of any other provisions of this Agreement. The remedies set forth herein are nonexclusive and are in addition to any other remedies that any party may have at law or in equity.      10. Attorneys’ Fees. If any legal action, arbitration or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach or default in connection with any of the provisions of this Agreement, the prevailing party shall be entitled to recover attorneys’ fees and costs as set forth in the Employment Agreement.      11. Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:           If to Executive: at Executive’s most recent address on the records of TRA,           If to TRA:           True Religion Apparel, Inc.           1525 Rio Vista Avenue           Los Angeles, CA 90023           Attn: Chief Executive Officer           with a copy to:           Manatt, Phelps & Phillips, LLP           11355 W. Olympic Blvd.           Los Angeles, CA 90064           Attn: Mark J. Kelson, Esq.           or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee. EXHIBIT B -3-   --------------------------------------------------------------------------------        12. Miscellaneous. This Agreement is entered into and shall be governed and interpreted in accordance with the laws of the State of California, without regard to or application of choice of law rules or principles. It shall be binding upon and inure to the benefit of the parties, and to their respective heirs, personal representatives, successors and assigns. In the event that any provision of this Agreement is found by a court, arbitrator or other tribunal to be illegal, invalid or unenforceable, then the remaining provisions of this Agreement shall not be voided, but shall be enforced to the maximum extent permissible by law.      IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above.                 “Executive”   “TRA”                       TRUE RELIGION APPAREL, INC.           By:                       Name:       Name:             Title:   EXHIBIT B -4-   --------------------------------------------------------------------------------   EXHIBIT C NON-COMPETITION AGREEMENT      This Non-Competition Agreement (this “Agreement”) is dated as of January 4, 2006, by and between True Religion Apparel, Inc., a Delaware corporation (“TRA”) and Kymberly Lubell (“Executive”).      WHEREAS, concurrently with the execution of this Agreement, TRA and Executive have entered into (i) an Employment Agreement, pursuant to which TRA has agreed to employ Executive, and Executive has agreed to be employed by TRA, as its Vice President, Women’s Design (the “Employment Agreement”) and (ii) a Confidentiality and Non-Disclosure Agreement (the “Non-Disclosure Agreement”);      WHEREAS, TRA and Executive agree that, in connection with the execution of the Employment Agreement and Executive’s employment, Executive will not engage in competition with TRA pursuant to the terms and conditions hereof;      WHEREAS, capitalized terms used herein without definition shall have the meanings ascribed thereto in the Employment Agreement.      NOW, THEREFORE, in furtherance of the foregoing and in exchange for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto hereby agree as follows:      1. Noncompetition; Nonsolicitation.   (a)   During the Employment Period and, if Executive’ employment is terminated by TRA or Executive terminates his employment with TRA for any reason, for one (1) year thereafter, Executive shall not engage in Competition (as defined below) with TRA or any of its Affiliates.     (b)   The term “Competition” for purposes of this Agreement shall mean the taking of any of the following actions by Executive in any county in the United States: (i) the conduct of, directly or indirectly (including, without limitation, engaging in, assisting or performing services for), any business that engages in any activity which is directly competitive with the business of TRA, whether such business is conducted by Executive individually or as principal, partner, officer, director, consultant, security holder, creditor, employee, stockholder, member or manager of any person, partnership, corporation, limited liability company or any other entity; and/or (ii) ownership of interests in any business which is competitive, directly or indirectly, with any business carried on by TRA (or any successor thereto) or its Affiliates.     (c)   During the Employment Period, and for one (1) year thereafter, Executive shall not, directly or indirectly, solicit the employment of or employ any person who is then or has been within three (3) months prior to the time of such action, an employee of TRA, or any Affiliate of TRA.     (d)   During the Employment Period, and for one (1) year thereafter, Executive agrees that upon the earlier of Executive’s (x) negotiating with any Person EXHIBIT C -1-   --------------------------------------------------------------------------------         concerning the possible employment of Executive by such Person in Competition with TRA, (y) receiving an offer of employment from any Person in Competition with TRA, or (z) becoming employed by any Person in competition with TRA, Executive will (A) immediately provide notice to TRA of such circumstances and (B) provide copies of this Agreement to such Person. Executive further agrees that TRA may provide notice to any such Person of Executive’s obligations under this Agreement.      2. Specific Performance. Executive acknowledges that in the event of breach or threatened breach by Executive of the terms of Section 1 hereof, TRA could suffer significant and irreparable harm that could not be satisfactorily compensated in monetary terms, and that the remedies at law available to TRA may otherwise be inadequate and TRA shall be entitled, in addition to any other remedies to which it may be entitled to under law or in equity, to specific performance of this Agreement by Executive including the immediate ex parte issuance, without bond, of a temporary restraining order enjoining Executive from any such violation or threatened violation of Section 1 hereof and to exercise such remedies cumulatively or in conjunction with all other rights and remedies provided by law and not otherwise limited by this Agreement. Executive hereby acknowledges and agrees that TRA shall not be required to post bond as a condition to obtaining or exercising any such remedies, and Executive hereby waives any such requirement or condition.      3. Reasonableness of Covenants. Executive agrees that all of the covenants contained in this Agreement are reasonably necessary to protect the legitimate interests of TRA and its affiliates, are reasonable with respect to time and territory and that he has read and understands the descriptions of the covenants so as to be informed as to their meaning and scope.      4. Attorneys’ Fees. If any legal action, arbitration or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach or default in connection with any of the provisions of this Agreement, the prevailing party shall be entitled to recover attorneys’ fees and costs as set forth in the Employment Agreement.      5. No Alteration of Employment Status. The execution of this Agreement shall not be construed in any manner to alter Executive’s employment with TRA as provided in the Employment Agreement.      6. Effect of Waiver. The waiver by either party of a breach of any provision of this Agreement will not operate or be construed as a waiver of any subsequent breach thereof or as a waiver of any other provision of this Agreement. The remedies set forth herein are nonexclusive and are in addition to any other remedies that TRA may have at law or in equity.      7. Severability. Any provision of this Agreement which is deemed invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction and subject to this paragraph, be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that any other provisions of this Agreement invalid, illegal or unenforceable in any other jurisdiction. Notwithstanding the foregoing, if any provision of this Agreement should be deemed invalid, illegal or unenforceable because its scope or duration is considered excessive, such provision shall be modified so that the scope of the provision is reduced only to the minimum extent necessary to render the modified provision valid, legal and enforceable.      8. Governing Law. This Agreement shall be governed, construed, interpreted and enforced in accordance with the laws of the State of California, without regard to the conflict of laws principles thereof. The parties irrevocably elect as the sole judicial forum for the adjudication of any matters arising EXHIBIT C -2-   --------------------------------------------------------------------------------   under or in connection with this Agreement, and consent to the exclusive jurisdiction of, the federal and state courts of the State of California.      9. Entire Agreement. This Agreement, together with the Employment Agreement, the Non-Disclosure Agreement and any equity award agreements between Executive and TRA, contains the entire agreement and understanding between TRA and Executive with respect to the subject matter hereof, and no representations, promises, agreements or understandings, written or oral, not herein or therein contained shall be of any force or effect.      10. Assignment. This Agreement may not be assigned by Executive, but may be assigned by TRA to any successor to its business and will inure to the benefit of and be binding upon any such successor.      11. Notice. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:      If to Executive: at Executive’s most recent address on the records of TRA,      If to TRA:           True Religion Apparel, Inc.           1525 Rio Vista Avenue           Los Angeles, CA 90023           Attn: Chief Executive Officer           with a copy to:           Manatt, Phelps & Phillips, LLP           11355 W. Olympic Blvd.           Los Angeles, CA 90064           Attn: Mark J. Kelson, Esq. or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.      12. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.      13. Amendments. No amendment or modification to this Agreement shall be valid unless in writing signed by Executive and an authorized officer of TRA.      14. Executive’s Acknowledgment. Executive acknowledges (a) that he has had the opportunity to consult with independent counsel of his own choice concerning this Agreement, and (b) that he has read and understands this Agreement, is fully aware of its legal effect, and has entered into it freely based on his own judgment. EXHIBIT C -3-   --------------------------------------------------------------------------------   IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written.           “Executive”   “TRA”               TRUE RELIGION APPAREL, INC.               By:               Name:       Name:         Title: EXHIBIT C -4-  

Exhibit 10.2 RESTRICTED STOCK AWARD AGREEMENT This RESTRICTED STOCK AWARD AGREEMENT (the “Agreement”) is made this      day of      ,      , by and between ROCHESTER MEDICAL CORPORATION, a Minnesota corporation (the “Corporation”) and      , an individual resident of      ,      (“Employee”). WHEREAS, the Corporation considers it desirable and in its best interests that the Employee be given an inducement to acquire a proprietary interest in the Corporation and an added incentive to advance the interests of the Corporation, by possessing a restricted stock award for common shares of the Corporation, in accordance with Rochester Medical Corporation 2001 Stock Incentive Plan (as adopted, amended and currently in effect, the “Plan"). NOW THEREFORE, in consideration of the premises and of the mutual promises and consideration provided herein, the parties agree as follows: 1. Definitions. Words and phrases not otherwise defined herein shall have the meanings ascribed to them, respectively, in the Plan. 2. Award. The Corporation hereby grants to Employee a restricted stock award of       shares (the “Shares”) of Common Stock, without par value per share, of the Corporation according to the terms and conditions set forth herein and in the Plan. A copy of the Plan will be furnished upon request of Employee. With respect to the Shares, Employee shall be entitled at all times on and after the date of issuance of the Shares to exercise the rights of a shareholder of Common Stock of the Corporation, including the right to vote the Shares and the right to receive dividends on the Shares. 3. Vesting. Except as otherwise provided in this Agreement, the Shares shall vest in accordance with the following schedule:           On each of   Number of Shares the following dates   Vested 4. Restrictions on Transfer. Until the Shares vest pursuant to Section 3 or Section 5 hereof, none of the Shares may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance shall be void and unenforceable against the Corporation, and no attempt to transfer the Shares, whether voluntary or involuntary, by operation of law or otherwise, shall vest the purported transferee with any interest or right in or with respect to the Shares. 5. Forfeiture; Early Vesting. If Employee ceases to be an employee of the Corporation or any affiliate prior to vesting of the Shares pursuant to Section 3 or Section 7 hereof, all of Employee’s rights to all of the unvested Shares shall be immediately and irrevocably forfeited, except that (i) if Employee ceases to be an employee by reason of permanent and total disability prior to the vesting of Shares under Section 3 or Section 7 hereof, (ii) if Employee ceases to be an employee by reason of death prior to the vesting of Shares under Section 3 or Section 7 hereof, or (iii) if Employee ceases to be an employee by reason of termination without cause prior to the vesting of Shares under Section 3 or Section 7 hereof, all Shares granted hereunder shall vest as of such termination of employment. Upon forfeiture, Employee will no longer have any rights relating to the unvested Shares, including the right to vote the Shares and the right to receive dividends declared on the Shares. 6. Distributions and Adjustments. (a) If any Shares vest subsequent to any change in the number or character of the Common Stock of the Corporation (through any stock dividend or other distribution, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares, or otherwise), Employee shall receive upon such vesting the number and type of securities or other consideration which Employee would have received if such Shares had vested prior to the event changing the number or character of the outstanding Common Stock. (b) Any additional shares of Common Stock of the Corporation, any other securities of the Corporation and any other property (except for regular cash dividends or other cash distributions) distributed with respect to the Shares prior to the date or dates the Shares vest shall be subject to the same restrictions, terms and conditions as the Shares to which they relate and shall be promptly deposited with the Secretary of the Corporation or a custodian designated by the Secretary. 7. Change In Control. Notwithstanding Section 3 above, the Shares shall be fully vested on the date of (i) a public announcement (which, for purposes of this definition, shall include, without limitation, a report filed pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”)) is made by the Company or any Person that such Person beneficially owns more than 50% of the Common Stock outstanding, (ii) the Company consummates a merger, consolidation or statutory share exchange with any other Person in which the surviving entity would not have as its directors at least 60% of the Continuing Directors and would not have at least 60% of its common stock owned by the common shareholders of the Company prior to such merger, consolidation or statutory share exchange, (iii) a majority of the Board of Directors is not comprised of Continuing Directors or (iv) a sale or disposition of all or substantially all of the assets of the Company or the dissolution of the Company. A “Continuing Director” is a current director of the Company, a director elected by the Board of Directors, a majority of whose members are Continuing Directors, or a director elected by shareholders upon the recommendation of the Board of Directors, a majority of whose members are Continuing Directors. “Person” means any individual, firm, corporation or other entity, and shall include any successor (by merger or otherwise) of such entity. 8. Miscellaneous. (a) Issuance of Shares. The Corporation shall cause the Shares to be issued in the name of Employee, either by book-entry registration or issuance of a stock certificate or certificates evidencing the Shares, which certificate or certificates shall be held by the Secretary of the Corporation or the stock transfer agent or brokerage service selected by the Secretary of the Corporation to provide such services for the Plan. The Shares shall be restricted from transfer and shall be subject to an appropriate stop-transfer order. If any certificate is used, the certificate shall bear an appropriate legend referring to the restrictions applicable to the Shares. Employee hereby agrees to the retention by the Corporation of the Shares and, if a stock certificate is used, agrees to execute and deliver to the Corporation a blank stock power with respect to the Shares as a condition to the receipt of this award of Shares. After any Shares vest pursuant to Section 3 or Section 7 hereof, and following payment of the applicable withholding taxes pursuant to Section 8(b) of this Agreement, the Corporation shall promptly cause to be issued a certificate or certificates, registered in the name of Employee or in the name of Employee’s legal representatives, beneficiaries or heirs, as the case may be, evidencing such vested whole Shares (less any shares withheld to pay withholding taxes) and shall cause such certificate or certificates to be delivered to Employee or Employee’s legal representatives, beneficiaries or heirs, as the case may be, free of the legend or the stop-transfer order referenced above. The value of any fractional Shares shall be paid in cash at the time certificates evidencing the Shares are delivered to Employee. (b) Income Tax Matters. (i) In order to comply with all applicable federal or state income tax laws or regulations, the Corporation may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are the sole and absolute responsibility of Employee, are withheld or collected from Employee. (ii) In accordance with the terms of the Plan, and such rules as may be adopted by the Committee under the Plan, Employee may elect to satisfy Employee’s federal and state income tax withholding obligations arising from the receipt of, or the lapse of restrictions relating to, the Shares, by (i) delivering cash, check (bank check, certified check or personal check) or money order payable to the Corporation, (ii) having the Corporation withhold a portion of the Shares otherwise to be delivered having a Fair Market Value equal to the amount of such taxes, or (iii) delivering to the Corporation shares of Common Stock already owned by Employee having a fair market value equal to the amount of such taxes. Any  shares already owned by Employee for no less than six months prior to the date delivered to the Corporation if such shares were acquired upon the exercise of an option or upon the vesting of restricted stock units or other restricted stock. The Corporation will not deliver any fractional Shares but will pay, in lieu thereof, the Fair Market Value of such fractional Shares. Employee’s election must be made on or before the date that the amount of tax to be withheld is determined. (c) Plan Provisions Control. In the event that any provision of the Agreement conflicts with or is inconsistent in any respect with the terms of the Plan, the terms of the Plan shall control. (d) Binding Effect. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns. (e) No Right to Employment. The issuance of the Shares shall not be construed as giving Employee the right to be retained in the employ, or as giving a director of the Corporation or an affiliate the right to continue as a director, of the Corporation or an affiliate, nor will it affect in any way the right of the Corporation or an affiliate to terminate such employment or position at any time, with or without cause. In addition, the Corporation or an affiliate may at any time dismiss Employee from employment, or terminate the term of a director of the Corporation or an affiliate, free from any liability or any claim under the Plan or the Agreement. Nothing in the Agreement shall confer on any person any legal or equitable right against the Corporation or any affiliate, directly or indirectly, or give rise to any cause of action at law or in equity against the Corporation or an affiliate. The Award granted hereunder shall not form any part of the wages or salary of Employee for purposes of severance pay or termination indemnities, irrespective of the reason for termination of employment. Under no circumstances shall any person ceasing to be an employee of the Corporation or any affiliate be entitled to any compensation for any loss of any right or benefit under the Agreement or Plan which such employee might otherwise have enjoyed but for termination of employment, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise. By participating in the Plan, Employee shall be deemed to have accepted all the conditions of the Plan and the Agreement and the terms and conditions of any rules and regulations adopted by the Committee (as defined in the Plan) and shall be fully bound thereby. (f) Governing Law. The validity, construction and effect of the Plan and the Agreement, and any rules and regulations relating to the Plan and the Agreement, shall be determined in accordance with the internal laws, and not the law of conflicts, of the State of Minnesota. (g) Securities Matters. The Corporation shall not be required to deliver Shares until the requirements of any federal or state securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Corporation to be applicable are satisfied. (h) Severability. If any provision of the Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Agreement under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Agreement, such provision shall be stricken as to such jurisdiction or the Agreement, and the remainder of the Agreement shall remain in full force and effect. (i) No Trust or Fund Created. Neither the Plan nor the Agreement shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Corporation or any Affiliate and Employee or any other person. (j) Headings. Headings are given to the Sections and subsections of the Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Agreement or any provision thereof. IN WITNESS WHEREOF, the Corporation and Employee have executed this Restricted Stock Award Agreement on the date set forth in the first paragraph.           ROCHESTER MEDICAL CORPORATION       By: Name: Title: [Employee] Name:  

  Exhibit 10.3 PANERA BREAD COMPANY 2005 LONG-TERM INCENTIVE PROGRAM [FORM OF] NON-QUALIFIED STOCK OPTION AGREEMENT (Granted Under 2006 Stock Incentive Plan) (Employee)      AGREEMENT (the “Agreement”) made as of the ___ day of ___, 2005 (the “Grant Date”), between Panera Bread Company (the “Company”), a Delaware corporation having a principal place of business in Richmond Heights, Missouri, and <<First_Name>> <<Last_Name>> (the “Participant”).      WHEREAS, pursuant to the 2005 Long-Term Incentive Program (the “LTIP”), the Company desires to grant to the Participant an Option to purchase shares of its Class A Common Stock, $.0001 par value per share (the “Shares”), under and for the purposes set forth in the Company’s 2006 Stock Incentive Plan (the “Plan”) and the LTIP;      WHEREAS, the Company and the Participant understand and agree that any terms used and not defined herein have the same meanings as in the Plan or the LTIP, as applicable; and      WHEREAS, the Company and the Participant each intend that the option granted herein shall be a Non-Qualified Option.      NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto agree as follows:      1. GRANT OF OPTION.      The Company hereby grants to the Participant the right and option (the “Option”) to purchase all or any part of an aggregate of <<Proposed_Grant>> Shares, subject to adjustment, as provided in Section 8 of the Plan, in the event of a stock dividend, stock split, reverse stock split or other events affecting the holders of Shares, and on the terms and conditions and subject to all the limitations set forth herein and in the Plan and the LTIP, which are incorporated herein by reference and copies of which are furnished to the Participant with this Agreement.      It is intended that the Option evidenced by this Agreement shall not be an incentive stock option as defined in Section 422 of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”). Except as otherwise indicated by the context, the term “Participant”, as used in this Option, shall be deemed to include any person who acquires the right to exercise this Option validly under its terms.      2. PURCHASE PRICE.      The purchase price of the Shares covered by the Option shall be <<Grant_Price>> per Share, subject to adjustment, as provided in Section 8 of the Plan, in the event of a stock dividend, stock 1 --------------------------------------------------------------------------------   split, reverse stock split or other events affecting the holders of Shares. Payment shall be made in accordance with Section 5(h) of the Plan.      3. EXERCISABILITY OF OPTION.      Subject to the terms and conditions set forth in this Agreement, the Plan and the LTIP, the Option granted hereby shall become exercisable as follows:       On the second anniversary of the date of this Agreement   25% of the Shares       On the third anniversary of the date of this Agreement   an additional 25% of the Shares       On the fourth anniversary of the date of this Agreement   an additional 25% of the Shares       On the fifth anniversary of the date of this Agreement   an additional 25% of the Shares      The foregoing rights are (i) cumulative so that to the extent the Option is not exercised in any period to the maximum extent permissible, it shall continue to be exercisable, in whole or in part, with respect to all Shares for which it is vested until the earlier of the Final Exercise Date (as defined below) or the termination of this Option under Section 4 hereof, the Plan or the LTIP and (ii) are subject to the other terms and conditions of this Agreement, the Plan and the LTIP.      4. TERM OF OPTION.      The Option shall expire at 5:00 p.m., Central Time, on the date six (6) years from the Grant Date (the “Final Exercise Date”), but shall be subject to earlier termination as provided herein or in the Plan or the LTIP; provided, however that termination or expiration of the Plan or the LTIP shall not affect the Option or the rights of the Participant under this Agreement.      If the Participant ceases to be an employee of the Company or of an affiliate of the Company for any reason other than the death or Disability of the Participant or termination of the Participant for Cause, the Option may be exercised, if it has not previously terminated, within three (3) months after the date the Participant ceases to be an employee of the Company or an affiliate of the Company, or within the originally prescribed term of the Option, whichever is earlier, but in no event may the Option be exercised after the Final Exercise Date. In such event, the Option shall be exercisable only to the extent that the Option has become exercisable and is in effect at the date of such cessation of employment.      Notwithstanding the foregoing, in the event of the Participant’s Disability or death within three (3) months after the termination of employment, the Participant or the Participant’s survivors may exercise the Option within one (1) year after the date of the Participant’s termination of employment, but in no event after the Final Exercise Date. 2 --------------------------------------------------------------------------------        In the event the Participant’s employment is terminated by the Company or an affiliate of the Company for Cause, the Participant’s right to exercise any unexercised portion of this Option shall cease as of such termination, and this Option shall thereupon terminate. Notwithstanding anything herein to the contrary, if subsequent to the Participant’s termination, but prior to the exercise of the Option, the Administrator of the Plan determines that, either prior or subsequent to the Participant’s termination, the Participant engaged in conduct which would constitute Cause, then the Participant shall immediately cease to have any right to exercise the Option and this Option shall thereupon terminate and the Company shall be entitled to recover from the Participant any and all Shares which were previously acquired through exercise of this Option.      In the event of the Disability of the Participant while an employee of the Company or an affiliate of the Company, the Option shall be exercisable within one (1) year after the Participant’s termination of employment or, if earlier, within the term originally prescribed by the Option. In such event, the Option shall be exercisable:   (a)   to the extent exercisable but not exercised as of the date of Disability; and     (b)   to the extent of a pro rata portion of any additional rights to exercise the Option as would have accrued had the Participant not become Disabled prior to the end of the accrual period which next ends following the date of Disability. The proration shall be based upon the number of days during the accrual period prior to the date of Disability.      In the event of the death of the Participant while an employee of the Company or of an affiliate of the Company, the Option shall be exercisable by the Participant’s survivors within one (1) year after the date of death of the Participant or, if earlier, within the originally prescribed term of the Option. In such event, the Option shall be exercisable:   (x)   to the extent exercisable but not exercised as of the date of death; and     (y)   to the extent of a pro rata portion of any additional rights to exercise the Option as would have accrued had the Participant not died prior to the end of the accrual period which next ends following the date of death. The proration shall be based upon the number of days during the accrual period prior to the Participant’s death.      5. METHOD OF EXERCISING OPTION.      Subject to the terms and conditions of this Agreement, the Option (or any part or installment) may be exercised by written notice signed by the Participant and delivered to the Company at its principal executive office, in substantially the form of Exhibit A attached hereto or other form approved by the Company, accompanied by payment in full in the manner provided in Section 5(h) of the Plan. Such notice shall state the number of Shares with respect to which the Option is being exercised and shall be signed by the person exercising the Option. The Company shall deliver a certificate or certificates representing such Shares, or issue the Shares in electronic form or book-entry credit, as applicable, as soon as practicable after the 3 --------------------------------------------------------------------------------   notice shall be received; provided, however, that the Company may delay issuance of such Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including, without limitation, state securities or “blue sky” laws). The Shares as to which the Option shall have been so exercised shall be registered in the name of the person or persons so exercising the Option (or, if the Option shall be exercised by the Participant and if the Participant shall so request in the notice exercising the Option, shall be registered in the name of the Participant and another person jointly, with right of survivorship) and shall be delivered as provided above to or upon the written order of the person or persons exercising the Option. In the event the Option shall be exercised, pursuant to Section 4 hereof, by any person or persons other than the Participant, such notice shall be accompanied by appropriate proof of the right of such person or persons to exercise the Option. All Shares that shall be purchased upon the exercise of the Option as provided herein shall be fully paid and nonassessable.      6. PARTIAL EXERCISE.      The Participant may purchase less than the number of Shares covered by this Option at any time and from time to time, provided that no partial exercise of this Option may be for any fractional share.      7. NON-TRANSFERABILITY.      This Option may not be sold, assigned, transferred, pledged or otherwise encumbered by the Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution or pursuant to a qualified domestic relations order and, during the lifetime of the Participant, this Option shall be exercisable only by the Participant. References to a Participant, to the extent relevant in the context, shall include references to authorized transferees.      8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE.      The Participant shall have no rights as a stockholder with respect to Shares subject to this Agreement until registration of the Shares in the Company’s share register in the name of the Participant. Except as is expressly provided in the Plan with respect to certain changes in the capitalization of the Company, no adjustment shall be made for dividends or similar rights for which the record date is prior to the date of such registration.      9. CAPITAL CHANGES AND BUSINESS SUCCESSIONS.      The Plan and the LTIP contain provisions covering the treatment of Options in a number of contingencies such as stock splits and mergers. Provisions in the Plan and the LTIP for adjustment with respect to stock subject to Options and the related provisions with respect to successors to the business of the Company are hereby made applicable hereunder and are incorporated herein by reference. 4 --------------------------------------------------------------------------------        10. TAXES.      The Participant acknowledges that upon exercise of the Option the Participant will be deemed to have taxable income measured by the difference between the then fair market value of the Shares received upon exercise and the price paid for such Shares pursuant to this Agreement. The Participant acknowledges that any income or other taxes due from him or her with respect to this Option or the Shares issuable pursuant to this Option shall be the Participant’s responsibility.      The Participant agrees that the Company shall be entitled to withhold from the Participant’s remuneration, if any, the minimum statutory amount of federal, state and local withholding taxes attributable to such amount that is considered compensation includable in the Participant’s gross income. At the Company’s discretion, the amount required to be withheld may be withheld in cash from such remuneration, or in kind from the Shares otherwise deliverable to the Participant on exercise of the Option. The Participant further agrees that, if the Company does not withhold an amount from the Participant’s remuneration sufficient to satisfy the Company’s income tax withholding obligation, the Participant will reimburse the Company on demand, in cash, for the amount under-withheld.      11. RESTRICTIONS ON TRANSFER OF SHARES.      11.1 If, in connection with a registration statement filed by the Company pursuant to the 1933 Act, the Company or its underwriter so requests, the Participant will agree not to sell any Shares for a period not to exceed 180 days following the effectiveness of such registration.      11.2 The Participant acknowledges and agrees that neither the Company, its stockholders nor its directors and officers, has any duty or obligation to disclose to the Participant any material information regarding the business of the Company or affecting the value of the Shares before, at the time of, or following a termination of the employment of the Participant by the Company, including, without limitation, any information concerning plans for the Company to make a public offering of its securities or to be acquired by or merged with or into another firm or entity.      12. NO OBLIGATION TO MAINTAIN RELATIONSHIP.      The Company is not by this Agreement, the LTIP or the Plan granting the Participant any right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with the Participant free from any liability or claim under this Agreement, the LTIP or the Plan.      13. NOTICES.      Any notices required or permitted by the terms of this Agreement or the Plan shall be given by recognized courier service, facsimile, registered or certified mail, return receipt requested, addressed as follows: 5 --------------------------------------------------------------------------------   If to the Company: Panera Bread Company 6710 Clayton Road Richmond Heights, MO 63117 ATTN: Director, Compensation & Benefits Facsimile: (314) 633-7220 If to the Participant:                                         or to such other address or addresses of which notice in the same manner has previously been given. Any such notice shall be deemed to have been given upon the earlier of receipt, one (1) business day following delivery to a recognized courier service or three (3) business days following mailing by registered or certified mail.      14. GOVERNING LAW.      This Agreement shall be governed by and interpreted in accordance with the laws of the State of Delaware, excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than such state.      15. BENEFIT OF AGREEMENT.      Subject to the provisions of the Plan and the other provisions hereof, this Agreement shall be for the benefit of and shall be binding upon the heirs, executors, administrators, successors and assigns of the parties hereto.      16. ENTIRE AGREEMENT.      This Agreement, and the grant made hereby, is subject to the terms and conditions of each of the Plan and LTIP, which are incorporated herein by reference. This Agreement, together with the Plan and the LTIP, embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. No statement, representation, warranty, covenant or agreement not expressly set forth in this Agreement shall affect or be used to interpret, change or restrict, the express terms and provisions of this Agreement, provided, however, in any event, this Agreement shall be subject to and governed by the Plan and the LTIP.      17. MODIFICATIONS AND AMENDMENTS.      The terms and provisions of this Agreement may be modified or amended as provided in the Plan or the LTIP. 6 --------------------------------------------------------------------------------        18. WAIVERS AND CONSENTS.      Except as provided in the Plan, the terms and provisions of this Agreement may be waived, or consent for the departure therefrom granted, only by a written document executed by the party entitled to the benefits of such terms or provisions. No such waiver or consent shall be deemed to be or shall constitute a waiver or consent with respect to any other terms or provisions of this Agreement, whether or not similar. Each such waiver or consent shall be effective only in the specific instance and for the purpose for which it was given, and shall not constitute a continuing waiver or consent.      19. ACKNOWLEDGMENT.      By executing this Agreement, the Participant acknowledges (a) he or she has been provided access to a copy of the Plan and the LTIP, and that all decisions, determinations and interpretations of the Administrator in respect of the Plan, the LTIP, this Agreement and the Option shall be final and conclusive, and (b) his or her obligations under the Confidentiality and Proprietary Information and Non-Competition Agreement with Panera, LLC, and any other confidentiality and non-competition agreement with Panera, LLC or the Company.      20. SECURITIES LAWS.      Notwithstanding anything to the contrary herein, no part of this Option shall be exercisable at any time that such exercise would violate any federal or state securities laws. [Signature Page Follows] 7 --------------------------------------------------------------------------------        IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Participant has hereunto set his or her hand, all as of the day and year first above written.               PANERA BREAD COMPANY               By:                   Name:                   Title:                             PARTICIPANT:                     «First_Name» «Last_Name» 8 --------------------------------------------------------------------------------   Exhibit A           (PANERA BREAD LOGO) [c05642c0564200.gif] THOMAS C. COCHRAN III     ADAMS, HARKNESS & HILL, INC.   Panera Bread Company 60 STATE STREET, 12TH FLOOR   6710 Clayton Rd. BOSTON, MA 02109   Richmond Heights, MO 63117 (800) 225-6201   (314) 633-7100 (617) 371-3741     FAX (617) 371-3796     NOTICE OF STOCK OPTION EXERCISE – EXHIBIT A 1. I elect to purchase:                       Number of Shares   Exercise Price Grant Number   Grant Date   To Exercise   Per Share                                                                                                                               2. I elect to use the “cashless exercise” program of Adams, Harkness & Hill, Inc. (AH&H) to purchase the Shares as follows:                              a. Number of Shares to be sold by AH&H I hereby authorize and direct AH&H to sell a sufficient number of shares in order to pay for the stock option price and required taxes.           Shares which are not required to be sold pursuant to the above paragraph will be credited to my account at AH&H which is directed to have the Shares:                                               Held in my account by AH&H in street name.                                         Mailed to me according to account standing instructions.                                         Other:                                                                                           I hereby authorize and direct AH&H to sell all my Shares. Proceeds from the sale of the Shares after payment of the stock option exercise price and required taxes are to be:                                         Mailed to me.                                         Held in my account at AH&H.           b. Sale Price     AH&H is authorized to sell my Shares no lower than:                                         The market price when this form is received by AH&H.                                         The following minimum price: $                    .           c. AH&H Account Number:                                           AH&H is authorized to pay the stock option exercise price and withholding taxes, if applicable, to Panera Bread Company and to provide to PNRA a duplicate confirmation of sale. Upon the sale of my stock option shares through AH&H, my authorization and direction to deliver those Shares to my account at AH&H is irrevocable.       Employee Signature   Position at Panera Bread Company       Print Name   Daytime Telephone Number       Street Address   Social Security Number       City, State, Zip Code   Company Authorization 9

  Exhibit 10.26 MARATHON OIL CORPORATION CASH RETENTION AWARD AGREEMENT July 1, 2005           Pursuant to this Award Agreement, MARATHON OIL CORPORATION (the “Corporation”) hereby grants to [NAME] (the “Participant”), an employee of the Corporation or an Affiliate, on {DATE} (the “Grant Date”), a cash retention award (“Award”) of $[AMOUNT]. The Award is subject to the following terms and conditions:      1. Definitions. For purposes of this Award Agreement:           “Affiliate” means (a) any corporation of which the Corporation directly or indirectly owns shares representing 50% or more of the combined voting power of the shares of all classes or series of capital stock of such corporation which have the right to vote generally on matters submitted to a vote of the stockholders of such corporation or (b) any joint venture or partnership in which the Corporation has at least 50% ownership, voting, capital or profit interests (in whatever form).           “Change in Control” shall have the same meaning as that set forth in the Marathon Oil Corporation 2003 Incentive Compensation Plan.           “Employment” means employment with the Corporation, an Affiliate, or a successor entity.      2. Payment and Forfeiture of Award.      (a) The Award shall be payable in cash on September 18, 2006; provided, however, that the Participant must be in continuous Employment from the Grant Date through the payment date in order for the applicable payment to be made. If the Employment of the Participant is terminated for any reason other than death prior to the payment date, the Participant shall forfeit the right to receive any payments pursuant to this Award Agreement. The payment will be made on or as soon as administratively feasible after the scheduled payment date.      (b) The Participant’s right to receive future cash payments pursuant to this Award Agreement shall be accelerated and such payments shall be immediately payable in full, irrespective of the limitations set forth in subparagraph (a) above, to the Participant’s estate upon termination of the Participant’s Employment due to death.      3. Vesting Upon a Change of Control. Notwithstanding anything herein to the contrary, upon the occurrence of a Change in Control prior to September 18, 2006, the Participant’s right to receive the Award, unless previously forfeited pursuant to Paragraph 2, shall vest in full. The Award payment shall be made to the Participant on or as soon as administratively feasible after September 18, 2006. Such vesting shall satisfy the rights of the Participant and the obligations of the Corporation under this Award Agreement in full.      4. Taxes. The Corporation or its designated representative shall have the right to withhold 1 --------------------------------------------------------------------------------   applicable taxes from the Award payment otherwise deliverable to the Participant pursuant to Paragraph 2 or 3, or from other compensation payable to the Participant.      5. Nonassignability. The Participant may not sell, transfer, assign, pledge or otherwise encumber any portion of the Award, and any attempt to sell, transfer, assign, pledge, or encumber any portion of the Award shall have no effect.      6. No Employment Guaranteed. Nothing in this Award Agreement shall give the Participant any rights to (or impose any obligations for) continued Employment by the Corporation or any Affiliate or successor, nor shall it give such entities any rights (or impose any obligations) with respect to continued performance of duties by the Participant.      7. Modification of Agreement. Any modification of this Award Agreement shall be binding only if evidenced in writing and signed by an authorized representative of the Corporation, provided that no modification may, without the consent of the Participant, adversely affect the rights of the Participant.               Marathon Oil Corporation                   By: /s/ Eileen M. Campbell                              Authorized Officer     2

  Exhibit 10.3 NONCOMPETITION AGREEMENT      THIS NONCOMPETITION AGREEMENT (this “Agreement”) is entered into as of June 5, 2006 by and between U-STORE-IT TRUST, a Maryland real estate investment trust (the “Company”), and Christopher P. Marr (the “Executive”).      WHEREAS, concurrently with the execution and delivery of this Agreement, the Company and the Executive are entering into an Employment Agreement dated as of the date hereof, pursuant to which, among other things, the Company has agreed to employ the Executive, and the Executive has agreed to be employed by the Company, in accordance with the terms thereof (the “Employment Agreement”); and      WHEREAS, the Company and the Executive agree that the Executive will not engage in competition with the Company and will refrain from taking certain other actions pursuant to the terms and conditions hereof in an effort to protect the Company’s legitimate business interests and goodwill and for other business purposes.      NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto agree as follows:      1. Noncompetition. The Executive agrees with the Company that for the longer of (i) the three-year period beginning on the date of this Agreement or (ii) the period during which the Executive is employed by, or serving as an officer or trustee or director of, the Company, U-Store-It, L.P., a Delaware limited partnership, of which the Company is the general partner or any of their direct or indirect subsidiaries (collectively, the “REIT”), and for one year thereafter (the “Restricted Period”), the Executive will not, (a) directly or indirectly, engage in any business involving self-storage facility development, construction, acquisition or operation, whether such business is conducted by the Executive individually or as a principal, partner, member, stockholder, director, trustee, officer, employee or independent contractor of any Person (as defined below) or (b) own any interests in any self-storage facilities, in each case in the United States of America; provided, however, that this Section 1 shall not be deemed to prohibit the direct or indirect ownership by the Executive of up to five percent of the outstanding equity interests of any public company. For purposes of this Agreement, “Person” means any individual, firm, corporation, partnership, company, limited liability company, trust, joint venture, association or other entity.      2. Nonsolicitation. The Executive agrees with the Company that for the longer of (i) the three-year period beginning on the date of this Agreement or (ii) the period during which the Executive is employed by, or serving as an officer or trustee or director of, the REIT, and for two years thereafter, such Executive will not (a) directly or indirectly solicit, induce or encourage any employee or independent contractor to terminate their employment with the REIT or to cease rendering services to the REIT, and the Executive shall not initiate discussions with any such Person for any such purpose or authorize or knowingly cooperate with the taking of any such actions by any other Person, or (b) hire (on behalf of the Executive or any other person or entity) any employee or independent contractor who has left the employment or other service of the REIT (or any predecessor   --------------------------------------------------------------------------------   thereof) within one year of the termination of such employee’s or independent contractor’s employment or other service with the REIT.      3. Reasonable and Necessary Restrictions. The Executive acknowledges that the restrictions, prohibitions and other provisions hereof, including, without limitation, the Restricted Period set forth in Section 2, are reasonable, fair and equitable in terms of duration, scope and geographic area, are necessary to protect the legitimate business interests of the REIT, and are a material inducement to the Company to enter into this Agreement and the Employment Agreement.      4. Specific Performance. The Executive acknowledges that the obligations undertaken by such Executive pursuant to this Agreement are unique and that the Company likely will have no adequate remedy at law if the Executive shall fail to perform any of such Executive’s obligations hereunder, and the Executive therefore confirms that the Company’s right to specific performance of the terms of this Agreement is essential to protect the rights and interests of the Company. Accordingly, in addition to any other remedies that the Company may have at law or in equity, the Company shall have the right to have all obligations, covenants, agreements and other provisions of this Agreement specifically performed by the Executive, and the Company shall have the right to obtain preliminary and permanent injunctive relief to secure specific performance and to prevent a breach or contemplated breach of this Agreement by the Executive. Further, the Executive agrees to indemnify and hold harmless the Company from and against any reasonable costs and expenses incurred by the Company as a result of any breach of this Agreement by such Executive, and in enforcing and preserving the Company’s rights under this Agreement, including, without limitation, the Company’s reasonable attorneys’ fees. The Executive hereby acknowledges and agrees that the Company shall not be required to post bond as a condition to obtaining or exercising such remedies, and the Executive hereby waives any such requirement or condition. If the Executive is the prevailing party in any action in which the Company seeks to enforce its rights under this Agreement, the Company agrees to indemnify and hold harmless the Executive from and against any reasonable costs and expenses incurred by the Executive as a result of such action, including, without limitation, the Executive’s reasonable attorneys’ fees.      5. Miscellaneous Provisions.           5.1 Assignment; Binding Effect. This Agreement may not be assigned by the Executive, but may be assigned by the Company to any successor to its business and will inure to the benefit of and be binding upon any such successor. Subject to the foregoing provisions restricting assignment, all covenants and agreements in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors, assigns, heirs, and personal representatives.           5.2 Entire Agreement. This Agreement, together with the Employment Agreement, constitutes the entire agreement between the parties hereto with respect to the matters set forth herein and supersedes and renders of no force and effect all prior oral or written agreements, commitments and understandings among the parties with respect to the matters set forth herein. This Section 5.2 shall not be used to limit or restrict the rights or remedies, whether express or implied, of any noncompetition or nonsolicitation policies of the REIT applicable to the Executive. 2 --------------------------------------------------------------------------------             5.3 Amendment. Except as otherwise expressly provided in this Agreement, no amendment, modification or discharge of this Agreement shall be valid or binding unless set forth in writing and duly executed by each of the parties hereto.           5.4 Waivers. No waiver by a party hereto shall be effective unless made in a written instrument duly executed by the party against whom such waiver is sought to be enforced, and only to the extent set forth in such instrument. Neither the waiver by either of the parties hereto of a breach or a default under any of the provisions of this Agreement, nor the failure of either of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature, or as a waiver of any such provisions, rights or privileges hereunder.           5.5 Severability. If fulfillment of any provision of this Agreement, at the time such fulfillment shall be due, shall transcend the limit of validity prescribed by law, then the obligation to be fulfilled shall be reduced to the limit of such validity; and if any clause or provision contained in this Agreement operates or would operate to invalidate this Agreement, in whole or in part, then such clause or provision only shall be held ineffective, as though not herein contained, and the remainder of this Agreement shall remain operative and in full force and effect. Notwithstanding the foregoing, in the event that the restrictions against engaging in competitive activity contained in this Agreement shall be determined by any court of competent jurisdiction to be unenforceable by reason of their extending for too great a period of time or over too great a geographical area or by reason of their being too extensive or unreasonable in any other respect, the Agreement shall be interpreted to extend only over the maximum period of time for which it may be enforceable and over the maximum geographical area as to which it may be enforceable and to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action and the court may limit the application of any other provision or covenant, or modify any such term, provision or covenant and proceed to enforce this Agreement as so limited or modified. To the extent necessary, the parties shall revise the Agreement and enter into an appropriate amendment to the extent necessary to implement any of the foregoing.           5.6 Governing Law; Jurisdiction. This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State of Ohio, but not including the choice-of-law rules thereof.           5.7 Headings. Section and subsection headings contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof.           5.8 Executive’s Acknowledgement. The Executive acknowledges (i) that he has had the opportunity to consult with independent counsel of his own choice concerning this Agreement, and (ii) that he has read and understands this Agreement, is fully aware of its legal effect, and has entered into it freely based on his own judgment. 3 --------------------------------------------------------------------------------             5.9 Notices. All notices, requests, demands, and other communications hereunder shall be in writing and shall be deemed to have been delivered (i) when physically received by personal delivery (which shall include the confirmed receipt of a telecopied facsimile transmission), or (ii) three business days after being deposited in the United States certified or registered mail, return receipt requested, postage prepaid or (iii) one business day after being deposited with a nationally known commercial courier service providing next day delivery service (such as Federal Express), to the following addresses:   (i)   if to the Executive, to the address set forth in the records of the Company; and     (ii)   if to the Company, U-Store-It Trust 6745 Engle Road Suite 300 Middleburg Heights, OH 44130 Attn: Dean Jernigan Facsimile No.: (440) 234-8776 with a copy to: U-Store-It Trust 6745 Engle Road Suite 300 Middleburg Heights, OH 44130 Attn: Kathleen A. Weigand Facsimile No.: (440) 260-2397 4 --------------------------------------------------------------------------------        5.10 Execution in Counterparts. To facilitate execution, this Agreement may be executed in as many counterparts as may be required. It shall not be necessary that the signature of or on behalf of each party appears on each counterpart, but it shall be sufficient that the signature of or on behalf of each party appears on one or more of the counterparts. All counterparts shall collectively constitute a single agreement.      IN WITNESS WHEREOF, each of the undersigned has executed and delivered this Agreement, or caused this Agreement to be duly executed on its behalf, as of the date first set forth above.             THE EXECUTIVE:       /s/ Christopher P. Marr      Christopher P. Marr                THE COMPANY: U-STORE-IT TRUST       By:   /s/ Dean Jernigan        Name:   Dean Jernigan        Title:   President and Chief Executive Officer      5

Exhibit 10.24   MAGMA DESIGN AUTOMATION, INC.   Summary of Standard Director Compensation Arrangements for Non-Employee Directors   Description of Director Compensation (effective as of April 25, 2006)   Directors who are employees of Magma do not receive separate compensation for service on the Board of Directors. Directors who are not employees of Magma receive a cash retainer of $25,000 per year and $2,500 per Board or committee meeting attended ($500 for teleconference meetings) for services as a member of the Board of the Directors. In addition, the Chairman of the Audit Committee and the Chairman of the Compensation Committee each receive a fee of $10,000 per year; the other members of the Audit Committee receive a fee of $5,000 per year, and the other members of the Compensation Committee receive a fee of $2,500 per year. Magma reimburses its non-employee Directors for out-of-pocket expenses incurred in attending meetings of the board or its Committees.   Pursuant to the 2001 Stock Incentive Plan, which was approved by Magma’s stockholders, each non-employee director receives an initial stock option grant to purchase 50,000 shares of Magma common stock upon appointment or election. The initial option vests as to 25% of the shares on the first anniversary of the date of grant with the remaining shares vesting monthly over the following three years. Following the conclusion of each regular annual meeting of stockholders, each continuing non-employee director receives an additional option to purchase 20,000 shares at an exercise price equal to the fair market value of the common stock on the date of grant. When a non-employee director is appointed to the Board of Directors at a time other than at an annual meeting, such director receives a pro rata portion of the 20,000 share grant. The annual grants and the interim grants vest in full on the day immediately prior to the annual meeting of stockholders in the year immediately following the year of the grant if the director continues as a member of the Board on that date. All options will vest fully upon a change in control of Magma, as set forth under the 2001 Stock Incentive Plan.

Exhibit 10.1   EXECUTION COPY         SEPARATION AGREEMENT   by and among   SOCIÉTÉ GÉNÉRALE,   SG AMERICAS, INC.,   SG AMERICAS SECURITIES HOLDINGS, INC.,   COWEN AND COMPANY, LLC     and     COWEN GROUP, INC.     Dated as of July 11, 2006       -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   TABLE OF CONTENTS     Page     ARTICLE I DEFINITIONS 1 SECTION 1.01. Definitions 1       ARTICLE II THE SEPARATION 9 SECTION 2.01. Organization of Cowen Inc.; IPO; Intercompany Transactions 9 SECTION 2.02. The Separation Transactions 12 SECTION 2.03. Transaction Documents 18 SECTION 2.04. Disclaimer of Representations and Warranties; Bulk Sales 18 SECTION 2.05. Financing Arrangements; Adjustments 19 SECTION 2.06. Leases 22 SECTION 2.07. Employee Investment Vehicles 23 SECTION 2.08. NYSE-Archipelago Merger Proceeds 23 SECTION 2.09. Termination of Agreements 23 SECTION 2.10. Settlement of Accounts Between SG and Cowen Inc 24 SECTION 2.11. Novation of Liabilities 24 SECTION 2.12. Mixed Contracts; Mixed Accounts 24 SECTION 2.13. Further Assurances 26 SECTION 2.14. Transition Committee 26 SECTION 2.15. Conditions to the Separation 27       ARTICLE III MUTUAL RELEASES; INDEMNIFICATION 28 SECTION 3.01. Indemnification Agreement 28       ARTICLE IV CERTAIN OTHER MATTERS 28 SECTION 4.01. Insurance Matters 28 SECTION 4.02. Late Payments 29 SECTION 4.03. SG Financial Statements 29 SECTION 4.04. Certain Employee Matters 30 SECTION 4.05. Compliance with Regulatory Requirements 31 SECTION 4.06. Tax Treatment 31 SECTION 4.07. Warrants Held by Cowen LLC 31 SECTION 4.08. Registration Statement and Prospectus Disclosures 31   i -------------------------------------------------------------------------------- --------------------------------------------------------------------------------     Page       ARTICLE V EXCHANGE OF INFORMATION; CONFIDENTIALITY 32 SECTION 5.01. Agreement for Exchange of Information 32 SECTION 5.02. Ownership of Information 32 SECTION 5.03. Record Retention 32 SECTION 5.04. Limitations of Liability 32 SECTION 5.05. Other Agreements Providing for Exchange of Information 32 SECTION 5.06. Confidentiality 33 SECTION 5.07. Protective Arrangements 33       ARTICLE VI DISPUTE RESOLUTION 34 SECTION 6.01. Disputes 34       ARTICLE VII TERMINATION 35 SECTION 7.01. Termination 35       ARTICLE VIII NON-SOLICITATION; NON-DISPARAGEMENT; EMPLOYEE ARRANGEMENTS; COMPETITION 35 SECTION 8.01. Non-Solicitation 35 SECTION 8.02. Non-Disparagement 36 SECTION 8.03. No Other Business Restrictions 36       ARTICLE IX MISCELLANEOUS 36 SECTION 9.01. Counterparts; Entire Agreement; Corporate Power; Facsimile Signatures 36 SECTION 9.02. Governing Law 37 SECTION 9.03. Assignability 37 SECTION 9.04. Third Party Beneficiaries 37 SECTION 9.05. Notices 38 SECTION 9.06. Severability 39 SECTION 9.07. Force Majeure 39 SECTION 9.08. Responsibility for Expenses 39 SECTION 9.09. Headings 39 SECTION 9.10. Survival 39 SECTION 9.11. Subsidiaries 40 SECTION 9.12. Waivers 40   ii -------------------------------------------------------------------------------- --------------------------------------------------------------------------------     Page       SECTION 9.13. Amendments 40 SECTION 9.14. Interpretation 40 SECTION 9.15. Advisors 41 SECTION 9.16. Mutual Drafting 41 SECTION 9.17. No Right to Set-Off 41 SECTION 9.18. Enforcement Costs 41 SECTION 9.19. Remedies 41   iii -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   SCHEDULES   Schedule 1.01(a) Cowen Benefit Plans Schedule 1.01(b) Cowen’s Knowledge Schedule 1.01(c) Excluded Assets Schedule 1.01(d) Leases Schedule 1.01(e) SG’s Knowledge Schedule 1.01(f) Transferred Entities Schedule 2.02(a)(i) Scheduled Cowen Assets Schedule 2.02(a)(ii) Scheduled Cowen Liabilities Schedule 2.02(b) Scheduled SG Liabilities Schedule 2.06(a) Lease Guarantees; Fees Payable to SG Schedule 2.09 Arrangements Not to be Terminated Schedule 2.10 Intercompany Accounts Not to be Terminated Schedule 2.14 Transition Committee Members Schedule 4.01 Insurance Policies Schedule 4.07 Warrants Held by Cowen LLC   EXHIBITS   Exhibit A Amended and Restated By-Laws of Cowen Inc. Exhibit B Amended and Restated Certificate of Incorporation of Cowen Inc. Exhibit C Cowen Employee Ownership Plan Exhibit D Employee Matters Agreement Exhibit E Indemnification Agreement Exhibit F Stockholders Agreement Exhibit G Tax Matters Agreement Exhibit H Transition Services Agreement   iv -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   SEPARATION AGREEMENT   THIS SEPARATION AGREEMENT, dated as of July 11, 2006, is made by and among SOCIÉTÉ GÉNÉRALE, a French banking corporation (“SG”), SG AMERICAS, INC., a Delaware corporation (“SGAI”), SG AMERICAS SECURITIES HOLDINGS, INC., a Delaware corporation (“SGASH”), COWEN AND COMPANY, LLC, a Delaware limited liability company (“Cowen LLC”), and COWEN GROUP, INC., a Delaware corporation (“Cowen Inc.”).   R E C I T A L S:   WHEREAS, SG is the sole stockholder of SGAI, SGAI is the sole stockholder of SGASH and SGASH is the sole member of Cowen LLC and the sole stockholder of Cowen UK;   WHEREAS, Cowen Inc. is a newly-formed corporation and, as of the date hereof, a wholly-owned Subsidiary of SGASH;   WHEREAS, SG, SGAI and SGASH have determined that it is appropriate and advisable to separate the Cowen Business (as defined herein) from the SG Business (as defined herein) (the “Separation”); and   WHEREAS, each of the Parties hereto has determined that it is necessary and advisable to set forth the principal transactions required to effect the Separation and to describe other agreements that will govern certain other matters prior to and following the Separation.   NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement (as defined herein), the Parties (as defined herein) hereby agree as follows:   ARTICLE I DEFINITIONS   SECTION 1.01.  Definitions.  Reference is made to Section 9.14 regarding the interpretation of certain words and phrases used in this Agreement.  In addition, for the purpose of this Agreement, the following terms shall have the meanings set forth below.   “AAA” has the meaning set forth in Section 6.01.   “Agreement” means this Separation Agreement and each of the Schedules and Exhibits hereto.   “Assets” means assets, rights, claims and properties of all kinds, real and personal, tangible, intangible and contingent, including rights and benefits pursuant to any contract, license, permit, indenture, note, bond, mortgage, agreement, concession, franchise, instrument, undertaking, commitment, understanding or other arrangement and any rights or benefits pursuant to any Proceeding.   -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   “BHCA” has the meaning set forth in Section 4.05(a).   “Business Day” means any day other than (i) a Saturday or Sunday or (ii) a day on which banks are required or authorized to close in New York, New York.   “Business Entity” means any corporation, general or limited partnership, trust, joint venture, unincorporated organization, limited liability entity or other entity.   “By-Laws” means the amended and restated By-Laws of Cowen Inc., substantially in the form of Exhibit A.   “Certificate of Incorporation” means the amended and restated Certificate of Incorporation of Cowen Inc., substantially in the form of Exhibit B.   “Closing Distribution Amount” has the meaning set forth in Section 2.02(d).   “Closing Litigation Reserve” has the meaning set forth in Section 2.05(b).   “Closing Statement” has the meaning set forth in Section 2.05(d).   “Code” means the Internal Revenue Code of 1986, as amended.   “Consents” means any consents, waivers or approvals from, or notification requirements to, any Third Parties.   “Conveyance and Assumption Instruments” means, collectively, such deeds, bills of sale, Asset transfer agreements, endorsements, assignments, assumptions (including Liability assumption agreements), leases, subleases, affidavits and other instruments of sale, conveyance, contribution, distribution, lease, transfer and assignment between SG or, where applicable, any SG Subsidiary, on the one hand, and Cowen Inc. or, where applicable, any Cowen Subsidiary or designee of Cowen Inc., on the other hand, as may be necessary or advisable under the laws of the relevant jurisdictions to effect the Separation.   “Cowen Assets” has the meaning set forth in Section 2.02(a)(i).   “Cowen Balance Sheet” means the audited combined statement of financial condition of Cowen Inc., Cowen LLC and the other Cowen Subsidiaries, including the notes thereto, as of December 31, 2005, included in the Prospectus.   “Cowen Benefit Plans” means, collectively, the plans and arrangements set forth on Schedule 1.01(a) and any other benefit plans maintained, sponsored or adopted by Cowen LLC, Cowen Inc. or the Cowen Subsidiaries, whether before or after the Separation Date.   “Cowen Business” means the businesses and operations conducted prior to the Separation Date by Cowen LLC and the Transferred Entities, excluding the Transferred Businesses.   “Cowen Common Stock” means the outstanding shares of common stock, par value $0.01, of Cowen Inc.   2 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   “Cowen Contracts” means any contract, agreement or instrument (other than this Agreement and any Transaction Document) to which Cowen LLC, Cowen Inc. or any Cowen Subsidiary is a party or by which any of their respective assets are bound.   “Cowen Employee Ownership Plan” means the 2006 Equity and Incentive Plan adopted by Cowen Inc. as of the Separation Date, substantially in the form attached as Exhibit C.   “Cowen Inc.” has the meaning set forth in the Preamble.   “Cowen Indemnitees” means Cowen Inc. and each Cowen Subsidiary and their respective successors and assigns.   “Cowen Indemnity Obligations” has the meaning set forth in the Indemnification Agreement.   “Cowen Liabilities” has the meaning set forth in Section 2.02(a)(ii).   “Cowen LLC” has the meaning set forth in the Preamble.   “Cowen Subsidiary” means Cowen LLC, Cowen UK and any other Subsidiary of Cowen Inc.   “Cowen UK” means Cowen International Limited, a private limited company organized in England and Wales.   “Cowen UK Purchase Agreement” shall have the meaning set forth in Section 2.02(c).   “Cowen’s Knowledge” means the actual knowledge of the officers and employees listed on Schedule 1.01(b) as of the IPO Date.   “Cowen Sublease” has the meaning set forth in Section 2.06(a).   “Employee Matters Agreement” means the Employee Matters Agreement entered into on or prior to the Separation Date among SG, SGAI, SGASH, Cowen LLC and Cowen Inc., substantially in the form attached as Exhibit D hereto.   “Employment Tax” means withholding, payroll, social security, workers compensation, unemployment, disability and any similar tax imposed by any Tax Authority, and any interest, penalties, additions to tax or additional amounts with respect to the foregoing imposed on any taxpayer or consolidated, combined or unitary group of taxpayers.   “Escrow Agent” means JPMorgan Chase Bank, N.A., or such other financial institution as mutually agreed upon by the Parties, in its capacity as escrow agent under the Escrow Agreement.   “Escrow Agreement” means the Escrow Agreement entered into on or prior to the Separation Date among SGASH, Cowen LLC, Cowen Inc. and the Escrow Agent.   “Estimated Distribution Amount” has the meaning set forth in Section 2.05(c).   3 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   “Exchange Act” means the Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.   “Excluded Assets” means all of the following assets of the Parties or their respective Subsidiaries:   (i)  all Assets of the Parties or their respective Subsidiaries to the extent such Assets relate to, arise out of or result from the SG Business;   (ii)  all cash and cash equivalents as of the Separation Date of SG, each SG Subsidiary, Cowen LLC and each Cowen Subsidiary, except (x) any cash and cash equivalents included in the Initial Capital retained by Cowen LLC pursuant to Section 2.05(a) and (y) any cash or cash equivalents held for customers pursuant to Rule 15c3-3 promulgated under the Exchange Act;   (iii)  subject to Section 2.13, all Assets that are expressly contemplated by this Agreement or any Principal Transaction Document to be Assets retained by or transferred to SG or any SG Subsidiary; and   (iv)  all other Assets listed or described on Schedule 1.01(c).   “Final Closing Statement”  means (x) the Closing Statement, if no Notice of Disagreement with respect thereto is duly and timely delivered pursuant to Section 2.05, or (y) if such a Notice of Disagreement is so delivered, the Closing Statement as agreed by Cowen Inc. and SG or as prepared by the arbiter, in each case pursuant to Article VI.   “Final Distribution Amount” means the Closing Distribution Amount, as set forth in the Final Closing Statement.   “Firm Public Offering Shares” means the Cowen Common Stock to be sold in the IPO as contemplated in the Underwriting Agreement, other than Cowen Common Stock to be sold as a result of the Underwriters’ over-allotment option.   “GAAP” means U.S. generally accepted accounting principles, as applied by SGAI as of the Separation Date.   “Governmental Authority” means any supranational, international, national, federal, state, or local court, government, department, commission, board, bureau, agency, official or other regulatory, self-regulatory, administrative or governmental authority, including the NASD, the NYSE and any similar regulatory or self-regulatory body under applicable securities laws or regulations.   “Greenwich Capital Partners” means SG Cowen/Greenwich Street Capital Partners II, L.P., a Delaware limited partnership.   “IAS” means the international financial reporting standards issued by the International Accounting Standards Board, as applied by SG and SG Subsidiaries.   4 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   “Indemnification Agreement” means the Indemnification Agreement entered into on or prior to the Separation Date among the Parties, substantially in the form attached as Exhibit E hereto.   “Information” means information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, including studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data.   “Initial Capital” has the meaning set forth in Section 2.05(a).   “Insurance Proceeds” means, with respect to any insured party, those monies, net of any applicable premium adjustments (including reserves and retrospectively rated premium adjustments) and net of any out-of-pocket costs or expenses incurred in the collection thereof, which are either:  (i) received by an insured from an insurance carrier or its estate; or (ii) paid by an insurance carrier or its estate on behalf of the insured.   “IPO” means the initial public offering of shares of Cowen Common Stock pursuant to the Registration Statement.   “IPO Date” means the date of the closing of the IPO.   “Leases” means the real property leases and subleases entered into by Cowen LLC or any of the Cowen Subsidiaries prior to the date hereof, each of which is listed on Schedule 1.01(d).   “Liabilities” means all debts, liabilities, obligations, responsibilities, response actions, losses, damages (other than punitive, consequential, treble or other similar damages, except to the extent that the same are paid to Third Parties), fines, penalties and sanctions, absolute or contingent, matured or unmatured, liquidated or unliquidated, foreseen or unforeseen, joint, several or individual, asserted or unasserted, accrued or unaccrued, known or unknown, whenever arising, including those arising under or in connection with any law, statute, ordinance, regulation, rule or other pronouncements of Governmental Authorities having the effect of law, Proceeding, threatened Proceeding, order or consent decree of any Governmental Authority or any award of any arbitration tribunal, those arising under any contract, guarantee, commitment or undertaking, whether sought to be imposed by a Governmental Authority, private party, or Party, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, or otherwise, and those, in respect of Cowen Inc. or any Cowen Subsidiary and SG and any SG Subsidiary, pursuant to indemnification or contribution arrangements with their respective directors, officers, employees and agents, and including any costs, expenses, interest, attorneys’ fees, disbursements and expense of counsel, expert and consulting fees and costs related thereto (including allocated costs of in-house counsel and other personnel) or to the investigation, preparation or defense thereof.   5 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   “MBF Purchasers” means the purchasers of the partnership interests in the Merchant Banking Fund identified on Schedule 1.01(g).   “Merchant Banking Fund” means SG Merchant Banking Fund L.P., a Delaware limited partnership.   “Mixed Accounts” has the meaning set forth in Section 2.12(b).   “Mixed Contract” has the meaning set forth in Section 2.12(a).   “NASD” means the National Association of Securities Dealers, Inc.   “NASDAQ” means the NASDAQ Stock Market.   “Notice of Disagreement” has the meaning set forth in Section 2.05(e).   “NYSE” means the New York Stock Exchange, Inc.   “NYSE-Archipelago Merger Proceeds” means, collectively, all of Cowen LLC’s right, title and interest in and to the cash, equity and any other proceeds or consideration to which the holders of equity or membership interests of the NYSE are entitled in connection with the merger between the NYSE and Archipelago, as effected pursuant to the Merger Agreement between the NYSE and Archipelago Holdings, Inc., dated as of April 20, 2005, as amended.   “Parties” means the parties to this Agreement.   “Person” means any:  (i) individual; (ii) Business Entity; or (iii) Governmental Authority.   “Prime Rate” means the rate which SG (or its successor or another major money center commercial bank agreed to by the Parties) announces as its prime lending rate, as in effect from time to time.   “Principal Transaction Documents” means:  (i) the Employee Matters Agreement; (ii) the Escrow Agreement; (iii) the Indemnification Agreement; (iv) the Stockholders Agreement; (v) the Tax Matters Agreement; (vi) the Transition Services Agreement; and (vii) any and all Leases.   “Proceeding” means:  (i) any past, present or future suit, countersuit, action, arbitration, mediation, alternative dispute resolution process, claim, counterclaim, demand, proceeding; (ii) any inquiry, proceeding or investigation by or before any Governmental Authority; or (iii) any arbitration or mediation tribunal, in each case involving SG, any SG Subsidiary, any SG Indemnitee (but only if in a capacity entitling such Person to the rights of an SG Indemnitee), Cowen LLC, Cowen Inc., any Cowen Subsidiary or any Cowen Indemnitee (but only if in a capacity entitling such Person to the rights of a Cowen Indemnitee).   “Prospectus” means the prospectus forming a part of the Registration Statement as the same may be amended or supplemented from time to time.   6 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   “Registration Statement” means the registration statement on Form S-1 (File No. 333-132602) filed under the Exchange Act on March 21, 2006, pursuant to which the Cowen Common Stock to be sold in the IPO has been registered, together with all amendments and supplements thereto.   “SEC” means the Securities and Exchange Commission.   “Securities Act” means the Securities Act of 1933, as amended, together with the rules and regulations promulgated thereunder.   “Security Interest” means any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-way, covenant, condition, easement, encroachment, restriction on transfer, or other encumbrance of any nature whatsoever.   “Separation” has the meaning set forth in the Recitals.   “Separation Date” means the date as of which the Separation is consummated.   “Service Level Agreements” has the meaning set forth in the Transition Services Agreement.   “SG” has the meaning set forth in the Preamble.   “SGAI” has the meaning set forth in the Preamble.   “SGASH” has the meaning set forth in the Preamble.   “SG Business” means all businesses and operations conducted prior to the Separation Date by SG and any of the SG Subsidiaries, in each case that are not included in the Cowen Business.  For purposes of this Agreement and the Transaction Documents only, the SG Business shall also be deemed to include the Transferred Businesses.   “SG Contracts” means any contract, agreement or instrument (other than this Agreement and any Transaction Document) to which SG or any of the SG Subsidiaries is a party or by which SG or any SG Subsidiaries, or any of their respective assets, are bound.   “SG Cowen Ventures” means SG Cowen Ventures I, L.P., a Delaware limited partnership.   “SG Indemnitees” means SG and each SG Subsidiary and each of their respective successors and assigns.   “SG Indemnity Obligations” has the meaning set forth in the Indemnification Agreement.   “SG Liabilities” has the meaning set forth in Section 2.02(b).   “SG’s Knowledge” means the actual knowledge of the officers and employees listed on Schedule 1.01(e) as of the IPO Date.   7 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   “SG Subsidiary” means any Subsidiary of SG other than Cowen LLC, Cowen Inc. and any Cowen Subsidiary.   “Stockholders Agreement” means the Stockholders Agreement entered into as of the Separation Date among Cowen Inc. and certain of its stockholders, including SGASH, substantially in the form attached as Exhibit F hereto.   “Subsidiary” of any Person means another Business Entity that is directly or indirectly controlled by such Person.  As used herein, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Business Entity, whether through ownership of voting securities or other interests, by contract or otherwise.  For the avoidance of doubt, Cowen Inc. and the Cowen Subsidiaries are not Subsidiaries of SG as that term is used in this Agreement.   “Tax” means:  (i) any income, net income, gross income, gross receipts, profits, capital stock, franchise, property, ad valorem, stamp, excise, severance, occupation, service, sales, use, license, lease, transfer, import, export, customs duties, value added, alternative minimum, estimated or other similar tax (including any fee, assessment, or other charge in the nature of or in lieu of any tax) imposed by any Tax Authority, and any interest, penalties, additions to tax or additional amounts with respect to the foregoing imposed on any taxpayer or consolidated, combined or unitary group of taxpayers; and (ii) any Employment Tax.   “Tax Authority” means, with respect to any Tax, the Governmental Authority or political subdivision thereof that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such entity or subdivision.   “Tax Matters Agreement” means the Tax Matters Agreement entered into on or prior to the Separation Date among SGAI, SGASH, Cowen LLC and Cowen Inc., substantially in the form attached as Exhibit G hereto.   “Third Party” means any Person other than SG, any SG Subsidiary, Cowen Inc. and any Cowen Subsidiary.   “Third Party Claim” has the meaning set forth in the Indemnification Agreement.   “Transaction Documents” means all written agreements, instruments, understandings, assignments or other arrangements (other than this Agreement) entered into by the Parties or any of their respective Subsidiaries in connection with the Separation and the other transactions contemplated by this Agreement, including the following:  (i) the Conveyance and Assumption Instruments; (ii) the Employee Matters Agreement; (iii) the Escrow Agreement; (iv) the Indemnification Agreement; (v) the Stockholders Agreement; (vi) the Tax Matters Agreement; (vii) the Transition Services Agreement; (viii) any and all Leases; and (ix) any other agreements which the Parties determine are necessary or advisable in connection with the Separation and the other transactions contemplated by this Agreement and the Transaction Documents.   “Transferred Businesses” means (i) the Private Client Group division sold by SG Cowen Securities Corporation to Lehman Brothers Holdings Inc. in October 2000, (ii) the bond brokerage business sold by SG Cowen Securities Corporation to Fimat Futures, USA, Inc. in   8 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   2000, (iii) the correspondent clearing operations sold by SG Cowen Securities Corporation to BNY Clearing Services LLC in January 2000 and (iv) the SG Cowen Asset Management Business.   “Transferred Entities” means the entities set forth on Schedule 1.01(f).   “Transition Services Agreement” means the Transition Services Agreement entered into on or prior to the Separation Date among SG, SGAI, SGASH, Cowen LLC and Cowen Inc., substantially in the form attached as Exhibit H hereto.   “Underwriters” mean the managing underwriters for the IPO.   “Underwriting Agreement” means the firm commitment underwriting agreement to be entered into by and among SGASH, Cowen Inc. and the Underwriters in connection with the offering of Cowen Common Stock in the IPO.   “U.S.” or “United States” means the United States of America, including each of the 50 states thereof, the District of Columbia and Puerto Rico, but excluding all other territories and possessions.   ARTICLE II THE SEPARATION   SECTION 2.01.  Organization of Cowen Inc.; IPO; Intercompany Transactions.   (a)  Incorporation of Cowen Inc.  The Parties acknowledge that: (i) SGASH caused Cowen Inc. to be incorporated in Delaware on February 15, 2006 under the name “Cowen Group, Inc.”; and (ii) immediately prior to the IPO, SGASH will be the sole stockholder of Cowen Inc.   (b)  Adoption of Cowen Inc.’s Amended and Restated Charter and By-Laws.  On or prior to the Separation Date, SGASH and Cowen Inc. shall take all necessary actions so that, effective immediately prior to the Separation Date, the Certificate of Incorporation and the By-Laws shall be the certificate of incorporation and by-laws of Cowen Inc.   (c)  Cowen Inc.’s Directors and Officers.  On or prior to the Separation Date, SGASH and Cowen Inc. shall take all necessary actions so that immediately following the Separation: (i) the directors and executive officers of Cowen Inc. shall be those set forth in the Prospectus, unless otherwise agreed by the Parties; and (ii) Cowen Inc. shall have such other officers as Cowen Inc. shall desire.   (d)  NASDAQ Listing.  Cowen Inc. shall prepare and file, and shall use commercially reasonable efforts to have approved prior to the Separation Date, an application for the listing on NASDAQ of the shares of Cowen Common Stock to be sold pursuant to the IPO.   (e)  IPO Procedures.  In connection with the IPO, Cowen LLC and Cowen Inc.:   9 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   (i)  shall timely consult with, and cooperate in all respects with, SG and the SG Subsidiaries in connection with the pricing of the Cowen Common Stock to be offered in the IPO;   (ii)  shall promptly furnish to SG and SGASH copies of reasonably complete drafts of all such documents prepared to be filed (including exhibits) in connection with the IPO, provide SG and SGASH with the reasonable opportunity to object to any information contained therein and make any corrections reasonably requested by SG and SGASH that are reasonably acceptable to Cowen LLC and Cowen Inc. with respect to such information prior to filing any such registration statement or amendment;   (iii)  shall timely execute and deliver the Underwriting Agreement in such form and substance as is satisfactory to Cowen Inc., Cowen LLC, SG and the SG Subsidiaries;   (iv)  shall notify SG and SGASH promptly of any request by the SEC for the amending or supplementing of the Registration Statement or Prospectus or for additional information;   (v)  shall, during the period when the Prospectus is required to be delivered under the Securities Act, promptly file all documents required to be filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act;   (vi)  shall otherwise use their respective reasonable best efforts to comply with all applicable rules and regulations of the SEC, including the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder, and make generally available to Cowen Inc.’s security holders an earnings statement satisfying the provisions of Section 11(a) of the Securities Act no later than thirty (30) days after the end of the twelve (12) month period beginning with the first day of Cowen Inc.’s first fiscal quarter commencing after the effective date of a registration statement, which earnings statement shall cover said twelve (12) month period, and which requirement will be deemed to be satisfied if Cowen Inc. timely files complete and accurate information on Forms 10-Q, 10-K and 8-K under the Exchange Act and otherwise complies with Rule 158 under the Securities Act; and   (vii)  shall promptly take any and all other actions reasonably necessary or desirable to consummate the IPO as contemplated in the Registration Statement and the Underwriting Agreement.   (f)  Representations Regarding Disclosure.   (i)  Cowen LLC and Cowen Inc., jointly and severally, hereby represent and warrant to SG and SGASH that, to Cowen’s Knowledge, the information in the Prospectus and Registration Statement and any amendments or supplements thereto does not on the date hereof or on the date of the execution of the Underwriting Agreement and will not as of the IPO Date, contain any untrue statement of a material fact or omit to state any 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;   10 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   (ii)  SG hereby represents and warrants to Cowen LLC and Cowen Inc. that, to SG’s Knowledge, (A) the information in the sections of the Prospectus entitled “Business—Regulation”, “Business—Legal Proceedings” and “Use of Proceeds” and the information relating to SG (and not to Cowen LLC or Cowen Inc. or their respective offices and employees) in the Section of the Prospectus entitled “Principal and Selling Stockholders” and any amendments or supplements thereto does not on the date hereof or on the date of the execution of the Underwriting Agreement and will not as of the IPO Date contain any untrue statement of material fact or omit to state any 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, and (B) any financial information furnished in writing by SG to Cowen LLC expressly for use in the combined statements of financial condition of Cowen Inc. contained in the Prospectus was true and correct as of the date such financial information was provided (or, if the information provided related to a prior period or date, was true and correct as of the end of such prior period or as of such prior date).   (iii)  The representations and warranties in this Section 2.01(f) shall survive until the date eighteen (18) months following the IPO Date, at which date such representations and warranties shall terminate and cease to be of further force or effect.   (iv)  Notwithstanding anything to the contrary in Sections 2.01, 2.02, 3.01(a) and 3.02(b) of the Indemnification Agreement), no Person shall be (A) relinquished, released or discharged pursuant to Section 2.01 or 2.02 of the Indemnification Agreement from Liabilities arising from any breach of the representations and warranties in this Section 2.01(f) or (B) entitled to indemnification for or against any Liabilities to the extent such Liabilities relate to, arise out of or result from any breach of the representations and warranties in this Section 2.01(f).   (g)  Opinion and Comfort Letter.  Cowen Inc. shall furnish or cause to be furnished to the Underwriters a signed counterpart of (A) an opinion or opinions of counsel to Cowen Inc., and (B) a comfort letter or comfort letters from Cowen Inc.’s independent public accountants, each at the times required by the Underwriting Agreement, in the form attached to the Underwriting Agreement, addressed to the Underwriters, and covering such matters of the type customarily covered by opinions or comfort letters, as the case may be, as the Underwriters reasonably request.   (h)  Self-Regulatory Membership.  Prior to the Separation Date, Cowen Inc. shall consult with the NYSE, and any other self-regulatory organization of which Cowen LLC currently is a member, with respect to the transactions contemplated by this Agreement, and, sufficiently prior to the Separation Date as is required or appropriate under the circumstances, shall submit to the NYSE or such other self-regulatory organization such information as the NYSE or such other self-regulatory organization may require under its rules and regulations by reason of the transactions contemplated by this Agreement.  SG agrees to cooperate with Cowen Inc. by furnishing to Cowen Inc. such information as may reasonably be requested for this purpose by Cowen, the NYSE or other such self-regulatory organization.   11 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   SECTION 2.02.  The Separation Transactions.  The Parties acknowledge that the Separation is intended to result in Cowen Inc.’s directly or indirectly operating the Cowen Business, owning the Cowen Assets and assuming the Cowen Liabilities as set forth below in this Article II.   (a)  Transfer of Cowen Assets and Liabilities.   (i)  Transfer of Cowen Assets.  Subject to Section 2.02(f) and Section 2.15, on the Separation Date, and in any event following the transactions described in Sections 2.01(b), (c) and (d), Sections 2.02(d) and (e), Section 2.05(b) and Sections 2.15(a)(i) and (a)(ii), SG shall, and shall cause each applicable SG Subsidiary to, assign, transfer, convey and deliver to Cowen Inc., Cowen LLC or such other Cowen Subsidiaries as Cowen Inc. may designate, and Cowen Inc. and Cowen LLC shall, and shall cause Cowen LLC and such Cowen Subsidiaries to, accept from SG and the SG Subsidiaries, all of SG’s and the SG Subsidiaries’ respective rights, title and interest in and to only the following Assets of the Parties or their respective Subsidiaries, but excluding any Excluded Assets (collectively, the “Cowen Assets”):   (A)  the outstanding membership interests of Cowen LLC;   (B)  the outstanding capital shares of Cowen UK;   (C)  the Assets included on the Cowen Balance Sheet after completion of the transactions contemplated by this Agreement and the Transaction Documents or any notes or subledger thereto that are owned by any Party or any of their respective Subsidiaries as of the IPO Date;   (D)  the Assets of any Party or any of their respective Subsidiaries as of the Separation Date that are of a nature or type that would have resulted in such Assets being included as Assets on a pro forma combined statement of financial condition of Cowen Inc. or the notes or subledgers thereto as of the IPO Date (were such statement of financial condition, notes and subledgers to be prepared) on a basis consistent with the determination of the Assets included on the Cowen Balance Sheet or any subledger thereto;   (E)  the Assets expressly allocated to Cowen Inc. or any Cowen Subsidiary under this Agreement or any of the Principal Transaction Documents;   (F)  the Assets used or held by Cowen Inc. or any Cowen Subsidiary for use in the Cowen Business and the rights to the Cowen Business;   (G)  all right, title and interest to the trade name, trademark and service mark “Cowen”, together with the goodwill associated therewith;   (H)  the trade secrets, know-how, proprietary information (including any clinical study data and product registrations), any other rights or intellectual property and any other rights, claims or properties, in each case:  (A) as of the Separation Date; (B) to the   12 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   extent primarily related to the Cowen Business; and (C) that are not otherwise specifically addressed under any other subsection of this definition; and   (I)  the Assets identified on Schedule 2.02(a)(i).   (ii)  Transfer of Cowen Liabilities.  Subject to Section 2.02(f) and Section 2.15, on the Separation Date, and in any event following the transactions described in Sections 2.01(b), (c) and (d), Sections 2.02(d) and (e), Section 2.05(b) and Sections 2.15(a)(i) and (a)(ii), Cowen Inc. shall, or shall cause the applicable Cowen Subsidiaries to accept, assume and agree faithfully to perform, discharge and fulfill all of the following Liabilities of the Parties or their respective Subsidiaries (collectively, the “Cowen Liabilities”) in accordance with their respective terms:   (A)  all Liabilities included on the Cowen Balance Sheet or any subledger thereto that remain outstanding as of the Separation Date after completion of the transactions contemplated by this Agreement and the Transaction Documents;   (B)  all other Liabilities that are incurred or accrued by any Party or any of their respective Subsidiaries from the date of the Cowen Balance Sheet to the Separation Date that are of a nature or type that would have resulted in such Liabilities being included as Liabilities on a pro forma combined statement of financial condition of Cowen Inc. and the notes or subledgers thereto as of the Separation Date (were such statement of financial condition, notes or subledgers to be prepared) on a basis consistent with the determination of the Liabilities included on the Cowen Balance Sheet or any subledger thereto;   (C)  all Liabilities expressly allocated to Cowen Inc. or any Cowen Subsidiary pursuant to this Agreement or any Transaction Document, and all agreements, obligations and Liabilities of Cowen Inc. and any Cowen Subsidiaries under this Agreement or any Transaction Document;   (D)  all Liabilities relating to, arising out of or resulting from investment decisions or the management of portfolio companies relating to SG Cowen Ventures (including all claims by limited partners of SG Cowen Ventures and other Third Parties); provided, however, that Liabilities relating to, arising out of or resulting from the administration of SG Cowen Ventures, including the accuracy or correctness of disbursements and the distribution of materials by or on behalf of the general partner of SG Cowen Ventures to limited partners of SG Cowen Ventures shall be deemed “SG Liabilities” as contemplated in Section 2.02(b);   (E)  all Liabilities relating to, arising out of or resulting from investment decisions or the management of portfolio companies of or relating to the Merchant Banking Fund on or after January 1, 2004 (including all claims by limited partners of the Merchant Banking Fund and other Third Parties); provided, however, that Liabilities relating to, arising out of or resulting from (w) the sale and transfer of partnership interests in the Merchant Banking Fund to the MBF Purchasers (except that any rights of SG or any SG Subsidiaries in respect of the representations and warranties made to the MBF Purchasers   13 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   in the sale and transfer documents shall not be deemed to have been waived pursuant to this clause (w)), (x) the administration of the Merchant Banking Fund, including the accuracy or correctness of disbursements and the distribution of materials by or on behalf of the Merchant Banking Fund to the partners of the Merchant Banking Fund or participants in the Merchant Banking Co-investment Plan and (y) any claim by former partners of the Merchant Banking Fund that do not relate to investment decisions or management of the Merchant Banking Fund after January 1, 2004 shall be deemed “SG Liabilities” as contemplated in Section 2.02(b);   (F)  all Liabilities relating to, arising out of or resulting from any business or operations conducted at any time prior to, on or after the IPO Date by the employees of SG’s London Branch whose employment was primarily associated with the Cowen Business (including but not limited to those employees who are “Transferred Employees” as defined in the Cowen UK Purchase Agreement); provided, however, that any such Liabilities relating to, arising out of or resulting from claims pending as of the IPO Date shall be added to Schedule 2.02(b) and shall be deemed “SG Liabilities” as contemplated in Section 2.02(b);   (G)  all Liabilities relating to, arising out of or resulting from any claim in respect of any period prior to the IPO Date by an employee of Cowen Inc. or any Cowen Subsidiary who does not execute an Executive Award Agreement and a release satisfactory to SG and Cowen Inc.; provided, however, that the foregoing shall exclude any such claim by any employee of Cowen Inc. or any Cowen Subsidiary who did execute an Executive Award Agreement and release satisfactory to SG and Cowen Inc., and the Parties acknowledge and agree that each of SG and the SG Subsidiaries, on the one hand, and Cowen Inc. and the Cowen Subsidiaries, on the other hand, shall be responsible for any Liabilities arising from claims against it (or its Subsidiaries) in respect of any period prior to the IPO Date by an employee who executed an Executive Award Agreement and release satisfactory to SG and Cowen Inc.;   (H)  all Liabilities relating to, arising out of or resulting from the Cowen Benefit Plans;   (I)  all Liabilities relating to, arising out of or resulting from (1) Cowen Inc.’s adoption of the Cowen Employee Ownership Plan, (2) Cowen Inc.’s adoption of any directed share program, and (3) any employment agreements, retention agreements, guaranteed bonuses, bonus plans or payments, deferred compensation plans and any other agreements, arrangements or understandings between Cowen LLC, Cowen Inc. or the Cowen Subsidiaries and their respective directors, officers and employees; provided, however, that Liabilities pertaining to deferred compensation plans (other than the SG-USA Fidelity Bonus Plan) maintained by SG for any SG Subsidiary and Cowen LLC prior to the IPO, shall be deemed “SG Liabilities”;   (J)  Cowen Inc.’s portion, determined in accordance with Section 2.12, of Liabilities associated with Mixed Contracts and Mixed Accounts;   14 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   (K)  all Liabilities relating to, arising out of or resulting from Cowen Inc.’s, Cowen LLC’s or any of their respective Subsidiaries’ breach of or failure to perform any Cowen Contract;   (L)  those specific Liabilities set forth on Schedule 2.02(a)(ii) as of the Separation Date (which schedule shall be updated from time to time as mutually agreed in good faith by Cowen Inc. and SG up to the IPO Date), in each case subject to the limitations set forth in Schedule 2.02(a)(ii); and   (M)  except to the extent expressly excluded from the Cowen Liabilities above, all other known and unknown Liabilities relating to, arising out of or resulting from the Cowen Business, the Cowen Assets, the other Cowen Liabilities or any business or operations conducted by Cowen Inc., Cowen LLC or any of their respective Subsidiaries, at any time prior to, on or after the Separation Date (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case, before, on or after the Separation Date) that are not expressly retained or assumed by SG or the SG Subsidiaries pursuant to this Agreement or any Transaction Document.   Notwithstanding anything to the contrary in this Agreement or any Transaction Document, Cowen Liabilities shall in no event include any Liabilities (a) relating to, arising out of or resulting from the Excluded Assets, (b) for which SG or any of its Affiliates has responsibility pursuant to applicable provisions of any Service Level Agreements or any Transaction Documents in connection with the provision of services to Cowen Inc. or any Cowen Subsidiary thereunder or (c) expressly allocated to or retained by SG or any SG Subsidiary pursuant to clauses (i) through (v) or (ix) through (xiii) of Section 2.02(b) of this Agreement.   Except as expressly set forth in this Agreement, Cowen Inc., Cowen LLC and such other Cowen Subsidiaries shall be responsible for all Cowen Liabilities, regardless of (a) when or where such Cowen Liabilities arose or arise or whether the facts on which such Cowen Liabilities are based occurred prior to, on or following the Separation Date, (b) where or against whom such Cowen Liabilities are asserted or determined or whether asserted or determined prior to, on or following the Separation Date or the date hereof and (c) whether arising from or alleged to arise from negligence, recklessness, violation of law, fraud or misrepresentation.   (b)  Retention of SG Liabilities.  SG shall, or shall cause the applicable SG Subsidiaries to, retain, accept, assume and agree faithfully to perform, discharge and fulfill all of the following Liabilities of the Parties or their respective Subsidiaries (collectively, the “SG Liabilities”) in accordance with their respective terms:   (i)  all Liabilities expressly allocated to SG or any SG Subsidiaries pursuant to this Agreement or any Transaction Document, and all agreements, obligations and Liabilities of SG and any SG Subsidiaries under this Agreement or any Transaction Document;   (ii)  all Liabilities relating to, arising out of or resulting from the administration of SG Cowen Ventures, including the accuracy or correctness of disbursements and the distribution of materials by or on behalf of the general partner of SG Cowen Ventures to   15 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   limited partners of SG Cowen Ventures; provided, however, that Liabilities relating to, arising out of or resulting from investment decisions or the management of portfolio companies relating to SG Cowen Ventures (including all claims by limited partners of SG Cowen Ventures and other Third Parties) shall be deemed “Cowen Liabilities” as contemplated by Section 2.02(a)(ii);   (iii)  all Liabilities relating to, arising out of or resulting from (x) the administration of the Merchant Banking Fund, including the accuracy or correctness of disbursements and the distribution of materials by or on behalf of the Merchant Banking Fund to the partners of the Merchant Banking Fund or participants in the Merchant Banking Co-investment Plan and (y) investment decisions or the management of portfolio companies of or relating to the Merchant Banking Fund prior to January 1, 2004; provided, however, that Liabilities relating to, arising out of or resulting from investment decisions or the management of portfolio companies of or relating to the Merchant Banking Fund on or after January 1, 2004 (including all claims by limited partners of the Merchant Banking Fund and other Third Parties) shall be deemed “Cowen Liabilities” as contemplated by Section 2.02(a)(ii);   (iv)  all Liabilities relating to, arising out of or resulting from the sale and transfer of partnership interests in the Merchant Banking Fund to the MBF Purchasers (except that any rights of SG or any SG Subsidiaries in respect of the representations and warranties made to the MBF Purchasers in the sale and transfer documents shall not be deemed to have been waived hereby);   (v)  all Liabilities for expenses payable by SG as provided in Section 9.08;   (vi)  SG’s portion, determined in accordance with Section 2.12, of Liabilities associated with Mixed Contracts and Mixed Accounts;   (vii)  all Liabilities relating to, arising out of or resulting from SG’s or any SG Subsidiary’s breach of or failure to perform any SG Contract;   (viii)  except to the extent expressly excluded from the SG Liabilities in this Section 2.02(b) or included as Cowen Liabilities in Section 2.02(a)(ii), all Liabilities relating to, arising out of or resulting from any business conducted by SG or any SG Subsidiary at any time prior to, on or after the Separation Date;   (ix)  all Liabilities relating to, arising out of or resulting from the Transferred Businesses whether arising prior to, on or after the Separation Date;   (x)  all Liabilities relating to, arising out of or resulting from employee-related claims made by any current or former employees of SG or any SG Subsidiary that are asserted by such current or former employees against Cowen Inc. or any Cowen Subsidiaries in respect of any period prior to the IPO Date;   (xi)  all Liabilities (other than Cowen Liabilities) to the extent such Liabilities relate to, arise out of or result from a claim by any Third Party, including any Governmental Authority, against Cowen Inc. or any Cowen Subsidiaries that relate   16 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   primarily to the terms, amount or procurement of insurance with respect to the Cowen Business prior to the Separation Date; provided, however, that the term “SG Liabilities” shall not include and SG shall have no indemnity obligation in respect of Liabilities relating to, arising out of or resulting from a claim (including but not limited to a claim by a Third Party) under or relating to the insurance policies listed on Schedule 4.01;   (xii)  those specific contingent Liabilities set forth on Schedule 2.02(b) as of the Separation Date (which schedule shall be updated from time to time as mutually agreed in good faith by Cowen Inc. and SG up to the IPO Date), in each case solely to the extent that payment in respect of such Liabilities has not been made out of the escrow therefor pursuant to Section 2.05(b); provided, however, that, unless otherwise specifically identified on Schedule 2.02(b), any suit, inquiry, proceeding or investigation (including but not limited to any such suit, inquiry, proceeding or investigation that relates to, arises out of or results from the litigation and regulatory matters set forth on Schedule 2.02(b)) that is not known to SG as of the IPO Date shall not be deemed an “SG Liability” for purposes of this Agreement; and   (xiii)  all Liabilities relating to, arising out of or resulting from the Excluded Assets.   Except as expressly set forth in this Agreement, SG or the applicable SG Subsidiaries shall be responsible for all SG Liabilities, regardless of (a) when or where such SG Liabilities arose or arise or whether the facts on which such SG Liabilities are based occurred prior to, on or following the Separation Date, (b) where or against whom such SG Liabilities are asserted or determined or whether asserted or determined prior to, on or following the Separation Date or the date hereof and (c) whether arising from or alleged to arise from negligence, recklessness, violation of law, fraud or misrepresentation.   (c)  Separation of U.K. Operations.  Prior to the date hereof, SG’s London Branch has transferred Cowen Assets related to the London operations of the Cowen Business to Cowen UK pursuant to and subject to the terms of the Intra-Group Asset Sale and Purchase Agreement, dated as of May 1, 2006, by and between SG London Branch and Cowen UK (the “Cowen UK Purchase Agreement”).  Liabilities relating to, arising out of or resulting from any business or operations conducted by the employees of SG’s London Branch whose employment was primarily associated with the Cowen Business (including but not limited to those employees who are “Transferred Employees” as defined in the Cowen UK Purchase Agreement) shall be transferred to Cowen UK pursuant to and subject to the terms of Section 2.02(a)(ii)(F) of this Agreement.   (d)  Cash Distribution.  In connection with the Separation, Cowen LLC shall make a cash distribution to SGASH in an amount (the “Closing Distribution Amount”) equal to the dollar amount by which Cowen LLC’s group equity exceeds the $207.0 million Initial Capital to be retained by Cowen LLC pursuant to Section 2.05(a), after giving effect to the transactions contemplated by this Agreement and the Transaction Documents but without giving effect to the impact of any gain or loss associated with SGASH’s sale of shares of Cowen Common Stock in the IPO.  The Closing Distribution Amount shall be paid and, if appropriate, adjusted as follows:   17 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   (i)  On the Separation Date and immediately prior to the Separation, Cowen LLC shall make a cash distribution to SGASH in an amount equal to the Estimated Distribution Amount; and   (ii)  Upon the determination of the Final Distribution Amount pursuant to Section 2.05(d) through (j), the Parties shall make any adjustments and payments required by Section 2.05(g).   (e)  Stock Issuance.  On the Separation Date, Cowen Inc. shall, in consideration of the Separation and the transfers by SGASH of the assets and liabilities specified in Section 2.02(a), issue to SGASH the number of shares of Cowen Common Stock that are mutually agreed to by SGASH and the Underwriters, which shares of Cowen Common Stock, together with such shares of Cowen Common Stock held by SGASH prior to the Separation Date, shall represent 100% of the shares of Cowen Common Stock outstanding immediately prior to the IPO.  For purposes of determining whether SGASH owns shares representing 100% of the shares of Cowen immediately prior to the IPO in accordance with the preceding sentence, any shares of Cowen Common Stock issued, effective immediately following the IPO, under the Cowen Employee Ownership Plan shall not be deemed to be outstanding immediately prior to the IPO.   (f)  Rescission.  Notwithstanding anything to the contrary set forth in this Agreement, all transactions theretofore contemplated under this Agreement or any of the Transaction Documents (excluding the transactions set forth in Sections 2.01(a) and 2.02(c), the distribution described in Section 2.02(d) and the rescission transactions described in this Section 2.02(f)) shall immediately be rescinded in all respects and this Agreement and all of the Transaction Documents (other than any Leases) shall terminate and all Assets transferred pursuant to this Agreement or the Transaction Documents shall be returned to the entities that transferred such Assets, and all assumptions of liabilities hereunder and thereunder shall be rescinded and nullified to the maximum extent possible, if (1) prior to the time as of which the Underwriters and SGASH agree on the final purchase price per share of Cowen Common Stock to be paid to SGASH by the Underwriters pursuant to the Underwriting Agreement, SG elects in its sole discretion, for any reason or no reason, to rescind such transactions and terminate such Agreements or (2) delivery of the Firm Public Offering Shares to the Underwriters against payment therefor is not complete within ten (10) Business Days after the Separation Date.   SECTION 2.03.  Transaction Documents.  Prior to the Separation Date, the Parties shall execute and deliver, or where applicable shall cause their respective Subsidiaries to execute and deliver, each Transaction Document to which they are intended to be a party; provided, however, that if this Article II calls for a Transaction Document to be executed and delivered on or as of a later time, it shall be executed and delivered on or as of such later time.   SECTION 2.04.  Disclaimer of Representations and Warranties; Bulk Sales.   (a)  Except as expressly set forth in Sections 2.01(f), 4.08 and 9.01(c) and in the Underwriting Agreement, the Parties understand and agree that no Party hereto and no party to any Transaction Document is making any representations or warranties whatsoever, whether expressed or implied, as to any Cowen Assets, Cowen Liabilities, SG Liabilities, Assets of SG or the transactions contemplated by this Agreement or any Transaction Document, including any   18 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   representations or warranties as to:  (i) any Consents required in connection therewith; (ii) the value of or freedom from any Security Interests in, or any other matter concerning, any Cowen Asset; (iii) the absence of any defenses to or right of setoff against or freedom from counterclaim with respect to any claim; (iv) the merchantability or fitness for a particular purpose of any of the Cowen Assets; (v) the legal sufficiency of any Conveyance and Assumption Instruments to convey title to any Cowen Asset or thing of value upon the execution, delivery and filing of such Conveyance and Assumption Instruments; or (vi) any projections or forecasts of the future financial performance of Cowen Inc., Cowen LLC and the other Cowen Subsidiaries or SG and the SG Subsidiaries, in each case, whether referenced in the Registration Statement, the Prospectus or otherwise.  The Parties further understand and agree that all Cowen Assets are being transferred on an “as is,” “where is” basis, and Cowen Inc. and its Subsidiaries shall bear the economic and legal risks that: (a) any Conveyance and Assumption Instrument may prove to be insufficient to vest in the transferee good and marketable title, free and clear of any Security Interest; and (b) any necessary Consents are not obtained or that any requirements of laws, agreements, Security Interests or judgments are not complied with; provided, however, that SG agrees that the outstanding membership interests of Cowen LLC and capital shares of Cowen UK shall be transferred to Cowen Inc. free and clear of any liens or encumbrances.   (b)  Cowen Inc. hereby waives compliance by SG and the SG Subsidiaries with the “bulk-sale” or “bulk-transfer” laws of any jurisdiction that may otherwise be applicable to the transfer of any or all of the Cowen Assets to Cowen Inc. and the Cowen Subsidiaries.   SECTION 2.05.  Financing Arrangements; Adjustments.   (a)  Cowen Inc.’s Group Equity.  Notwithstanding anything to the contrary in this Agreement, Cowen Inc.’s group equity immediately following the IPO Date, after giving effect to the transactions contemplated under this Agreement (including but not limited to any distribution payable to SGASH under Section 2.02(d) and any Liabilities and expenses allocated to Cowen Inc. or SG in connection with this Agreement, the Separation and the IPO) but without giving effect to the impact of any gain or loss associated with SGASH’s sale of shares of Cowen Common Stock in the IPO, (“Initial Capital”) shall be $207.0 million.   (b)  Litigation Reserve; Cash Escrow Account.   (i)  On or prior to the Separation Date, Cowen LLC shall deposit with the Escrow Agent an amount in cash equal to the cash litigation reserve on its books as of such time (the “Closing Litigation Reserve”).  The amount of the Closing Litigation Reserve shall be determined by SG, after consultation with Cowen Inc.’s outside auditors, in accordance with GAAP.  The dollar amount deposited with the Escrow Agent pursuant to this Section 2.05(b) shall be held by the Escrow Agent in accordance with the terms and conditions of the Escrow Agreement and shall be subject to adjustment from time to time by SG or SGASH in accordance with the terms and conditions of the Escrow Agreement.   (ii)  Notwithstanding anything to the contrary in this Agreement or the Transaction Documents, each of SGASH and Cowen Inc. agrees that the Closing Litigation Reserve shall be deemed to be an asset of Cowen Inc. for purposes of calculating the Initial Capital pursuant to this Section 2.05, which amount shall be offset   19 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   by the SG Liabilities set forth on Schedule 2.02(b).  SGASH covenants that, if at any time prior to the termination of the Escrow Agreement the amount of the Closing Litigation Reserve held in escrow by the Escrow Agent is determined by Cowen Inc.’s outside auditors or a Governmental Entity (a) not to constitute an allowable asset or (b) to be valued using a discount rate less than that applied to cash held by an entity, then SGASH shall pay to Cowen Inc. an amount in cash or other mutually agreed upon qualifying assets equal to the amount then held by the Escrow Agent (or, in the case of a decrease in the discount rate applied, the amount by which the funds held by the Escrow Agent is deemed an allowable asset has decreased).  If such a payment is made, Cowen Inc. covenants to pay to the Escrow Agent for contribution to the funds held by the Escrow Agent an amount equal to each payment made from such funds in satisfaction of an SG Liability set forth on Schedule 2.02(b) (or, in the case of a decrease in the discount rate, the pro rata amount attributable to any payment made from the funds held by the Escrow Agent in satisfaction of such Liability); provided, however, that in no case shall Cowen Inc. be obligated to contribute an aggregate amount in excess of the amount received from SGASH pursuant to this paragraph.   (c)  Estimated Distribution Amount.  On or prior to the anticipated Separation Date, SG shall deliver to Cowen LLC:   (i)  a statement containing a good faith estimate (the “Estimated Distribution Amount”) of the Closing Distribution Amount, together with   (ii)  a statement confirming that Cowen Inc.’s Initial Capital (after payment of the Estimated Distribution Amount and any Liabilities and expenses allocated to Cowen Inc. or SG in connection with this Agreement, the Separation and the IPO) will be $207.0 million, as required by Section 2.05(a).  Following the Separation Date, the Estimated Distribution Amount shall be subject to adjustment as set forth below in this Section 2.05.   (d)  Cowen Delivery of Financials; Closing Statement.  As soon as practicable following the end of the fiscal quarter in which the IPO occurs, Cowen Inc. shall deliver to SG audited combined statements of financial condition, operations, cash flow and stockholders’ equity of Cowen Inc., Cowen LLC and the other Cowen Subsidiaries as of, and for the periods ended on, the IPO Date, all of which shall have been prepared in accordance with GAAP and present fairly, in all material respects, the consolidated financial position of Cowen Inc., Cowen LLC and the other Cowen Subsidiaries at the date specified in such financial statements and the results of their operations for the periods stated therein.  The combined statements of financial condition, operations, cash flow and stockholders’ equity to be delivered hereunder shall be audited unless SG determines otherwise in its sole discretion, and any such audit shall be conducted by a nationally-recognized accounting firm.  SG shall reimburse Cowen Inc. for the reasonable fees and expenses of the accounting firm that are attributable to such audit.  Within 30 days after the date it receives such financial statements from or on behalf of Cowen Inc., SG shall prepare and deliver to Cowen Inc. a statement (the “Closing Statement”) setting forth in reasonable detail:   (i)  a calculation of the Closing Distribution Amount; and   20 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   (ii)  Cowen Inc.’s Initial Capital (after payment of the Closing Distribution Amount and any Liabilities and expenses allocated to Cowen Inc. in connection with this Agreement, the Separation and the IPO).   (e)  Cowen Review of Closing Statement.  During the 15-day period following Cowen Inc.’s receipt of the Closing Statement, Cowen Inc. and its independent accountants shall at Cowen Inc.’s expense be permitted to review, and SG shall make available to Cowen Inc., the supporting schedules, analyses, working papers and other documentation of SG relating to the Closing Statement and to ask questions, receive answers and request such other data and information from each of them as shall be reasonable under the circumstances.  The Closing Statement shall become final and binding upon the parties at 5:00 p.m. (New York City time) on the 15th day following delivery thereof (or, if the 15th day is not a Business Day, on the first Business Day thereafter) and the Closing Distribution Amount reflected in the Closing Statement shall be deemed to be the Final Distribution Amount under this Agreement, unless Cowen Inc. gives written notice of its disagreement with the Closing Statement (a “Notice of Disagreement”) to SG prior to such time.   (f)  Dispute Resolution.  Following the delivery of any Notice of Disagreement, Cowen Inc. and SG shall resolve any differences that they may have with respect to the matters specified in the Notice of Disagreement in accordance with Article VI.  In resolving any such disputed matters and determining the appropriate Closing Distribution Amount, the Parties and any individual, mediator, arbiter or other party designated pursuant to Article VI shall (i) be bound by the principles set forth in this Section 2.05 and (ii) limit their review to matters set forth in the Notice of Disagreement.  Any Closing Distribution Amount determined pursuant to this Section 2.05(f) shall be deemed to be the Final Distribution Amount under this Agreement   (g)  Adjustments Following Determination of Final Distribution Amount.  Upon determination of the Final Distribution Amount pursuant to Section 2.05(e) or Section 2.05(f), as applicable, the Parties shall make the following adjustments, as applicable:   (i)  If the Final Distribution Amount is less than the Estimated Distribution Amount, then SG shall pay or cause an SG Subsidiary to pay Cowen Inc. a dollar amount equal to the difference;   (ii)  If the Final Distribution Amount is greater than the Estimated Distribution Amount, then Cowen Inc. shall pay to SG or a SG Subsidiary designated by SG a dollar amount equal to the difference; or   (iii)  If the Final Distribution Amount equals the Estimated Distribution Amount, then there shall be no adjustment pursuant to this Section 2.05.   Within five (5) Business Days after the Final Distribution Amount is determined, any amount payable under Section 2.05(g)(i) or (ii) shall be paid by wire transfer of immediately available funds to an account designated in writing by the payee.   (h)  Cooperation.  Each of the Parties agrees that it will, and will use commercially reasonable efforts to cause its respective Subsidiaries, agents and representatives to, cooperate and assist in obtaining any requisite regulatory consent in respect of any capital   21 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   distribution, preparing the Closing Statement, calculating the Closing Distribution Amount and Final Distribution Amount and conducting the reviews and dispute resolution process referred to in this Section 2.05.   (i)  Purpose of Adjustments.  The provisions of this Section 2.05, including but not limited to the post-Separation adjustment provisions of Sections 2.05(d), (e), (f) and (g), are solely intended to allocate and adjust capital as of the IPO Date between SG and the SG Subsidiaries, on the one hand, and Cowen Inc., Cowen LLC and the other Cowen Subsidiaries, on the other hand, as agreed by the Parties.  Nothing in this Section 2.05, including but not limited to Sections 2.05(d), (e), (f) and (g), shall operate to modify the other provisions of this Agreement, the Indemnification Agreement or the Principal Transaction Documents, including the Parties’ allocation of Cowen Assets, SG Assets, Cowen Liabilities, SG Liabilities, Cowen Indemnity Obligations and SG Indemnity Obligations hereunder and thereunder.   (j)  Tax Treatment of Adjustments.  Any payment by SGAI or Cowen Inc. under this Section 2.05 shall be treated for Tax purposes as an adjustment to the Acquisition Price (as defined in the Tax Matters Agreement).   SECTION 2.06.  Leases.   (a)  Guarantees.  If SG or any SG Subsidiary has guaranteed (whether pursuant to a formal guarantee or by a similar arrangement such as agreeing to act as co-lessee) the obligations of Cowen LLC, Cowen Inc. or any of their respective Subsidiaries under any Lease (other than the sublease by and between SG and Cowen LLC dated December 19, 2005 for certain premises located at 1221 Avenue of the Americas, New York, New York 10020 (the “Cowen Sublease”), then Cowen LLC, Cowen Inc. and the applicable Cowen Subsidiary shall (a) as of the Separation Date, unconditionally terminate and release such guarantees (or equivalent arrangements), and obtain, or cause to be obtained, any Consent, substitution, or amendment required to obtain in writing any Third Party’s unconditional termination and release of SG and any SG Subsidiary from such guarantees (or equivalent arrangements), or (b) commencing as of the Separation Date, pay SG or the applicable SG Subsidiary a fee equal to the fair market value of providing such guarantees (or equivalent arrangements), in accordance with the arrangements and fee structure set forth on Schedule 2.06(a) and subject to adjustment from time to time upon mutual agreement by SG and Cowen Inc.  Any post-Separation guarantee (or equivalent arrangement), provided by SG or any SG Subsidiary pursuant to the foregoing clause (b) shall remain in effect only until the expiration or termination of the initial or base term of the applicable Lease and not during any renewal or extension thereof.   (b)  Leasehold Improvements.  Cowen LLC acknowledges that (i) as of December 31, 2005, SG had incurred costs in the amount of $9,277,854.00 for leasehold improvements made to the premises subject to the Cowen Sublease and (ii) prior to the execution of this Agreement it agreed to pay SG for the cost of such improvements in equal monthly installments in the amount of $99,762.00.  SG acknowledges that Cowen LLC has made all monthly payments required starting in January of 2006 until the date of this Agreement.  Cowen Inc. or a Cowen Subsidiary shall continue to make such monthly payments to SG on the first day of each month after the date of this Agreement until September 1, 2013 or such other date when the aggregate amount specified in the first sentence of this Section 2.06(b) is fully paid to SG.   22 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   SECTION 2.07.  Employee Investment Vehicles.   (a)  Merchant Banking Fund.  On or prior to the Separation Date, (i) SG Capital Partners L.L.C. will resign as the general partner of the Merchant Banking Fund and transfer its 0.15% ownership interest in the Merchant Banking Fund to the entity and in the manner designated by SG and (ii) Cowen LLC and Cowen Inc. will cause any officer or employee of Cowen LLC, Cowen Inc. and their respective Subsidiaries who is a member of the Administrative Committee of the SG Merchant Banking Coinvestment Plan or otherwise responsible for managing or administering the SG Merchant Banking Coinvestment Plan or the Merchant Banking Fund to resign from such Administrative Committee or such management or administrative position.  Notwithstanding the foregoing, (x) Cowen LLC or Cowen Inc. and any of their respective Subsidiaries may enter into an agreement with the MBF Purchasers regarding management by Cowen Inc. and/or any of its Subsidiaries, following such sale, of the assets acquired by the MBF Purchasers and (y) SG or a SG Subsidiary will, pursuant to a service level agreement, engage Cowen LLC or Cowen Inc. to act as the investment advisor for any assets of the Merchant Banking Fund that are not transferred or sold by SG to the MBF Purchasers.   (b)  Greenwich Capital Partners.  On or prior to the Separation Date, (i) Cowen LLC will resign as the general partner of Greenwich Capital Partners and be replaced by an entity designated by SG and (ii) Cowen LLC and Cowen Inc. will cause any officer or employee of Cowen LLC, Cowen Inc. and their respective Subsidiaries who is a member of the Investment Committee of Greenwich Capital Partners or otherwise responsible for managing or administering Greenwich Capital Partners to resign from such Investment Committee or such management or administrative position.   SECTION 2.08.  NYSE-Archipelago Merger Proceeds.  The Parties agree that the NYSE-Archipelago Merger Proceeds are an “Excluded Asset”.  Prior to the date hereof, Cowen LLC has transferred all of its right, title and interest in and to the NYSE-Archipelago Merger Proceeds to SGASH.   SECTION 2.09.  Termination of Agreements.   (a)  Termination of Agreements between SG and Cowen.  Except as set forth in Section 2.09(b), Cowen Inc. and each Cowen Subsidiary, on the one hand, and SG and each SG Subsidiary, on the other hand, hereby terminate and agree to cause to be terminated all agreements, arrangements, commitments or understandings, whether or not in writing, entered into prior to the Separation Date between or among Cowen LLC, Cowen Inc. or any Cowen Subsidiaries, on the one hand, and SG or any SG Subsidiaries, on the other hand, effective as of immediately prior to the consummation of the IPO; provided that the provisions of this Section 2.09(a) shall not terminate any rights or obligations between SG and any SG Subsidiary or between any SG Subsidiaries.   (b)  Exceptions.  The provisions of Section 2.09 (a) shall not apply to any of the following agreements, arrangements, commitments or understandings (or to any of the provisions thereof):  (i) this Agreement and the Transaction Documents; (ii) any agreements, arrangements, commitments or understandings listed or described on Schedule 2.09; (iii) any agreements, arrangements, commitments or understandings to which any Third Party is a party;   23 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   and (iv) any agreements, arrangements, commitments or understandings to which any non-wholly owned Subsidiary of SG or Cowen Inc., as the case may be, is a party (it being understood that directors’ qualifying shares or similar interests shall be disregarded for purposes of determining whether a Subsidiary is wholly owned).  To the extent that the rights and obligations of SG or any SG Subsidiaries under any agreements, arrangements, commitments or understandings not terminated under this Section 2.09 constitute Cowen Assets or Cowen Liabilities, they shall be assigned or assumed pursuant to this Agreement.   SECTION 2.10.  Settlement of Accounts Between SG and Cowen Inc.  All intercompany receivables, payables and loans (other than in respect of balances under clearing arrangements or intercompany receivables, payables and loans otherwise specifically provided for in this Agreement or any Transaction Document as described on Schedule 2.10), including in respect of any cash balances, any cash balances representing deposited checks or drafts for which only a provisional credit has been allowed or any cash held in any centralized cash management system, between SG or any SG Subsidiary, on the one hand, and Cowen LLC, Cowen Inc. or any Cowen Subsidiary, on the other hand, and to which there are no Third Parties, shall, immediately prior to the consummation of the IPO, be settled, capitalized, cancelled, assigned or assumed by SG or one or more SG Subsidiaries, in each case in the manner determined prior to the consummation of the IPO by duly authorized representatives of SG and Cowen Inc.   SECTION 2.11.  Novation of Liabilities.  Each of SG and Cowen Inc., and their respective Subsidiaries, at the request of the other, shall use commercially reasonable efforts to: (a) obtain, or cause to be obtained, any Consent, substitution, or amendment required to novate or assign all Cowen Liabilities and obtain in writing the unconditional release of SG and any SG Subsidiary that is a party to any such arrangements, so that, in any such case, Cowen Inc. and its designated Subsidiaries shall be solely responsible for such Cowen Liabilities; (b) obtain, or cause to be obtained, any Consent, substitution, or amendment required to novate or assign all SG Liabilities and obtain in writing the unconditional release of Cowen Inc. and any Cowen Subsidiary that is a party to any such arrangements, so that, in any such case, SG and its designated Subsidiaries shall be solely responsible for such SG Liabilities; (c) unconditionally terminate and release any guarantees by SG or any SG Subsidiary of any Cowen Liabilities, provided, however, that a guarantee by SG or any SG Subsidiary of any Lease shall be subject to Section 2.06(a); and (d) unconditionally terminate and release any guarantees by Cowen Inc. or any Cowen Subsidiary of any SG Liabilities; provided, however, that nothing herein shall require any attempt to substitute Cowen Inc. or any Cowen Subsidiary for SG or any SG Subsidiary as a party in any Proceeding.   SECTION 2.12.  Mixed Contracts; Mixed Accounts.   (a)  Mixed Contracts.  Unless the Parties agree otherwise (including but not limited to the Parties’ agreement in Section 4.01 regarding insurance matters), any agreement to which SG, Cowen Inc., Cowen LLC or any of their respective Subsidiaries is a party prior to the Separation Date that inures to the benefit or burden of each of the SG Business and the Cowen Business (a “Mixed Contract”) shall be assigned in part to Cowen Inc. or its Subsidiaries, if so assignable, prior to, on or after the Separation Date, so that each Party or their respective   24 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   Subsidiaries shall be entitled to the rights and benefits and shall assume the related portion of any obligations and Liabilities inuring to their respective businesses; provided, however, that in no event shall SG, Cowen Inc, Cowen LLC or any of their respective Subsidiaries be required to assign any Mixed Contract in its entirety.  If any Mixed Contract cannot be so partially assigned, SG and Cowen Inc. shall, and shall cause each of their respective Subsidiaries to, take such other reasonable and permissible actions to cause:  (i) the Assets associated with that portion of each Mixed Contract that relates to the Cowen Business to be enjoyed by Cowen Inc. or a Cowen Subsidiary; (ii) the Liabilities associated with that portion of each Mixed Contract that relates to the Cowen Business to be borne by Cowen Inc. or a Cowen Subsidiary; (iii) the Assets associated with that portion of each Mixed Contract that relates to the SG Business to be enjoyed by SG or an SG Subsidiary; and (iv) the Liabilities associated with that portion of each Mixed Contract that relates to the SG Business to be borne by SG or an SG Subsidiary.  If any Liability associated with the Mixed Contracts cannot be allocated as set forth in the preceding sentence, such Liability shall be allocated to SG and Cowen Inc. based on the relative proportions of total benefit received (over the term of the Mixed Contract, measured as of the date of the allocation) under the relevant Mixed Contract as mutually determined by SG and Cowen Inc.  Notwithstanding the foregoing, each party shall be responsible for any or all Liabilities arising out of or resulting from its breach of the relevant Mixed Contract by reason of any failure to properly perform its obligations thereunder.   (b)  Mixed Accounts.  Except as may otherwise be agreed by the Parties, the Parties shall not seek to assign any accounts receivable or accounts payable relating to both the SG Business and the Cowen Business (“Mixed Accounts”).  SG and Cowen Inc. shall, and shall cause each of their respective Subsidiaries to, take such other reasonable and permissible actions to cause:  (i) the Assets associated with that portion of each Mixed Account that relates to the SG Business to be enjoyed by SG or an SG Subsidiary; (ii) the Liabilities associated with that portion of each Mixed Account that relates to the SG Business to be borne by SG or an SG Subsidiary; (iii) the Assets associated with that portion of each Mixed Account that relates to the Cowen Business to be enjoyed by Cowen Inc. or a Cowen Subsidiary; and (iv) the Liabilities associated with that portion of each Mixed Account that relates to the Cowen Business to be borne by Cowen Inc. or a Cowen Subsidiary. If any Liability associated with the Mixed Accounts cannot be allocated as set forth in the preceding sentence, such Liability shall be allocated to SG and Cowen Inc. based on the on the relative proportions of total benefit received (over the life of the Mixed Account, measured as of the date of the allocation) under the relevant Mixed Account as mutually determined by SG and Cowen Inc.  Notwithstanding the foregoing, each party shall be responsible for any or all Liabilities arising out of or resulting from its breach of the relevant Mixed Account by reason of any failure to properly perform its obligations thereunder.   (c)  Misdirected Benefits.  If SG or an SG Subsidiary, on the one hand, or Cowen Inc. or a Cowen Subsidiary, on the other hand, receives any benefit or payment under any Mixed Contract or Mixed Account that was intended for the other party, SG or an SG Subsidiary, on the one hand, or Cowen Inc. or a Cowen Subsidiary, on the other hand, will use their respective reasonable best efforts to deliver, transfer or otherwise afford such benefit or payment to the other party.   25 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   (d)  No Payments.  Nothing in this Section 2.12 shall require SG, Cowen Inc. or any of their respective Subsidiaries to make any payment, incur any obligation or grant any concession to any Third Party, other than ordinary and customary fees to Governmental Authorities, in order to effect any transaction contemplated by this Section 2.12.   SECTION 2.13.  Further Assurances.   (a)  Additional Actions.  Except as set forth in Section 2.15, in addition to the actions specifically provided for elsewhere in this Agreement, each Party shall, and shall cause each of its respective Subsidiaries to, use commercially reasonable efforts, prior to, at and after the Separation Date to take, or cause to be taken, all actions, and to do, or cause to be done, all things, necessary or advisable under applicable laws, regulations and agreements to consummate the transactions contemplated by this Agreement and the Transaction Documents; provided, however, that neither SG nor Cowen Inc. (nor any of their respective Subsidiaries) shall be obligated under this Section 2.13 to pay any consideration, grant any concession or incur any additional Liability to any Third Party other than ordinary and customary fees paid to a Governmental Authority.   (b)  Cooperation.  Without limiting the foregoing, prior to, at and after the Separation Date, each Party shall, and shall cause each of its Subsidiaries to, cooperate with the other Party without any further consideration to execute and deliver, or use commercially reasonable efforts to cause to be executed and delivered, all Conveyance and Assumption Instruments and to make all filings with, and to obtain all Consents of, any Governmental Authority or any other Person under any permit, license, agreement, indenture or other instrument (including any Consents), and to take all such other actions as such Party may reasonably be requested to take by the other Party from time to time, consistent with the terms of this Agreement and the Transaction Documents, in order to effectuate the provisions and purposes of this Agreement and the Transaction Documents and the transfers of the Cowen Assets and the assignment and assumption of the Cowen Liabilities and the other transactions contemplated hereby and thereby.   (c)  Misallocations.  In the event that at any time or from time to time (whether prior to, on or after the Separation Date), a Party or any of its Subsidiaries shall receive or otherwise possess any Asset that is allocated to any other Person pursuant to this Agreement or any Transaction Document, such Party shall promptly transfer, or cause its Subsidiary to transfer, such Asset to the Person so entitled thereto or such Party’s Subsidiary or designee.   SECTION 2.14.  Transition Committee.  To facilitate an orderly separation and transition of the Cowen Business from the SG Business, each of SG and Cowen Inc. has designated two key transition contacts on Schedule 2.14, who shall be primarily responsible for cooperation and coordination between the Parties regarding the matters contemplated by this Agreement and the Principal Transaction Documents.  SG and Cowen Inc. shall cause their respective key transition contacts to meet with their counterparts to establish procedures for such cooperation and coordination within 30 days after the Separation Date.  The key transition contacts shall designate such other contacts in specific functional areas as they agree from time to time are necessary or appropriate.  The key transition contacts and such other contacts may be   26 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   removed or replaced at any time by the Party (or key transition contacts) who designated them pursuant to this Section 2.14.   SECTION 2.15.  Conditions to the Separation.   (a)  The Conditions.  Subject to Section 7.01, the satisfaction or waiver by SG of the following shall be conditions to SG’s obligation to effect the Separation:   (i)  Cowen Inc. shall have duly authorized the issuance, pursuant to Section 2.02(e), of the number and classes of shares of Cowen Common Stock that are mutually agreed to by SGASH and the Underwriters, which shares shall represent 100% of the shares of Cowen Common Stock outstanding immediately prior to the IPO;   (ii)  the Underwriting Agreement shall have been executed and delivered by each of the parties thereto and shall be in full force and effect;   (iii)  the Registration Statement shall have been declared effective by the SEC, and there shall be no stop-order in effect with respect thereto and no Proceeding for that purpose shall have been instituted by the SEC;   (iv)  the actions and filings with regard to state securities and blue sky laws of the United States (and any comparable laws under any foreign jurisdictions) shall have been taken and, where applicable, shall have become effective or been accepted;   (v)  no order, injunction or decree issued by any Governmental Authority or court of applicable jurisdiction or other legal restraint or prohibition preventing the consummation of the transactions contemplated by this Agreement or any Transaction Document shall have been threatened or in effect;   (vi)  any Consents necessary to consummate the Separation and the transactions contemplated by this Agreement to be consummated on or prior to the Separation Date shall have been obtained and be in full force and effect;   (vii)  no events or developments shall have occurred subsequent to the date hereof that SG believes, in its sole discretion, could result in an adverse effect on SG, any SG Subsidiary, or on their respective shareholders;   (viii)  the Parties shall have performed and complied with all of their respective covenants, obligations and agreements contained in this Agreement and required to be performed or complied with by them on or prior to the Separation Date; and   (ix)  the Parties shall have executed and delivered or, where applicable, shall have caused their respective Subsidiaries to execute and deliver, the Transaction Documents that are contemplated by this Agreement to be executed and delivered on or prior to the Separation Date.   (b)  Conditions for Benefit of SG.  The foregoing conditions are for the sole benefit of SG and the SG Subsidiaries and shall not give rise to or create any duty on the part of   27 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   SG, the SG Subsidiaries or their respective boards of directors to waive or not waive such conditions or in any way limit SG’s right to terminate this Agreement as set forth in Article VII or alter the consequences of any such termination from those specified in such Article.  Any determination made by SG prior to the Separation concerning the satisfaction or waiver of any or all of the conditions set forth in this Section 2.15 shall be conclusive; provided, however, that SG’s determination concerning the satisfaction or waiver of Section 2.15(a)(i), (vi), (vii), (viii) and (ix) shall be made as of the time as of which the Underwriters and SGASH agree on the final purchase price per share of Cowen Common Stock to be paid to SGASH by the Underwriters pursuant to the Underwriting Agreement, and SG may not thereafter terminate this Agreement due to a failure of such conditions.   ARTICLE III MUTUAL RELEASES; INDEMNIFICATION   SECTION 3.01.  Indemnification Agreement.  The Parties agree that the mutual releases and indemnification in respect of the Liabilities of SG, Cowen Inc. and their respective Subsidiaries, including those that relate to, arise out of or result from the Separation or the IPO, shall be as set forth in the Indemnification Agreement.  Any indemnification by Cowen Inc. of the SG Indemnitees or by SG of the Cowen Indemnitees in respect of Liabilities for Taxes shall be as set forth in the Tax Matters Agreement.   ARTICLE IV CERTAIN OTHER MATTERS   SECTION 4.01.  Insurance Matters.   (a)  Insurance Policies.  Prior to the Separation Date, duly authorized representatives of Cowen Inc. and SG and its Subsidiaries shall enter into arrangements with their insurance providers to separate their insurance coverages effective as of the consummation of the IPO, including any pre- Separation Date and other obligations related thereto, in a manner consistent with this Section 4.01.   (b)  Termination of Cowen Coverage.  Effective as of the consummation of the IPO, Cowen Inc. Cowen LLC and the other Cowen Subsidiaries will be removed as insureds from all insurance policies of SG and its Subsidiaries under which Cowen Inc., Cowen LLC or the other Cowen Subsidiaries are then covered.  Cowen Inc., Cowen LLC and the other Cowen Subsidiaries shall, as of and following the consummation of the IPO, procure and maintain such policies of general, liability, worker’s compensation, directors’ and officers’ liability, employment practices liability and such other forms of insurance as are customary, in the good faith judgment of Cowen Inc.’s board of directors, for businesses of the type of Cowen Inc., Cowen LLC and the other Cowen Subsidiaries.  As of and following the consummation of the IPO, Cowen Inc. and its Subsidiaries shall be responsible for the payment of all premiums and any other costs or expenses associated with such insurance policies.  Nothing herein shall affect any rights of Cowen Inc., Cowen LLC and the other Cowen Subsidiaries with respect to any claims made under any such insurance policy prior to the Separation Date.   28 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   (c)  Cowen LLC Coverage Prior to IPO Date.  Until the consummation of the IPO, SG shall be responsible for the payment of all premiums and any other costs or expenses associated with insurance policies that SG maintains for Cowen Inc., Cowen LLC, their respective Subsidiaries and the Cowen Business.  Notwithstanding the foregoing, until the consummation of the IPO, SG shall allocate the cost of all such policies, and Cowen Inc. and Cowen LLC shall reimburse SG therefor, in accordance with SG’s policies and customary practices.   (d)  Future Insured Claims.  After the consummation of the IPO, Cowen Inc. and the Cowen Subsidiaries shall have no right to make an insurance claim on or under any insurance contract to which SG or any SG Subsidiary is a party other than in respect of any occurrence-based insurance policies set forth on Schedule 4.01 under the caption “Section 4.01(d)” that covered Cowen Inc. or any Cowen Subsidiary prior to the IPO.  In respect of each occurrence-based insurance policy set forth on Schedule 4.01, Cowen Inc. and the Cowen Subsidiaries shall only make claims in accordance with the terms and conditions of such policy and shall provide SG with prompt written notice of any such claims (even where such notice is not required by the applicable policy).   (e)  No Liability.  In respect of each of the insurance policies set forth on Schedule 4.01 under the caption “Section 4.01(e)”, Cowen Inc. does hereby, for itself and each of its Subsidiaries, agree that none of SG, any SG Subsidiary or any SG Indemnitee shall have any Liability whatsoever, and Cowen Inc. shall make no claim or demand, or commence any Proceeding asserting any claim or demand, alleging such Liability, as a result of the policies, practices and procedures regarding insurance matters of SG or any SG Subsidiary as in effect at any time prior to the Separation Date, including as a result of the limits or scope of any insurance, the creditworthiness of any insurance carrier, the collectibility of Insurance Proceeds, the terms and conditions of any policy, the handling or disposition of any claims, the adequacy or timeliness of any notice to any insurance carrier with respect to any claim or potential claim or otherwise.   SECTION 4.02.  Late Payments.  Except as provided in any Transaction Document, any amount not paid when due pursuant to this Agreement or any Transaction Document (and any amounts billed or otherwise invoiced or demanded and properly payable that are not paid within 30 days of the date of such bill, invoice or other demand) shall accrue interest at a rate per annum equal to the Prime Rate plus 2%.   SECTION 4.03.  SG Financial Statements.  Cowen Inc. agrees that if SG and the SG Subsidiaries (including SGASH) are required during any fiscal year, in accordance with IAS, to consolidate Cowen Inc.’s financial statements with its financial statements), then in respect of such fiscal year:   (a)  Auditors.  Cowen Inc. shall provide SG and any SG Subsidiary, and their respective auditors and representatives, access upon reasonable notice during normal business hours to Cowen Inc.’s and the Cowen Subsidiaries’ books and records so that SG and any applicable SG Subsidiary may conduct reasonable audits relating to the financial statements of Cowen Inc., as well as to the internal accounting controls and operations of Cowen Inc. and the Cowen Subsidiaries.   29 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   (b)  Cooperation.  Cowen Inc. will (i) provide to SG and any SG Subsidiary on a timely basis and in a manner consistent with past practice all information that SG or any SG Subsidiary reasonably requires in order to meet its schedule for the timely preparation, printing, and, if applicable, public filing and dissemination of their respective financial statements, (ii) when reasonably requested by SG or any SG Subsidiary, to provide such information within five Business Days following the end of the calendar month to which such information relates and (iii) in the event of a consolidation involving Cowen Inc., provide SG with prompt written notice of any reported or expected material inadequacies during the course of such consolidation.   (c)  Accounting Estimates and Principles.  Cowen Inc. will give SG reasonable prior notice of any proposed material change in accounting principles from those in effect with respect to Cowen LLC and the Cowen Subsidiaries immediately prior to the Separation Date, and will give SG notice immediately following the adoption of any such changes that are mandated or required by the SEC, the Financial Accounting Standards Board or the Public Company Accounting Oversight Board.  In connection therewith, Cowen Inc. will consult with SG and, if requested by SG, SG’s auditors with respect thereto.  As to material changes in accounting principles that could affect SG or any SG Subsidiary, Cowen Inc. will not make or permit any such changes without SG’s prior written consent if such a change would be sufficiently material to be required to be disclosed in Cowen Inc.’s financial statements as filed with the SEC or otherwise publicly disclosed therein, unless such changes are mandated or required by the SEC, the Financial Accounting Standards Board, the Public Company Accounting Oversight Board or Cowen Inc.’s auditors, provided, however, that Cowen Inc. shall provide prior written notice to SG in respect of any such mandated or required material change that does not require SG’s prior written consent.  If SG so requests, Cowen Inc. will be required to obtain the concurrence of Cowen Inc.’s auditors as to such material change prior to its implementation.  Notwithstanding the foregoing, accounting principles applied in calculating the Estimated Distribution Amount, the Final Distribution Amount or any other amounts paid or payable under Section 2.05 of this Agreement shall not be changed without the Parties’ written mutual agreement.  Any dispute among the Parties in connection with the immediately preceding sentence shall be settled in accordance with Article VI.   SECTION 4.04.  Certain Employee Matters.  Subject to the consummation of the IPO and the terms of the Cowen Employee Ownership Plan:   (a)  Initial Awards.  Upon the consummation of the IPO, Cowen Inc. will issue shares of Cowen Common Stock and options to purchase Cowen Common Stock only to the employees and officers of Cowen Inc. set forth in the notice delivered by Cowen Inc. to SG immediately prior to the Parties’ execution of this Agreement, and in each case only up to the respective amounts set forth next to each employee’s or officer’s name on such notice, which schedule may be amended at any time and from time to time with the consent of SG until the date that is one (1) Business Day prior to the anticipated Separation Date.   (b)  Consummation of IPO.  If the IPO is not consummated for any reason or no reason, the Employee Ownership Plan and any shares or options issued thereunder shall be null and void and of no force and effect.   30 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   SECTION 4.05.  Compliance with Regulatory Requirements.   (a)  General.  Cowen Inc. understands and agrees that, subject to subsection (b) of this Section 4.05, so long as SG owns or controls, directly or indirectly, 5% or more of any class of voting stock of Cowen Inc. or 25% or more of Cowen Inc.’s total voting and nonvoting equity, or SG determines, in its sole discretion, that it otherwise “controls” Cowen Inc. for purposes of the Bank Holding Company Act of 1956, as amended (“BHCA”), it shall:   (i)  limit its activities to those activities that are permissible for financial holding companies under section 4(k) of the BHCA and implementing regulations and orders of the Board of Governors of the Federal Reserve System (“Federal Reserve Board”) promulgated thereunder;   (ii)  make available, upon SG’s reasonable prior request, to any Governmental Authority with jurisdiction over the activities of SG any and all information concerning the business and activities of Cowen Inc., and its dealings and relationships with SG, to which such Government Authority is entitled under applicable law;   (iii)  comply with applicable requirements of federal, state and foreign financial institutions laws and regulations as required by SG’s “continued relationship” with Cowen Inc. within the meaning of such laws and regulations; and   (iv)  provide SG and any SG Subsidiary, and their respective representatives, access upon reasonable notice during normal business hours to Cowen Inc.’s and the Cowen Subsidiaries’ books and records, so that SG and any applicable SG Subsidiary may conduct reasonable reviews relating to the matters set forth in this Section 4.05.   (b)  Termination.  The requirements of subsection (a) above shall cease to be applicable with respect to U.S. laws and regulations at such time that: (i) SG neither owns or controls, directly or indirectly, 5% or more of any class of voting stock of Cowen Inc. nor 25% or more of Cowen Inc.’s total voting and nonvoting equity and (ii) SG determines, in its sole discretion, that it does not otherwise “control” Cowen Inc. for purposes of the BHCA.   SECTION 4.06.  Tax Treatment.  The Parties intend that the transactions constituting the Separation shall for United States federal income tax purposes be treated as a taxable asset transfer to Cowen Inc. for consideration equal to the Acquisition Price (as defined in the Tax Matters Agreement) and shall not take any position on any Tax Return or any action inconsistent with such treatment.   SECTION 4.07.  Warrants Held by Cowen LLC.  Each of Cowen Inc. and Cowen LLC represents and warrants as of the Separation Date that set forth on Schedule 4.07 hereto is a true, correct and complete list of the warrants held by Cowen LLC.   SECTION 4.08.  Registration Statement and Prospectus Disclosures.  Each of the representations and warranties made by Cowen Inc. to the Underwriters in Sections 2(a)(ii) through 2(a)(iv) and Section 2(a)(xii) of the Underwriting Agreement is hereby incorporated by reference herein and made a part hereof, as though directly made by Cowen Inc. to SG and SGASH hereunder; provided that such representations and warranties shall be deemed made hereunder as of the date they are deemed made under the Underwriting Agreement.   31 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   ARTICLE V EXCHANGE OF INFORMATION; CONFIDENTIALITY   SECTION 5.01.  Agreement for Exchange of Information.   (a)  Exchange of Information.  Each of SG and Cowen Inc., on behalf of itself and its Subsidiaries, shall provide, or cause to be provided, to the other, at any time before or after the Separation Date, as soon as reasonably practicable after written request therefor, any Information in its possession or under its control to the extent that:  (i) such Information relates to the Cowen Business, or any Cowen Asset or Cowen Liability, if Cowen Inc. is the requesting Party, or to the SG Business, or any Assets of SG (other than the Cowen Assets) or SG Liability, if SG is the requesting Party; or (ii) such Information is required by the requesting Party to comply with any obligation imposed by any Governmental Authority; provided, however, that in the event that any Party determines that any such provision of Information could be commercially detrimental, violate any law or agreement, compromise client confidentiality or waive any applicable privilege, the Parties shall use commercially reasonable efforts to permit the compliance with such obligations in a manner that avoids any such harm or consequence.  The Party providing Information pursuant to this subsection (a) shall only be obligated to provide such Information in the form, condition and format in which it then exists and in no event shall such Party be required to perform any improvement, modification, conversion, updating or reformatting of any such Information.  The Parties acknowledge that the Tax Matters Agreement shall exclusively govern the exchange of Information with respect to Taxes.   (b)  Compensation for Providing Information.  The Party requesting Information agrees to reimburse the other Party for the reasonable costs, if any, of creating, gathering, copying and transporting such Information.   SECTION 5.02.  Ownership of Information.  The provision of any Information pursuant to Section 5.01 shall not affect the ownership of such Information (which shall be determined solely in accordance with the terms of this Agreement and the Principal Transaction Documents), or constitute the grant of rights of license in any such Information.   SECTION 5.03.  Record Retention.  The Parties agree to use their reasonable best efforts to retain all books, records and other Information in their respective possession or control as of the Separation Date in accordance with applicable law and regulatory requirements.   SECTION 5.04.  Limitations of Liability.  No Party shall have any Liability to another Party in the event that any Information exchanged or provided pursuant to this Agreement is found to be inaccurate in the absence of gross negligence or willful misconduct by the Party providing such Information.  No Party shall have any Liability to any other Party if any Information is destroyed after commercially reasonable efforts by such Party to comply with the provisions of this Article V.   SECTION 5.05.  Other Agreements Providing for Exchange of Information.  The rights and obligations granted under this Article V are subject to any specific limitations,   32 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   qualifications or additional provisions on the sharing, exchange, retention or confidential treatment of Information set forth in any Principal Transaction Document.   SECTION 5.06.  Confidentiality.   (a)  Confidentiality.  Subject to Section 5.07, SG, on behalf of itself and each SG Subsidiary, and Cowen Inc., on behalf of itself and each Cowen Subsidiary, agrees to hold, and to cause its respective directors, officers, employees, agents, accountants, counsel and other advisors and representatives to hold, in strict confidence, with at least the same degree of care that applies to SG’s confidential and proprietary information pursuant to policies in effect as of the Separation Date, all Information concerning the other (or its business) and the other’s Subsidiaries (or their respective businesses) that is either in its possession (including Information in its possession prior to the Separation Date) or furnished by the other or the other’s Subsidiaries or their respective directors, officers, employees, agents, accountants, counsel and other advisors and representatives at any time pursuant to this Agreement or any Transaction Document, and shall not use any such Information other than for such purposes as may be expressly permitted hereunder or thereunder, except, in each case, to the extent that such Information has been: (i) in the public domain through no fault of such Party or its Subsidiaries or any of their respective directors, officers, employees, agents, accountants, counsel and other advisors and representatives; (ii) later lawfully acquired from other sources by such Party (or any of its Subsidiaries) which sources are not themselves bound by a confidentiality obligation; or (iii) independently generated without reference to any proprietary or confidential Information of the other Party.   (b)  No Release; Return or Destruction.  Each Party agrees not to release or disclose, or permit to be released or disclosed, any Information addressed in Section 5.06(a) to any other Person, except its directors, officers, employees, agents, accountants, counsel and other advisors and representatives who need to know such Information, and except in compliance with this Section 5.06 and Section 5.07.  Without limiting the foregoing, when any Information furnished by the other Party after the Separation Date pursuant to this Agreement or any Transaction Document is no longer needed for the purposes contemplated by this Agreement or any Transaction Document, each Party shall, at such Party’s option, promptly after receiving a written request from the other Party either return to the other Party all such Information in a tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or certify to the other Party that it has destroyed such Information (and such copies thereof and such notes, extracts or summaries based thereon); provided, however, that each Party may retain copies of such Information if necessary to satisfy applicable regulatory requirements.   SECTION 5.07.  Protective Arrangements.  In the event that SG or Cowen Inc. or any of their respective Subsidiaries either determines on the advice of its counsel that it is required or advisable to disclose any Information pursuant to applicable law or the rules or regulations of any Governmental Authority or receives any demand under lawful process or from any Governmental Authority to disclose or provide Information of another Party (or such other Party’s Subsidiaries) that is subject to the confidentiality provisions hereof, the Party contemplating the disclosure shall notify the other Party a reasonable time prior to disclosing or providing the other Party’s Information and shall cooperate in seeking any reasonable protective arrangements requested in a reasonably timely manner by the other Party.  The reasonable out-of-pocket   33 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   costs and expenses incurred by the Parties in connection with seeking any such protective arrangements shall be borne by the Party or Parties requesting the protective arrangements for its Information (solely to the extent the protective arrangement applies to its Information).  Without limiting the generality of the foregoing, to the extent that any disclosure contemplated pursuant to this Section 5.07 would consist of Information of the disclosing Party that is “bundled” with Information of the other Party, the Party required to disclose such “bundled” Information shall notify the other Party a reasonable time prior to such disclosure and such other Party shall as promptly as practicable either (i) arrange for the unbundling of such Information at its sole cost and expense (including any out-of-pocket costs and expenses incurred by the disclosing Party) or (ii) consent to the disclosure of such “bundled” Information.  Subject to the satisfaction of the foregoing provisions of this Section 5.07, the Party that received a request for any such protective arrangements, or its Subsidiaries, may thereafter disclose or provide Information to the extent required by or advisable under such law (as so advised by counsel) or by lawful process or such Governmental Authority.   ARTICLE VI DISPUTE RESOLUTION   SECTION 6.01.  Disputes.   (a)  Agreement to Arbitrate Disputes.  The Parties acknowledge that, from time to time after the Separation Date, a controversy, dispute or claim may arise relating to a Party’s rights or obligations under this Agreement.  The Parties agree that any controversy, dispute or claim (whether arising in contract, tort or otherwise) arising out of or in connection with the performance or breach of this Agreement, including any question regarding its enforcement, existence, validity, interpretation or termination shall be resolved by binding arbitration.   (b)  Conduct of the Arbitration.  An arbitration conducted pursuant to this provision shall be administered by and held before the American Arbitration Association (“AAA”) in accordance with the laws of the State of New York and the AAA’s then current Commercial Arbitration Rules.  Notwithstanding the foregoing, no pre-hearing discovery shall be permitted unless specifically authorized by the arbitration panel, provided, however, that unless the Parties agree otherwise, there shall be no pre-hearing depositions or interrogatories.  Any hearing or authorized discovery shall take place in New York City, unless the Parties agree otherwise.   (c)  Composition and Selection of Panel:  Unless the Parties agree otherwise, the arbitration panel shall consist of three persons appointed by the AAA from its National Roster pursuant to Rule R-11 of the AAA’s Commercial Arbitration Rules.   (d)  Limitations on Available Relief.  The arbitration panel shall have no authority or jurisdiction to award consequential, exemplary or punitive damages.   (e)  Confidentiality.  The Parties agree that any arbitration commenced pursuant to this provision shall be and remain confidential, and the Parties shall not make any public   34 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   statements concerning any arbitration, except to the extent that disclosure of or any statement concerning any arbitration is, in the opinion of counsel for one of the Parties, required by law.   (f)  Final and Binding Nature of Arbitration Award.  Any award rendered by the arbitrators shall be final and binding between the Parties and judgment thereon may be entered in any court of competent jurisdiction.  If a Party seeks to vacate or to appeal an award rendered by the arbitration panel and such Party’s motion to vacate is denied or its appeal is unsuccessful, then that Party shall pay the costs and expenses, including reasonable attorneys’ fees, of the prevailing Party.   ARTICLE VII TERMINATION   SECTION 7.01.  Termination.  This Agreement and all Transaction Documents may be terminated or abandoned at any time prior to the Separation Date by and in the sole discretion of SG without the approval of Cowen Inc.  In the event of such termination, no Party shall have any Liability of any kind to any other Party.  After the Separation Date, this Agreement may not be terminated except pursuant to Section 2.02(f) or Section 2.15 or by an agreement in writing signed by all of the Parties.   ARTICLE VIII NON-SOLICITATION; NON-DISPARAGEMENT; EMPLOYEE ARRANGEMENTS; COMPETITION   SECTION 8.01.  Non-Solicitation.  For a period of one year commencing on the IPO Date:   (a)  SG and the SG Subsidiaries will not, directly or indirectly, in one or a series of transactions, (i) solicit or recruit for the purpose of hiring, or hire, any individual who was employed by Cowen Inc. or a Cowen Subsidiary within the twelve (12) month period preceding the date of the incident in question or (ii) otherwise induce or influence any such individual to discontinue, reduce or modify his or her employment with Cowen Inc. or a Cowen Subsidiary; and   (b)  Cowen Inc. and the Cowen Subsidiaries will not, directly or indirectly, in one or a series of transactions, (i) solicit or recruit for the purpose of hiring, or hire, any individual who was employed by SG or a SG Subsidiary within the twelve (12) month period preceding the date of the incident in question or (ii) otherwise induce or influence any such individual to discontinue, reduce or modify his or her employment with SG or a SG Subsidiary.   Notwithstanding the foregoing provisions of this Section 8.01, nothing herein shall prevent SG and the SG Subsidiaries or Cowen Inc. and the Cowen Subsidiaries, from:  (i) using an independent employment agency, so long as such agency is not directed to contact a specific employee of the other party, (ii) placing general advertisements not targeted at a specific employee of the other party or (iii) engaging in discussions with or hiring employees of the other party regarding employment when discussions are initiated by such employee.   35 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   SECTION 8.02.  Non-Disparagement.  For a period of one year commencing on the IPO Date, Cowen Inc. agrees, on behalf of itself and the Cowen Subsidiaries, that it shall not, and shall not cause or permit any of its officers or directors (or the officers or directors of Cowen Subsidiaries) to make any false, defamatory or disparaging statements about SG or SG Subsidiaries, or the officers or directors of SG or any SG Subsidiaries.  For so long as SGASH owns any shares of Cowen Common Stock, SG agrees, on behalf of itself and the SG Subsidiaries, that it shall not, and shall not cause or permit any of its officers or directors (or the officers or directors of any SG Subsidiaries) to make any false, defamatory or disparaging statements about Cowen Inc. or the officers or directors of Cowen Inc. or any Cowen Subsidiaries.   SECTION 8.03.  No Other Business Restrictions.  Except as expressly provided to the contrary in this Agreement or in any Principal Transaction Document, nothing in this Agreement or any Transaction Document shall require SG or Cowen Inc. or any of their respective Subsidiaries to refrain from:  (a) engaging in the same or similar activities or lines of business as the other Party or any of its Subsidiaries; (b) doing business with any potential or actual supplier or customer of the other Party or any of its Subsidiaries; or (c) engaging in, or refraining from, any other activities whatsoever relating to any of the potential or actual suppliers or customers of the other Party or any of its Subsidiaries.   ARTICLE IX MISCELLANEOUS   SECTION 9.01.  Counterparts; Entire Agreement; Corporate Power; Facsimile Signatures.   (a)  Counterparts.  This Agreement and each Transaction Document may be executed in two or more counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by facsimile shall be as effective as delivery of an executed original of such counterpart to this Agreement.   (b)  Entire Agreement.  This Agreement, the Transaction Documents and the exhibits, schedules and annexes hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof and supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter, and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein.  Notwithstanding any other provisions in this Agreement to the contrary, in the event and to the extent that there is a conflict between the provisions of this Agreement and the provisions of any Principal Transaction Document, the provisions of such Principal Transaction Document shall control.   (c)  Corporate Power.  SG represents on behalf of itself and, to the extent applicable, each SG Subsidiary, and Cowen Inc. represents on behalf of itself and, to the extent applicable, each Cowen Subsidiary, as follows:   36 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   (i)  each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and each Principal Transaction Document to which it is a party and to consummate the transactions contemplated hereby and thereby; and   (ii)  this Agreement and each Principal Transaction Document to which it is a party has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof.   (d)  Facsimile Signatures.  Each Party acknowledges that it and the other Parties may execute this Agreement and certain of the Transaction Documents by facsimile, stamp or mechanical signature.  Each Party expressly adopts and confirms each such facsimile, stamp or mechanical signature made in its respective name as if it were a manual signature, agrees that it shall not assert that any such signature is not adequate to bind such Party to the same extent as if it were signed manually and agrees that at the reasonable request of the other Party at any time it shall as promptly as reasonably practicable cause each such Transaction Document to be manually executed (any such execution to be as of the date of the initial date thereof).   SECTION 9.02.  Governing Law.  This Agreement and, unless otherwise expressly provided therein, each Transaction Document, shall be governed by and construed and interpreted in accordance with the laws of the State of New York, irrespective of the choice of laws principles of the State of New York, as to all matters, including matters of validity, construction, effect, enforceability, performance and remedies.   SECTION 9.03.  Assignability.  Except as set forth in any Transaction Document, this Agreement and each Transaction Document shall be binding upon and inure to the benefit of the Parties hereto and the parties thereto, respectively, and their respective successors and permitted assigns; provided, however, that no Party hereto nor any party thereto may assign its rights or delegate its obligations under this Agreement or any Transaction Document without the express prior written consent of the other Parties hereto or the other parties thereto.  Notwithstanding the foregoing, this Agreement and the Transaction Documents (except as may be otherwise provided in any such Transaction Document) shall be assignable in whole in connection with a merger or consolidation or the sale of all or substantially all of the Assets of a Party so long as the resulting, surviving or transferee Person assumes all the obligations of the relevant party thereto by operation of law or pursuant to an agreement in form and substance reasonably satisfactory to the other Party.   SECTION 9.04.  Third Party Beneficiaries.  Except for the indemnification rights under this Agreement and any Principal Transaction Documents of any SG Indemnitee or Cowen Indemnitee in their respective capacities as such and for the releases under Article II of the Indemnification Agreement of any Person provided therein: (a) the provisions of this Agreement and each Transaction Document are solely for the benefit of the Parties and their respective Subsidiaries, after giving effect to the Separation, and are not intended to confer upon any Person except the Parties and their respective Subsidiaries, after giving effect to the Separation, any rights or remedies hereunder; and (b) there are no other Third Party beneficiaries of this Agreement or any Transaction Document and neither this Agreement nor any Transaction Document shall provide any other Third Party with any remedy, claim, liability, reimbursement,   37 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   claim of action or other right in excess of those existing without reference to this Agreement or any Transaction Document.   SECTION 9.05.  Notices.  All notices or other communications under this Agreement or any Transaction Document (except as otherwise provided therein) must be in writing and shall be deemed to be duly given: (a) when delivered in person; (b) upon transmission via confirmed facsimile transmission, provided that such transmission is followed by delivery of a physical copy thereof in person, via U.S. first class mail, or via a private express mail courier; or (c) two days after deposit with a private express mail courier, in any such case addressed as follows:   If to SG:   Société Générale 1221 Avenue of the Americas New York, New York 10020 Attn:  General Counsel, SG Americas Facsimile:  (212) 278-7432   With a copy to:   Mayer, Brown, Rowe & Maw LLP 1675 Broadway New York, New York  10019 Attn:  James B. Carlson Facsimile:  (212) 262-1910   If to Cowen Inc.:   Cowen Group, Inc. 1221 Avenue of the Americas New York, New York 10020 Attn:  General Counsel Facsimile:  (646) 562-1861   With a copy to:   Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, NY  10036-6522 Attn: Lou R. Kling Thomas W. Greenberg Facsimile: (212) 735-2000   Any Party may, by notice to the other Party, change the address to which such notices are to be given.   38 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   SECTION 9.06.  Severability.  If any provision of this Agreement or any Transaction Document or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby or thereby, as the case may be, is not affected in any manner adverse to any Party.  Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon a suitable and equitable provision to effect the original intent of the Parties.   SECTION 9.07.  Force Majeure.  No Party shall be deemed in default of this Agreement or any Transaction Document to the extent that any delay or failure in the performance of its obligations under this Agreement or any Transaction Document results from any cause beyond its reasonable control and without its fault or negligence, such as acts of God, acts of Governmental Authority, embargoes, epidemics, war, riots, insurrections, acts of terrorism, fires, explosions, earthquakes, floods, unusually severe weather conditions, labor problems or unavailability of parts, or, in the case of computer systems, any failure in electrical or air conditioning equipment.  In the event of any such excused delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay.   SECTION 9.08.  Responsibility for Expenses.   (a)  Expenses Incurred on or Prior to the Consummation of the IPO.  Except as otherwise expressly set forth in this Agreement or any Principal Transaction Document, SG shall bear each of the Parties’ and their affiliates’ costs and expenses incurred or accrued prior to the consummation of the IPO in connection with the Separation or the IPO; provided, however, that SG shall not be required to pay (or reimburse) any such expenses attributable to Cowen Inc. or any Cowen Subsidiary to the extent that SG is prohibited by law from paying (or reimbursing) such expenses.   (b)  Expenses Incurred or Accrued after the Separation Date.  Except as otherwise expressly set forth in this Agreement or any Principal Transaction Document, each Party shall bear its own costs and expenses incurred or accrued after the consummation of the IPO.   SECTION 9.09.  Headings.  The article, section and paragraph headings contained in this Agreement and in the Transaction Documents are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement or any Transaction Document.   SECTION 9.10.  Survival.  Except as expressly set forth in this Agreement (including but not limited to Section 2.01(f)(iii)) or any other Principal Transaction Document, the covenants, releases, indemnities, representations and warranties contained in this Agreement and each Transaction Document, and liability for the breach of any obligations contained herein or therein, shall survive the Separation Date and shall remain in full force and effect for the periods therein indicated (as of the end of which period they shall terminate and cease to be of further force or effect) or, where not indicated, without limitation as to time.   39 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   SECTION 9.11.  Subsidiaries.  SG shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any SG Subsidiary and Cowen Inc. shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Cowen Subsidiary.   SECTION 9.12.  Waivers.  The observance of any term of this Agreement or any Transaction Document may be waived (either generally or in a particular instance and either retroactively or prospectively) by the Party hereto or the party thereto entitled to enforce such term, but such waiver shall be effective only if it is in a writing signed by the Party hereto or the party thereto against whom the existence of such waiver is asserted.  Unless otherwise expressly provided in this Agreement or any Transaction Document, no delay or omission on the part of any Party hereto or party thereto in exercising any right or privilege under this Agreement or such Transaction Document shall operate as a waiver thereof, nor shall any waiver on the part of any Party hereto or party thereto of any right or privilege under this Agreement or any Transaction Document operate as a waiver of any other right or privilege under this Agreement or such Transaction Document nor shall any single or partial exercise of any right or privilege preclude any other or further exercise thereof or the exercise of any other right or privilege under this Agreement or such Transaction Document.  No failure by any Party or any party to any Transaction Document to take any action or assert any right or privilege hereunder or thereunder shall be deemed to be a waiver of such right or privilege in the event of the continuation or repetition of the circumstances giving rise to such right unless expressly waived in writing by the Party hereto or party thereto, as the case may be, against whom the existence of such waiver is asserted.   SECTION 9.13.  Amendments.  No provisions of this Agreement or any Transaction Document shall be deemed amended, supplemented or modified unless such amendment, supplement or modification is in writing and signed by an authorized representative of each of the Parties.   SECTION 9.14.  Interpretation.  Words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other genders as the context requires.  The terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole (including all of the Schedules and Exhibits hereto and thereto) and not to any particular provision of this Agreement.  Article, Section, Exhibit and Schedule references are to the Articles, Sections, Exhibits, and Schedules to this Agreement unless otherwise specified.  Unless otherwise stated, all references to any agreement shall be deemed to include the exhibits, schedules and annexes to such agreement.  The word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless the context otherwise requires or unless otherwise specified.  The word “or” shall not be exclusive.  Unless otherwise specified in a particular case, the word “days” refers to calendar days.  References herein to this Agreement or any Transaction Document shall be deemed to refer to this Agreement or such Transaction Document as of the Separation Date and as it may be amended thereafter, unless otherwise specified.  References to the performance, discharge or fulfillment of any Liability in accordance with its terms shall have meaning only to the extent such Liability   40 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   has terms; if the Liability does not have terms, the reference shall mean performance, discharge or fulfillment of such Liability.   SECTION 9.15.  Advisors.  Cowen Inc. acknowledges, for itself and each Cowen Subsidiary, that Mayer, Brown, Rowe & Maw LLP, has acted only in the capacity as counsel to SG, and not as counsel to Cowen LLC, Cowen Inc. or any Cowen Subsidiary, in connection with this Agreement and the Transaction Documents and the documents and transactions contemplated herein or therein.   SECTION 9.16.  Mutual Drafting.  This Agreement and the Transaction Documents shall be deemed to be the joint work product of the Parties and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.   SECTION 9.17.  No Right to Set-Off.  Each Party shall pay the full amount of any payments, costs and disbursements required under this Agreement or any Transaction Document, and shall not set off, counterclaim or otherwise withheld any other amount owed by such Party to other Persons on account of any obligation owed by other Persons to such Party.   SECTION 9.18.  Enforcement Costs.  In the event that a Party breaches any provision of this Agreement or any of the Transaction Documents, such Party agrees to reimburse the non-breaching Parties for all expenses related to the enforcement by the non-breaching Parties of their respective legal rights under this Agreement or any of the Transaction Documents, including but not limited to the non-breaching Parties’ respective attorneys’ fees, court costs, administrative fees and all other costs, fees and expenses incurred by the non-breaching Parties that are associated with enforcing their respective legal rights under this Agreement or any of the Transaction Documents.   SECTION 9.19.  Remedies.  In the event of a breach by a Party of its obligations under this Agreement, each other Party, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement.  Each Party agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of any provision of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it will waive the defense that a remedy at law would be adequate.   * * * * *   41 -------------------------------------------------------------------------------- --------------------------------------------------------------------------------   IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives.     SOCIÉTÉ GÉNÉRALE           By:   /s/ Jean-Philippe Coulier       Name: Jean-Philippe Coulier     Title:   Chief Operating Officer, Americas           SG AMERICAS, INC.           By:   /s/ Jean-Philippe Coulier       Name: Jean-Philippe Coulier     Title:   Vice President       SG AMERICAS SECURITIES HOLDINGS, INC.           By:   /s/ Jean-Philippe Coulier       Name: Jean-Philippe Coulier     Title:   President           COWEN AND COMPANY, LLC           By:   /s/ Christopher A. White       Name: Christopher A. White     Title:   Chief Administrative Officer           COWEN GROUP, INC.           By:   /s/ Christopher A. White       Name: Christopher A. White     Title:   Vice President     Separation Agreement   -------------------------------------------------------------------------------- --------------------------------------------------------------------------------

Exhibit 10.1   Summary of Non-Employee Director Compensation   Cash Compensation   Annual Retainer:    $ 25,000 Annual Committee Fees:        Audit Committee Chair    $ 5,000 Compensation Committee Chair    $ 1,000 Meeting Fees:        Special Board Meetings    $ 1,000 Committee Meetings    $ 1,000   Equity Compensation   Each year, non-employee directors will receive an award of restricted units equal to $25,000 in value. Subject to limits in the Inergy Long Term Incentive Plan, the board has the discretion to determine the form and terms of such awards to non-employee directors.   4

EXHIBIT 10.2   SECOND AMENDMENT TO REVOLVING CREDIT AND GUARANTY AGREEMENT   THIS SECOND AMENDMENT TO REVOLVING CREDIT AND GUARANTY AGREEMENT (this “Amendment”) is dated as of February 23, 2006 and is entered into by and among NEWPAGE CORPORATION, a Delaware corporation (the “Borrower”), NEWPAGE HOLDING CORPORATION, a Delaware corporation (“Holdings”), CERTAIN FINANCIAL INSTITUTIONS listed on the signature pages hereto (the “Lenders”), GOLDMAN SACHS CREDIT PARTNERS L.P. (“GSCP”), as Joint Lead Arranger, Joint Bookrunner and Co-Syndication Agent, UBS SECURITIES LLC, as Joint Lead Arranger, Joint Bookrunner and Co-Syndication Agent, WACHOVIA CAPITAL MARKETS, LLC, as Co-Syndication Agent, BANK OF AMERICA, N.A., as Documentation Agent, JPMORGAN CHASE BANK, N.A., as Collateral Agent (“Collateral Agent”), and GSCP, as Administrative Agent (“Administrative Agent”) and, for purposes of Section IV hereof, the CREDIT SUPPORT PARTIES listed on the signature papers hereto, and is made with reference to that certain REVOLVING CREDIT AND GUARANTY AGREEMENT dated as of May 2, 2005 (as amended through the date hereof, the “Credit Agreement”) by and among Borrower, Holdings, the subsidiaries of Borrower named therein, Lenders, Co-Syndication Agents, Documentation Agent, Collateral Agent and Administrative Agent. Capitalized terms used herein without definition shall have the same meanings herein as set forth in the Credit Agreement after giving effect to this Amendment.   RECITALS   WHEREAS, the Credit Parties have requested that Requisite Lenders agree to amend certain provisions of the Credit Agreement as provided for herein; and   WHEREAS, subject to certain conditions, Requisite Lenders are willing to agree to such amendment relating to the Credit Agreement.   NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows:   SECTION I.     AMENDMENTS TO CREDIT AGREEMENT   A.     Section 6.9(c) of the Credit Agreement is hereby amended by replacing the amount “$200,000,000” in the fourth line thereof with “$250,000,000”.   SECTION II.     CONDITIONS TO EFFECTIVENESS   This Amendment shall become effective as of the date hereof only upon the satisfaction of all of the following conditions precedent (the date of satisfaction of such conditions being referred to herein as the “Second Amendment Effective Date”):   A.     Execution. Administrative Agent shall have received a counterpart signature page of this Amendment duly executed by each of the Credit Parties and Requisite Lenders.   --------------------------------------------------------------------------------   B.     Necessary Consents. Each Credit Party shall have obtained all material consents necessary or advisable in connection with the transactions contemplated by this Amendment.   C.     Other Documents.  Administrative Agent and Lenders shall have received such other documents, information or agreements regarding Credit Parties as Administrative Agent or Collateral Agent may reasonably request.   SECTION III.     REPRESENTATIONS AND WARRANTIES   In order to induce Lenders to enter into this Amendment and to amend the Credit Agreement in the manner provided herein, each Credit Party which is a party hereto represents and warrants to each Lender that the following statements are true and correct in all material respects:   A.     Corporate Power and Authority.  Each Credit Party, which is party hereto, has all requisite power and authority to enter into this Amendment and to carry out the transactions contemplated by, and perform its obligations under, the Credit Agreement as amended by this Amendment (the “Amended Agreement”) and the other Credit Documents.   B.     Authorization of Agreements.  The execution and delivery of this Amendment and the performance of the Amended Agreement and the other Credit Documents have been duly authorized by all necessary action on the part of each Credit Party.   C.     No Conflict.  The execution and delivery by each Credit Party of this Amendment and the performance by each Credit Party of the Amended Agreement and the other Credit Documents do not and will not (i) violate (A) any provision of any law, statute, rule or regulation, or of the certificate or articles of incorporation or partnership agreement, other constitutive documents or by-laws of Holdings, Borrower or any Credit Party or (B) any applicable order of any court or any rule, regulation or order of any Governmental Authority, (ii) be in conflict with, result in a breach of or constitute (alone or with notice or lapse of time or both) a default under any Contractual Obligation of the applicable Credit Party, where any such conflict, violation, breach or default referred to in clause (i) or (ii) of this Section III.C., could reasonably be expected to have a Material Adverse Effect, (iii) except as permitted under the Amended Agreement, result in or require the creation or imposition of any Lien upon any of the properties or assets of each Credit Party (other than any Liens created under any of the Credit Documents in favor of Administrative Agent on behalf of Lenders), or (iv) require any approval of stockholders or partners or any approval or consent of any Person under any Contractual Obligation of each Credit Party, except for such approvals or consents which will be obtained on or before the Second Amendment Effective Date and except for any such approvals or consents the failure of which to obtain will not have a Material Adverse Effect.   D.     Governmental Consents.  No action, consent or approval of, registration or filing with or any other action by any Governmental Authority is or will be required in   2 --------------------------------------------------------------------------------   connection with the execution and delivery by each Credit Party of this Amendment and the performance by Borrower and Holdings of the Amended Agreement and the other Credit Documents, except for such actions, consents and approvals the failure to obtain or make could not reasonably be expected to result in a Material Adverse Effect or which have been obtained and are in full force and effect.   E.     Binding Obligation.  This Amendment and the Amended Agreement have been duly executed and delivered by each of the Credit Parties party thereto and each constitutes a legal, valid and binding obligation of such Credit Party to the extent a party thereto, enforceable against such Credit Party in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting creditors’ rights generally and except as enforceability may be limited by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).   F.     Incorporation of Representations and Warranties From Credit Agreement. The representations and warranties contained in Section 4 of the Amended Agreement are and will be true and correct in all material respects on and as of the Second Amendment Effective Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true and correct in all material respects on and as of such earlier date.   G.     Absence of Default.  No event has occurred and is continuing or will result from the consummation of the transactions contemplated by this Amendment that would constitute an Event of Default or a Default.   SECTION IV.     ACKNOWLEDGMENT AND CONSENT   Each Domestic Subsidiary listed on the signature pages hereto and Holdings are referred to herein as a “Credit Support Party” and collectively as the “Credit Support Parties”, and the Credit Documents to which they are a party are collectively referred to herein as the “Credit Support Documents”.   Each Credit Support Party hereby acknowledges that it has reviewed the terms and provisions of the Credit Agreement and this Amendment and consents to the amendment of the Credit Agreement effected pursuant to this Amendment.  Each Credit Support Party hereby confirms that each Credit Support Document to which it is a party or otherwise bound and all Collateral encumbered thereby will continue to guarantee or secure, as the case may be, to the fullest extent possible in accordance with the Credit Support Documents the payment and performance of all “Obligations” under each of the Credit Support Documents to which is a party (in each case as such terms are defined in the applicable Credit Support Document).   Each Credit Support Party acknowledges and agrees that any of the Credit Support Documents to which it is a party or otherwise bound shall continue in full force and effect and that all of its obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Amendment.  Each Credit Support Party   3 --------------------------------------------------------------------------------   represents and warrants that all representations and warranties contained in the Amended Agreement and the Credit Support Documents to which it is a party or otherwise bound are true and correct in all material respects on and as of the Second Amendment Effective Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true and correct in all material respects on and as of such earlier date.   Each Credit Support Party acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in this Amendment, such Credit Support Party is not required by the terms of the Credit Agreement or any other Credit Support Document to consent to the amendments to the Credit Agreement effected pursuant to this Amendment and (ii) nothing in the Credit Agreement, this Amendment or any other Credit Support Document shall be deemed to require the consent of such Credit Support Party to any future amendments to the Credit Agreement.   SECTION V.     MISCELLANEOUS   A.     Reference to and Effect on the Credit Agreement and the Other Credit Documents.   (i)     On and after the Second Amendment Effective Date, each reference in the Credit Agreement to “this Amendment”, “hereunder”, “hereof”, “herein” or words of like import referring to the Credit Agreement, and each reference in the other Credit Documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement as amended by this Amendment.   (ii)     Except as specifically amended by this Amendment, the Credit Agreement and the other Credit Documents shall remain in full force and effect and are hereby ratified and confirmed.   (iii)     The execution, delivery and performance of this Amendment shall not constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of any Agent or Lender under, the Credit Agreement or any of the other Credit Documents.   B.     Headings.  Section and Subsection headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose or be given any substantive effect.   C.     Applicable Law.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.   4 --------------------------------------------------------------------------------   D.     Counterparts.  This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.   [Remainder of this page intentionally left blank.]   5 --------------------------------------------------------------------------------   IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.       NEWPAGE CORPORATION               By: /s/ Matthew L. Jesch       Name: Matthew L. Jesch     Title: Vice President and CFO               NEWPAGE HOLDING CORPORATION               By: /s/ Matthew L. Jesch       Name: Matthew L. Jesch     Title: Vice President and CFO         CHILLICOTHE PAPER INC.   WICKLIFFE PAPER COMPANY               By: /s/ Matthew L. Jesch       Name: Matthew L. Jesch     Title: Vice President and CFO         ESCANABA PAPER COMPANY   LUKE PAPER COMPANY   RUMFORD PAPER COMPANY   NEWPAGE ENERGY SERVICES LLC   UPLAND RESOURCES, INC.         By: /s/ Matthew L. Jesch       Name: Matthew L. Jesch     Title: Vice President and CFO         RUMFORD COGENERATION, INC.   RUMFORD FALLS POWER COMPANY               By: /s/ Matthew L. Jesch       Name: Matthew L. Jesch     Title: Vice President and CFO   --------------------------------------------------------------------------------     GOLDMAN SACHS CREDIT PARTNERS L.P.,   as Administrative Agent, Joint Lead Arranger, Joint Bookrunner, Co-Syndication Agent, and a Lender             By: /s/ [Illegible]       Authorized Signatory                 JPMORGAN CHASE BANK, N.A.     as Collateral Agent, an Issuing Bank and a Lender                 By: /s/ Peter S. Predun         Name: Peter S. Predun       Title: Vice President             WACHOVIA BANK, NATIONAL   ASSOCIATION, as an Issuing Bank, Swingline   Lender and a Lender                 By: /s/ Thomas Grabosky         Name: Thomas Grabosky       Title: Director                 WACHOVIA CAPITAL MARKETS, LLC,     as Co-Syndication Agent               By: /s/ Thomas Grabosky         Name: Thomas Grabosky       Title: Director             BANK OF AMERICA, N.A.,     as Documentation Agent and as a Lender             By: /s/ Jang S. Kim         Name: Jang S. Kim       Title: Vice President   --------------------------------------------------------------------------------  

Exhibit 10.19 THIRD AMENDMENT THIRD AMENDMENT, dated as of November 27, 2006 (this “Third Amendment”), to the Amended and Restated Credit Agreement, dated as of April 28, 2005 (as amended, supplemented or otherwise modified, the “Credit Agreement”), among EDUCATE OPERATING COMPANY, LLC, a Delaware limited liability company (the “Borrower”), the several banks and other financial institutions or entities from time to time parties thereto (the “Lenders”), MERRILL LYNCH CAPITAL, a division of Merrill Lynch Business Financial Services Inc., as documentation agent (the “Documentation Agent”), and JPMORGAN CHASE BANK, N.A., as administrative agent (the “Administrative Agent”). W I T N E S S E T H: WHEREAS, the Borrower, the Lenders, the Documentation Agent and the Administrative Agent are parties to the Credit Agreement; WHEREAS, the Borrower has requested certain amendments to the Credit Agreement as set forth herein; and WHEREAS, the Required Lenders have consented to the requested amendments as set forth herein; NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, the parties hereto hereby agree as follows: 1. Defined Terms. Unless otherwise defined herein, capitalized terms used herein which are defined in the Credit Agreement are used herein as therein defined. 2. Amendments to Section 1. Section 1.1 of the Credit Agreement is hereby amended as follows: (a) by deleting the definition of “Applicable Margin” in its entirety and inserting in lieu thereof the following new definition: “Applicable Margin: (a) with respect to Revolving Loans, from and after the Third Amendment Effective Date, the rate per annum set forth under the relevant column heading in the grid below captioned “Revolving Loans Pricing Grid” and (b) with respect to Amended Term Loans, from and after the Third Amendment Effective Date, the rate per annum set forth under the relevant column heading in the grid below captioned “Amended Term Loans Pricing Grid.”   -------------------------------------------------------------------------------- Revolving Loans Pricing Grid   Consolidated Leverage Ratio    ABR Loans     Eurodollar Loans   Greater than or equal to 4.75:1.00    3.00 %   4.00 % Greater than or equal to 3.75:1.00 and less than 4.75:1.00    2.50 %   3.50 % Greater than or equal to 2.75:1.00 and less than 3.75:1.00    2.25 %   3.25 % Greater than or equal to 2.25:1.00 and less than 2.75:1.00    1.75 %   2.75 % Less than 2.25:1.00    1.50 %   2.50 % Amended Term Loans Pricing Grid   Consolidated Leverage Ratio    ABR Loans     Eurodollar Loans   Greater than or equal to 4.75:1.00    3.00 %   4.00 % Greater than or equal to 3.75:1.00 and less than 4.75:1.00    2.50 %   3.50 % Greater than or equal to 2.75:1.00 and less than 3.75:1.00    2.25 %   3.25 % Greater than or equal to 2.25:1.00 and less than 2.75:1.00    1.75 %   2.75 % Less than 2.25:1.00    1.50 %   2.50 % For the purposes of the above pricing grids, changes to the Applicable Margin resulting from changes in the Consolidated Leverage Ratio shall become effective on the date that is three Business Days after the date on which financial statements are delivered to the Lenders pursuant to Section 6.1 and shall remain in effect until the next change to be effected pursuant to this paragraph. If any financial statements referred to above are not delivered within the time periods specified in Section 6.1, then, until the date that is three Business Days after the date on which such financial statements are delivered, the highest rate set forth in each column of the above pricing grid shall apply. In addition, at all times while   -------------------------------------------------------------------------------- an Event of Default shall have occurred and be continuing, the highest rate set forth in each column of the above pricing grid shall apply. Each determination of the Consolidated Leverage Ratio pursuant to the above pricing grid shall be made in a manner consistent with the determination thereof pursuant to Section 7.1.”; (b) by amending the definition of “Consolidated EBITDA” by deleting “and” immediately before, and inserting the following immediately after, “(i) expenses relating to the grant of stock options, or payments or distributions in compliance with Section 7.6(b) and (d)”: “and (j) with respect to the Borrower for its fiscal year ending December 31, 2006, the expenses relating to production development of one-on-one tutoring incurred by Borrower or any Subsidiary during the fiscal year of the Borrower ending December 31, 2006 to the extent that such expenses are included in Product Development Expenditures as defined herein”; (c) by amending the definition of “Product Development Expenditures” by inserting the following immediately after “consolidated balance sheet of such Person and its Subsidiaries”: “, plus, with respect to the Borrower for its fiscal year ending December 31, 2006, the expenses relating to production development of one-on-one tutoring incurred by the Borrower or any Subsidiary during the fiscal year of the Borrower ending December 31, 2006 to the extent that such expenses are added back in the determination of Consolidated EBITDA as defined herein”; (d) by inserting the following definition in appropriate alphabetical order: “Third Amendment: the Third Amendment, dated as of November 27, 2006, to this Agreement.”; and (e) by inserting the following definition in appropriate alphabetical order: “Third Amendment Effective Date: as defined in the Third Amendment.” 3. Amendment to Section 7 of the Credit Agreement. (a) Section 7.1(a) of the Credit Agreement is hereby amended by deleting the portion of the table set forth therein covering the fiscal quarters set forth below and substituting therefor the following:   Fiscal Quarter    Consolidated Leverage Ratio 09/30/06    5.00:1.00 12/31/06    5.75:1.00 (b) Section 7.1(b) of the Credit Agreement is hereby amended by deleting the portion of the table set forth therein covering the fiscal quarters set forth below and substituting therefor the following:   Fiscal Quarter    Consolidated Interest Coverage Ratio 09/30/06    3.00:1.00 12/31/06    2.50:1.00   -------------------------------------------------------------------------------- (c) Section 7.1(c) of the Credit Agreement is hereby amended by deleting the portion of the table set forth therein covering the fiscal quarters set forth below and substituting therefor the following:   Fiscal Quarter    Consolidated Fixed Charge Coverage Ratio 09/30/06    1.50:1.00 12/31/06    1.45:1.00 4. Agreements by the Borrower. The Borrower shall not, and shall not permit any of its Subsidiaries to, make any Franchise Acquisition Expenditure, New Center Expenditure or Permitted Acquisition from the date hereof to and including March 31, 2007 (the “Restrictive Period”), except to the extent that it has committed to make, or materially commenced its planning for or consummation of, such Franchise Acquisition Expenditure, New Center Expenditure or Permitted Acquisition prior to November 13, 2006 and except for any Franchise Acquisition Expenditure made for the sole purpose of purchasing franchises to sell to new franchisees. 5. Conditions to Effectiveness of this Amendment. This Third Amendment shall become effective on and as of the date (such date the “Third Amendment Effective Date”) of the execution and delivery of this Third Amendment by the Borrower, the Administrative Agent and the Required Lenders and satisfaction of the following conditions precedent: (a) The Administrative Agent shall have received payment, for distribution to each Lender that has signed and delivered this Third Amendment to the Administrative Agent by not later than 12:00 Noon (New York City time) on November 27, 2006 (or such later time or date as agreed by the Borrower and the Administrative Agent), of an amendment fee equal to 0.250% of the Aggregate Exposure of such Lender then in effect immediately prior to the Third Amendment Effective Date. (b) The Lenders and the Administrative Agent shall have received all other fees required to be paid, and all expenses for which invoices have been presented (including the reasonable fees and expenses of legal counsel), in connection with the Third Amendment. (c) The Administrative Agent shall have received (i) a certificate of the Secretary or Assistant Secretary or similar officer of the Borrower, dated the Third Amendment Effective Date, and certifying (A) that attached thereto is a true and complete copy of resolutions duly adopted by the Board of Directors (or equivalent governing body) of the Borrower (or its managing member) authorizing the execution, delivery and performance of this Third Amendment, and that such resolutions have not been modified, rescinded or amended and are in full force and effect on the Third Amendment Effective Date, (B) as to the incumbency and specimen signature of each officer executing this Third Amendment or any other document delivered in connection herewith on behalf of the Borrower and (C) as to the incumbency and specimen signature of the Secretary or Assistant Secretary or similar officer executing such certificate; and (ii) a good standing certificate for the Borrower from its jurisdiction of organization. (d) The Administrative Agent shall have received an Acknowledgement and Consent in the form of Exhibit A attached hereto (the “Acknowledgement and Consent”), executed and delivered by each Loan Party other than the Borrower. 6. Miscellaneous. (a) Applicable Margin. Notwithstanding anything to the contrary in the Third Amendment or in any other Loan Documents, payment of interest and fees accrued during the period   -------------------------------------------------------------------------------- prior to the Third Amendment Effective Date shall be based upon the Applicable Margin in effect prior to the Third Amendment becoming effective. (b) Representation and Warranties. The Borrower hereby represents that as of the Third Amendment Effective Date each of the representations and warranties made by any Loan Party in or pursuant to the Loan Documents is true and correct in all material respects as if made on and as of such date (it being understood and agreed that any representation or warranty that by its terms is made as of a specific date shall be required to be true and correct in all material respects only as of such specified date), and no Default or Event of Default has occurred and is continuing after giving effect to the amendments contemplated herein. (c) Effect. Except as expressly amended hereby, all of the representations, warranties, terms, covenants and conditions of the Loan Documents shall remain unamended and not waived and shall continue to be in full force and effect. (d) Counterparts. This Third Amendment may be executed by one or more of the parties to this Third Amendment on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Third Amendment signed by all the parties shall be lodged with the Borrower and the Administrative Agent. (e) Severability. Any provision of this Third Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. (f) Integration. This Third Amendment and the other Loan Documents represent the agreement of the Loan Parties, the Administrative Agent and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Administrative Agent or any Lender relative to the subject matter hereof not expressly set forth or referred to herein or in the other Loan Documents. (g) GOVERNING LAW. THIS THIRD AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS THIRD AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. (h) Waiver. The Lenders waive any Default or Event of Default that may have occurred prior to the Third Amendment Effective Date as a result of the violation of Section 7.1 of the Credit Agreement, to the extent that such violation would not have occurred had this Third Amendment been effective as of September 30, 2006. (i) Acknowledgement and Consent. To effectuate the amendments to the Guarantee and Collateral Agreement provided in Section 3 of the Acknowledgement and Consent, the Lenders authorize and instruct the Administrative Agent to execute and deliver the Acknowledgement and Consent.   -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written.   EDUCATE OPERATING COMPANY, LLC By:   /s/ Kevin E. Shaffer Name:   Kevin E. Shaffer Title:   Vice President JPMORGAN CHASE BANK, N.A., as Administrative Agent and as a Lender By:   /s/ Kathryn A. Duncan Name:   Kathryn A. Duncan Title:   Managing Director MERRILL LYNCH CAPITAL, a division of Merrill Lynch Business Financial Services Inc., as Documentation Agent and as a Lender By:   /s/ Emily L. Koehn Name:   Emily L. Koehn Title:   Assistant Vice President GSC PARTNERS GEMINI FUND LIMITED By:   GSCP (NJ), L.P., as Collateral Monitor By:   GSCP (NJ), INC., its General Partner, as a Lender By:   /s/ Seth M. Katzenstein Name:   Seth M. Katzenstein Title:   Authorized Signatory Denali Capital LLC, managing member of DC Funding Partners LLC, portfolio manager for DENALI CAPITAL CLO I, LTD., or an affiliate, as a Lender By:   /s/ John P. Thacker Name:   John P. Thacker Title:   Chief Credit Officer Denali Capital LLC, managing member of DC Funding Partners LLC, portfolio manager for DENALI CAPITAL CLO III, LTD., or an affiliate, as a Lender   -------------------------------------------------------------------------------- By:   /s/ John P. Thacker Name:   John P. Thacker Title:   Chief Credit Officer Denali Capital LLC, managing member of DC Funding Partners LLC, portfolio manager for DENALI CAPITAL CLO VI, LTD., or an affiliate, as a Lender By:   /s/ John P. Thacker Name:   John P. Thacker Title:   Chief Credit Officer LightPoint CLO 2004-1, Ltd., Marquette US/European CLO, P.L.C. as a Lender By:   /s/ Colin Donlan Name:   Colin Donlan Title:   Director BABSON CLO LTD 2005-I SUFFIELD CLO, LIMITED, as Lenders By:   Babson Capital Management LLC as Collateral Manager By:   /s/ Dongbing Hu Name:   Dongbing Hu Title:   Associate Director BILL & MELINDA GATES FOUNDATION, as a Lender By:   Babson Capital Management LLC as Investment Adviser By:   /s/ Dongbing Hu Name:   Dongbing Hu Title:   Associate Director HAKONE FUND LLC, as a Lender By:   Babson Capital Management LLC as Investment Manager By:   /s/ Dongbing Hu Name:   Dongbing Hu Title:   Associate Director   -------------------------------------------------------------------------------- MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, as a Lender By:   Babson Capital Management LLC as Investment Adviser By:   /s/ Dongbing Hu Name:   Dongbing Hu Title:   Associate Director ING Capital LLC, as a Lender By:   /s/ Khursheed Sorabjee Name:   Khursheed Sorabjee Title:   Vice President SIERRA CLO II, as a Lender By:   /s/ John M. Casparian Name:   John M. Casparian Title:   Chief Operating Officer, (Manager) Centre Pacific, LLC WHITNEY CLO I, as a Lender By:   /s/ John M. Casparian Name:   John M. Casparian Title:   Chief Operating Officer, (Manager) Centre Pacific, LLC OLYMPIC CLO I, as a Lender By:   /s/ John M. Casparian Name:   John M. Casparian Title:   Chief Operating Officer, (Manager) Centre Pacific, LLC SIERRA CLO I, as a Lender By:   /s/ John M. Casparian Name:   John M. Casparian Title:   Chief Operating Officer, (Manager) Centre Pacific, LLC WB Loan Funding 4, LLC, as a Lender   -------------------------------------------------------------------------------- By:   /s/ Diana M. Himes Name:   Diana M. Himes Title:   Associate Atlas Loan Funding 2, LLC By:   Atlas Capital Funding, Ltd. By:   Structured Asset Investors, LLC Its   Investment Manager, as a Lender By:   /s/ Diana M. Himes Name:   Diana M. Himes Title:   Associate Atlas Loan Funding 1, LLC By:   Atlas Capital Funding, Ltd. By:   Structured Asset Investors, LLC Its   Investment Manager, as a Lender By:   /s/ Diana M. Himes Name:   Diana M. Himes Title:   Associate CIT Lending Services Corporation, as a Lender By:   /s/ David Manheim Name:   David Manheim Title:   Vice President OSP FUNDING LLC, as a Lender By:   /s/ Kristi Milton Name:   Kristi Milton Title:   Assistant Vice President Antares Capital Corporation, as a Lender By:   /s/ James Persico Name:   James Persico Title:   Duly Authorized Signatory General Electric Capital Corporation, as a Lender By:   /s/ James Persico Name:   James Persico   -------------------------------------------------------------------------------- Title:   Duly Authorized Signatory General Electric Capital Corporation, as Administrator for, Merritt CLO Holding LLC., as a Lender By:   /s/ Robert M. Kadlick Name:   Robert M. Kadlick Title:   Duly Authorized Signatory CLO I, Whitehorse I, LTD. By:   Whitehorse Capital Partners, L.P. as Collateral Manager, as a Lender By:   /s/ Jay Carvell Name:   Jay Carvell Title:   Manager Whitehorse I, LTD. By:   Whitehorse Capital Partners, L.P. as Collateral Manager, as a Lender By:   /s/ Jay Carvell Name:   Jay Carvell Title:   Manager Whitehorse II, LTD. By:   Whitehorse Capital Partners, L.P. as Collateral Manager, as a Lender By:   /s/ Jay Carvell Name:   Jay Carvell Title:   Manager Stanfield AZURE CLO, Ltd. By:   Stanfield Capital Partners, LLC as its Collateral Manager, as a Lender By:   /s/ Christopher E. Jansen Name:   Christopher E. Jansen Title:   Managing Partner Stanfield Quattro CLO, Ltd. By:   Stanfield Capital Partners, LLC as its Collateral Manager, as a Lender   -------------------------------------------------------------------------------- By:   /s/ Christopher E. Jansen Name:   Christopher E. Jansen Title:   Managing Partner Stanfield Arbitrage CDO, Ltd. By:   Stanfield Capital Partners LLC as its Collateral Manager, as a Lender By:   /s/ Christopher E. Jansen Name:   Christopher E. Jansen Title:   Managing Partner EAGLE LOAN TRUST By:   Stanfield Capital Partners, LLC as its Collateral Manager, as a Lender By:   /s/ Christopher E. Jansen Name:   Christopher E. Jansen Title:   Managing Partner Stanfield Vantage CLO, Ltd By:   Stanfield Capital Partners, LLC as its Asset Manager, as a Lender By:   /s/ Christopher E. Jansen Name:   Christopher E. Jansen Title:   Managing Partner Stanfield Modena CLO, Ltd By:   Stanfield Capital Partners, LLC as its Asset Manager, as a Lender By:   /s/ Christopher E. Jansen Name:   Christopher E. Jansen Title:   Managing Partner Bank of America, NA., as a Lender By:   /s/ Mary K. Giermek Name:   Mary K. Giermek Title:   Senior Vice President MSIM Croton Ltd., as a Lender By:   Morgan Stanley Investment Management as Collateral Manager, as a Lender   -------------------------------------------------------------------------------- By:   /s/ Jinny K. Kim Name:   Jinny Kim Title:   Executive Director Confluent 3 Limited By:   Morgan Stanley Investment Management as Investment Manager, as a Lender By:   /s/ Jinny K. Kim Name:   Jinny Kim Title:   Executive Director Zodiac Fund – Morgan Stanley US Senior Loan Fund By:   Morgan Stanley Investment Management, Inc. as Investment Adviser, as a Lender By:   /s/ Jinny K. Kim Name:   Jinny Kim Title:   Executive Director Qualcomm Global Trading, Inc. By:   Morgan Stanley Investment Management as Investment Manager, as a Lender By:   /s/ Jinny K. Kim Name:   Jinny Kim Title:   Executive Director Morgan Stanley Prime Income Trust, as a Lender By:   /s/ Jinny K. Kim Name:   Jinny Kim Title:   Executive Director MSIM Peconic Bay, Ltd. By:   Morgan Stanley Investment Management, Inc. as Interim Collateral Manager, as a Lender By:   /s/ Jinny K. Kim Name:   Jinny Kim Title:   Executive Director Toronto Dominion (New York), LLC, as a Lender   -------------------------------------------------------------------------------- By:   /s/ Masood Fikree Name:   Masood Fikree Title:   Manager and Authorized Signatory Van Kampen Senior Income Trust By:   Van Kampen Asset Management, as a Lender By:   /s/ Christina Jamieson Name:   Christina Jamieson Title:   Executive Director Van Kampen Senior Loan Fund By:   Van Kampen Asset Management, as a Lender By:   /s/ Christina Jamieson Name:   Christina Jamieson Title:   Executive Director Manufacturers and Traders Trust Company, as a Lender By:   /s/ Theodore K. Oswald Name:   Theodore K. Oswald Title:   Vice President Navigator CDO 2004, LTD., as a Lender By:   Antares Asset Management, Inc., as Collateral Manager By:   /s/ M. Stone Name:   Mary Stone Title:   VP Global Trading Operations AIB Debt Management Ltd, as a Lender By:   /s/ Joanne Gibson for Name:   Margaret Brennan Title:   Senior Vice President Investment Advisor to AIB Debt Management, Limited Allied Irish Bank, PLC, as a Lender By:   /s/ Joanne Gibson for Name:   Margaret Brennan Title:   Senior Vice President   -------------------------------------------------------------------------------- The Governor and Company of the Bank of Ireland, as a Lender By:   /s/ Tim Coffey Name:   Tim Coffey Title:   Authorized Signatory By:   /s/ Patrick Kilbane Name:   Pat Kilbane Title:   Authorized Signatory   -------------------------------------------------------------------------------- Exhibit A Form of Acknowledgement and Consent

  Exhibit 10.1 *Confidential Treatment Requested Under 17 C.F.R. §§ 200.80(b)(4) and 240.24b-2 FIFTH AMENDMENT TO OEM AGREEMENT      This Fifth Amendment to OEM Agreement, (“Amendment”) is made and entered into as of November 28, 2006 (“Amendment Date”), by and between Akorn-Strides, LLC, a Delaware limited liability company, having a principal place of business at 2500 Millbrook Drive, Buffalo Grove, Illinois 60089-4694, United States of America (“A-S”), and Strides Arcolab Limited, a company organized under the laws of India having a principal place of business at Strides House, Bilekahalli, Bannerghatta Road, Bangalore 560 076, India (“Strides”), (each a “Party” and collectively the “Parties”). RECITALS      A. A-S and Strides are parties to that certain OEM Agreement dated September 22, 2004 (“Agreement”) and desire to amend the Agreement to revise the ANDA Schedule, pursuant to the terms and conditions of this Amendment.      B. A-S and Strides desire to further amend the Agreement to provide for the payment to Strides of the additional amount of [...*...] United States Dollars [...*...] as additional Registration Costs for the development of additional Products. NOW, THEREFORE, in consideration of the mutual promises contained herein and other valuable consideration, the sufficiency of which is hereby acknowledged, the Parties agree as follows: 1. Definitions. All capitalized terms used herein shall have the same meanings set forth in the Agreement, unless otherwise defined in this Amendment. 2. Modification of ANDA Schedule. Exhibit B of the Agreement is deleted in its entirety and replaced with Exhibit B-1 attached hereto and fully incorporated herein. 3. Adption of Additional ANDA Schedule. Exhibit B-2, attached hereto and fully incorporated herein, is added to the Agreement as its new Exhibit B-2. Exhibit A of the Agreement is additionally hereby modified as required to include all products set forth in Exhibit B-2, each of which shall be henceforth deemed a “Product” under the Agreement. 4. Abandonment of [...*...]. The Parties acknowledge that A-S had previously paid an additional [...*...] Dollars [...*...] to Strides as additional Registration Costs for [...*...]. The Parties further acknowledge and agree that the [...*...] project is hereby abandoned and that the [...*...] Dollars [...*...] received from A-S as additional Registration Costs therefor shall be reallocated fully to Registration Costs set forth on Exhibit B-1. 5. Funding of Registration Costs. Section 2.3.2 of the Agreement is deleted in its entirety and replaced with the following:   2.3.2   Since the total Registration Costs set forth on Exhibit B-1 exceeds the Registration Costs paid to date by A-S by [...*...] Dollars [...*...] (when adding Page 1 * CONFIDENTIAL TREATMENT REQUESTED – This language has been omitted and filed separately with the Securities and Exchange Commission.   --------------------------------------------------------------------------------   *Confidential Treatment Requested Under 17 C.F.R. §§ 200.80(b)(4) and 240.24b-2       the re-allocation of Registration Costs for [...*...] to the Registration Costs set forth in Section 2.3.1 of the Agreement), A-S shall make the additional payment of [...*...] Dollars [...*...] to Strides at such time that Strides and Akorn, Inc. (“Akorn”) make an additional capital contribution for such purpose under Section 3.2 of the Limited Liability Company Agreement for Akorn-Strides, LLC between Strides and Akorn (“Company Agreement”). In addition, pursuant to and upon the date of the additional capital contributions for such purpose made by A-S’ members under Section 3.2 of the Company Agreement, A-S shall pay Strides the additional amount of [...*...] United States Dollars [...*...] as a further payment for additional Registration Costs associated with Registrations for the Products set forth on Exhibit B-2 (“Additional Products”). All such further amounts paid under this Section 2.3.2 shall be paid upon the payment schedule to be mutually determined by the Parties and shall be deemed part of the Registration Payment when made. Strides shall file ANDAs for the Additional Products by the dates set forth on Exhibit B-2. 6. Counterparts. This Amendment may be executed in several counterparts that together shall be originals and constitute one and the same instrument. 7. Effect. Except as modified above, the Agreement shall remain in full force and effect in accordance with its specific terms. IN WITNESS WHEREOF, the parties hereto, through their duly authorized officers, have executed this Amendment as of the Amendment Date.                 Akorn-Strides, LLC   Strides Arcolab Limited     By:   /s/ Arthur S. Przybyl   By:   /s/ Arun Kumar                             Name:   Arthur S. Przybyl   Name:   Arun Kumar                             Its:   Member Manager   Its:   Executive Vice Chairman & MD                                                   Page 2 * CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.   --------------------------------------------------------------------------------   *Confidential Treatment Requested Under 17 C.F.R. §§ 200.80(b)(4) and 240.24b-2 EXHIBIT B-1 ANDA SCHEDULE                             Sl.               Dossier Cost         No.   Product Name   Strength       (USD)   Remarks   Status of Dossier                             1   [...*...]   [...*...]       [...*...]   [...*...]   Exclusive 2   [...*...]   [...*...]       [...*...]   [...*...]   Exclusive 3   [...*...]   [...*...]       [...*...]   [...*...]   Exclusive 4   [...*...]   [...*...]       [...*...]   [...*...]   Exclusive 5   [...*...]   [...*...]       [...*...]   [...*...]   Exclusive 6   [...*...]   [...*...]       [...*...]   [...*...]   Exclusive 7   [...*...]   [...*...]       [...*...]   [...*...]   Exclusive 8   [...*...]   [...*...]       [...*...]   [...*...]   Exclusive 9   [...*...]   [...*...]       [...*...]   [...*...]   Exclusive 10   [...*...]   [...*...]       [...*...]   [...*...]   Exclusive 11   [...*...]   [...*...]       [...*...]   [...*...]   Exclusive     [...*...]   [...*...]       [...*...]   [...*...]   Exclusive 12   [...*...]   [...*...]       [...*...]   [...*...]   Exclusive                 [...*...]   [...*...]     13   [...*...]   [...*...]       [...*...]   [...*...]   Exclusive 14   [...*...]   [...*...]       [...*...]   [...*...]   Exclusive 15   [...*...]   [...*...]       [...*...]   [...*...]   Exclusive 16   [...*...]   [...*...]       [...*...]   [...*...]   Exclusive                 [...*...]   [...*...]     17   [...*...]   [...*...]       [...*...]   [...*...]   Semi-exclusive **   18   [...*...]           [...*...]   [...*...]   Exclusive 19   [...*...]   [...*...]       [...*...]   [...*...]   Exclusive               TOTAL [...*...]         * CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.   --------------------------------------------------------------------------------   *Confidential Treatment Requested Under 17 C.F.R. §§ 200.80(b)(4) and 240.24b-2 The above billing includes:           (i) Addtitional development of [...*...]           (ii) Additional batches of [...*...]           (iii) Additional batches of [...*...] ** Notwithstanding the terms of this Agreement to the contrary, the Parties acknowledge that [...*...] only may be sold by Strides in the Territory in the Exclusive Market to one other entity only in addition to A-S. * CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.   --------------------------------------------------------------------------------   *Confidential Treatment Requested Under 17 C.F.R. §§ 200.80(b)(4) and 240.24b-2 EXHIBIT B-2 ADDITIONAL ANDA SCHEDULE                                     Sl.               Dossier Cost             No.   Product Name   Strength       (USD)   Remarks   ANDA Filing   Status of Dossier                                     1   [...*...]   [...*...]       [...*...]   [...*...]   [...*...]   Exclusive 2   [...*...]   [...*...]       [...*...]       [...*...]   Exclusive         [...*...]                     3   [...*...]   [...*...]       [...*...]       [...*...]   Exclusive         [...*...]                     4   [...*...]   [...*...]       [...*...]   [...*...]   [...*...]   Exclusive 5   [...*...]   [...*...]       [...*...]   [...*...]   [...*...]   Exclusive         [...*...]                     6   [...*...]   [...*...]       [...*...]       [...*...]   Exclusive 7   [...*...]   [...*...]       [...*...]       [...*...]   Exclusive         [...*...]                     8   [...*...]   [...*...]       [...*...]   [...*...]   [...*...]   Exclusive         [...*...]                     9   [...*...]   [...*...]       [...*...]   [...*...]   [...*...]   Exclusive         [...*...]                             [...*...]                     10       [...*...]                             [...*...]                             [...*...]               [...*...]   Exclusive             TOTAL   [...*...]             * CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.   --------------------------------------------------------------------------------   *Confidential Treatment Requested Under 17 C.F.R. §§ 200.80(b)(4) and 240.24b-2 RLDs to be supplied by A-S: The above costs are not inclusive of RLDs. Timelines indicated are based on best efforts and any changes will be discussed between the two Parties and, upon mutual agreement by the Parties, will not invoke any penalty clauses * CONFIDENTIAL TREATMENT REQUESTED — This language has been omitted and filed separately with the Securities and Exchange Commission.  

Exhibit 10.105 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (this “Agreement”) is made and entered into as of April 25, 2006, by and between Path 1 Network Technologies Inc., a Delaware corporation (the “Company”), and Laurus Master Fund, Ltd. (the “Purchaser”). This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof, by and between the Purchaser and the Company (as amended, modified or supplemented from time to time, the “Securities Purchase Agreement”), and pursuant to the Note and the Warrants referred to therein. The Company and the Purchaser hereby agree as follows: 1. Definitions. Capitalized terms used and not otherwise defined herein that are defined in the Securities Purchase Agreement shall have the meanings given such terms in the Securities Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings: “Commission” means the Securities and Exchange Commission. “Common Stock” means shares of the Company’s common stock, par value $0.001 per share. “Effectiveness Date” means (i) with respect to the initial Registration Statement required to be filed hereunder, a date no later than one-hundred twenty (120) days following the date hereof and (ii) with respect to each additional Registration Statement required to be filed hereunder, a date no later than forty (40) days following the applicable Filing Date. “Effectiveness Period” has the meaning set forth in Section 2(a). “Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor statute. “Filing Date” means, with respect to the shares of Common Stock issuable upon exercise of any Warrant, the date which is forty five (45) days after the date of the issuance of such Warrant, and the shares of Common Stock issuable to the Holder as a result of adjustments to the Exercise Price, as the case may be, made pursuant to the Warrant or otherwise, thirty (30) days after the occurrence of such event or the date of the adjustment of the Exercise Price, as the case may be. “Holder” or “Holders” means the Purchaser or any of its affiliates or transferees to the extent any of them hold Registrable Securities, other than those purchasing Registrable Securities in a market transaction. “Indemnified Party” has the meaning set forth in Section 5(c). “Indemnifying Party” has the meaning set forth in Section 5(c). -------------------------------------------------------------------------------- “Note” has the meaning set forth in the Security Agreement. “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened. “Prospectus” means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus. “Registrable Securities” means the shares of Common Stock issued upon the exercise of the Warrants. “Registration Statement” means each registration statement required to be filed hereunder, including the Prospectus therein, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. “Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. “Securities Act” means the Securities Act of 1933, as amended, and any successor statute. “Security Agreement” has the meaning given to such term in the Preamble hereto. “Trading Market” means any of the NASD Over The Counter Bulletin Board, NASDAQ Capital Market, the NASDAQ National Market System, the American Stock Exchange or the New York Stock Exchange. “Warrants” means the Common Stock purchase warrants issued in connection with the Security Agreement, whether on the date hereof or thereafter. 2. Registration. (a) On or prior to the Filing Date the Company shall prepare and file with the Commission a Registration Statement covering the Registrable Securities for a selling   2 -------------------------------------------------------------------------------- stockholder resale offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith). The Company shall cause each Registration Statement to become effective and remain effective as provided herein. The Company shall use its reasonable commercial efforts to cause each Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event no later than the Effectiveness Date. The Company shall use its reasonable commercial efforts to keep each Registration Statement continuously effective under the Securities Act until the date which is the earlier date of when (i) all Registrable Securities have been sold or (ii) all Registrable Securities covered by such Registration Statement may be sold immediately without registration under the Securities Act and without volume restrictions pursuant to Rule 144(k), as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company’s transfer agent and the affected Holders (the “Effectiveness Period”). (b) If: (i) any Registration Statement is not filed on or prior to the applicable Filing Date; (ii) a Registration Statement filed hereunder is not declared effective by the Commission by the applicable Effectiveness Date; (iii) after a Registration Statement is filed with and declared effective by the Commission, a Discontinuation Event (as hereafter defined) shall occur and be continuing, or such Registration Statement ceases to be effective (by suspension or otherwise) as to all Registrable Securities to which it is required to relate at any time prior to the expiration of the Effectiveness Period (without being succeeded immediately by an additional registration statement filed and declared effective), for a period of time which shall exceed 45 days in the aggregate per year or more than 20 consecutive calendar days (defined as a period of 365 days commencing on the date the Registration Statement is declared effective); or (iv) the Common Stock is not listed or quoted, or is suspended from trading on any Trading Market for a period of three (3) consecutive Trading Days (in either case after the Company shall not have been able to cure such trading suspension within 30 days of the notice thereof or list the Common Stock on another Trading Market); (any such failure or breach being referred to as an “Event,” and for purposes of clause (i) or (ii) the date on which such Event occurs, or for purposes of clause (iii) the date which such 45 day or 20 consecutive day period (as the case may be) is exceeded, or for purposes of clause (iv) the date on which such three (3) Trading Day period is exceeded, being referred to as “Event Date”), then as partial relief for the damages to the Purchaser by reason of the occurrence of any such Event (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company shall pay to the Purchaser for each day that an Event has occurred and is continuing, an amount in cash as liquidated damages and not as a penalty, equal to one-thirtieth (1/30th) of the product of: (A) the then outstanding principal amount of the Note multiplied by (B) 0.02. In the event the Company fails to make any payments pursuant to this Section 2(b) in a timely manner, such payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full. (c) Within three business days of the Effectiveness Date, the Company shall cause its counsel to issue a blanket opinion in the form attached hereto as Exhibit A, to   3 -------------------------------------------------------------------------------- the transfer agent stating that the shares are subject to an effective registration statement and can be reissued free of restrictive legend upon notice of a sale by the Purchaser and confirmation by the Purchaser that it has complied with the prospectus delivery requirements, provided that the Company has not advised the transfer agent orally or in writing that the opinion has been withdrawn. Copies of the blanket opinion required by this Section 2(c) shall be delivered to the Purchaser within the time frame set forth above. 3. Registration Procedures. If and whenever the Company is required by the provisions hereof to effect the registration of any Registrable Securities under the Securities Act, the Company will, as expeditiously as possible: (a) prepare and file with the Commission a Registration Statement with respect to such Registrable Securities, respond as promptly as possible to any comments received from the Commission, and use its reasonable commercial efforts to cause the Registration Statement to become and remain effective for the Effectiveness Period with respect thereto, and promptly provide to the Purchaser copies of all filings and Commission letters of comment relating thereto; (b) prepare and file with the Commission such amendments and supplements to the Registration Statement and the Prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such Registration Statement and to keep such Registration Statement effective until the expiration of the Effectiveness Period applicable to such Registration Statement; (c) furnish to the Purchaser such number of copies of the Registration Statement and the Prospectus included therein (including each preliminary Prospectus) as the Purchaser reasonably may request to facilitate the public sale or disposition of the Registrable Securities covered by the Registration Statement; (d) use its commercially reasonable efforts to register or qualify the Purchaser’s Registrable Securities covered by such Registration Statement under the securities or “blue sky” laws of such jurisdictions within the United States as the Purchaser may reasonably request, provided, however, that the Company shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction; (e) list the Registrable Securities covered by such Registration Statement with any securities exchange on which the Common Stock of the Company is then listed; (f) immediately notify the Purchaser at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event of which the Company has knowledge as a result of which the Prospectus contained in such Registration Statement, as then in effect, includes an 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 not misleading in light of the circumstances then existing; and   4 -------------------------------------------------------------------------------- (g) make available for inspection by the Purchaser and any attorney, accountant or other agent retained by the Purchaser, all publicly available, non-confidential financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors and employees to supply all publicly available, non-confidential information reasonably requested by the attorney, accountant or agent of the Purchaser. 4. Registration Expenses. All expenses relating to the Company’s compliance with Sections 2 and 3 hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, fees and expenses (including reasonable counsel fees) incurred in connection with complying with state securities or “blue sky” laws, fees of the NASD, transfer taxes, fees of transfer agents and registrars, fees of, and disbursements incurred by, one counsel for the Holders, are called “Registration Expenses”. All selling commissions applicable to the sale of Registrable Securities, including any fees and disbursements of any special counsel to the Holders beyond those included in Registration Expenses, are called “Selling Expenses.” The Company shall only be responsible for all Registration Expenses. 5. Indemnification. (a) In the event of a registration of any Registrable Securities under the Securities Act pursuant to this Agreement, the Company will indemnify and hold harmless the Purchaser, and its officers, directors and each other person, if any, who controls the Purchaser within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which the Purchaser, or such persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement under which such Registrable Securities were registered under the Securities Act pursuant to this Agreement, any preliminary Prospectus or final Prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Purchaser, and each such person for any reasonable legal or other expenses incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by or on behalf of the Purchaser or any such person in writing specifically for use in any such document. (b) In the event of a registration of the Registrable Securities under the Securities Act pursuant to this Agreement, the Purchaser will indemnify and hold harmless the Company, and its officers, directors and each other person, if any, who controls the Company within the meaning of the Securities Act, against all losses, claims, damages or liabilities, joint or several, to which the Company or such persons may become subject under the Securities Act or otherwise, insofar as such losses, claims,   5 -------------------------------------------------------------------------------- damages or liabilities (or actions in respect thereof) arise out of or are based upon failure by the Purchaser to deliver an authorized Prospectus as required under law, use by the Purchaser of any unauthorized selling documents, or any untrue statement or alleged untrue statement of any material fact which was furnished in writing by the Purchaser to the Company expressly for use in (and such information is contained in) the Registration Statement under which such Registrable Securities were registered under the Securities Act pursuant to this Agreement, any preliminary Prospectus or final Prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and each such person for any reasonable legal or other expenses incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, provided, however, that the Purchaser will be liable in any such case if and only to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished in writing to the Company by or on behalf of the Purchaser specifically for use in any such document. Notwithstanding the provisions of this paragraph, the Purchaser shall not be required to indemnify any person or entity in excess of the amount of the aggregate net proceeds received by the Purchaser in respect of Registrable Securities in connection with any such registration under the Securities Act. (c) Promptly after receipt by a party entitled to claim indemnification hereunder (an “Indemnified Party”) of notice of the commencement of any action, such Indemnified Party shall, if a claim for indemnification in respect thereof is to be made against a party hereto obligated to indemnify such Indemnified Party (an “Indemnifying Party”), notify the Indemnifying Party in writing thereof, but the omission so to notify the Indemnifying Party shall not relieve it from any liability which it may have to such Indemnified Party other than under this Section 5(c) and shall only relieve it from any liability which it may have to such Indemnified Party under this Section 5(c) if and to the extent the Indemnifying Party is prejudiced by such omission. In case any such action shall be brought against any Indemnified Party and it shall notify the Indemnifying Party of the commencement thereof, the Indemnifying Party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel satisfactory to such Indemnified Party, and, after notice from the Indemnifying Party to such Indemnified Party of its election so to assume and undertake the defense thereof, the Indemnifying Party shall not be liable to such Indemnified Party under this Section 5(c) for any legal expenses subsequently incurred by such Indemnified Party in connection with the defense thereof; if the Indemnified Party retains its own counsel, then the Indemnified Party shall pay all fees, costs and expenses of such counsel, provided, however, that, if the defendants in any such action include both the Indemnified Party and the Indemnifying Party and the Indemnified Party shall have reasonably concluded that there may be reasonable defenses available to it which are different from or additional to those available to the Indemnifying Party or if the interests of the Indemnified Party reasonably may be deemed to conflict with the interests of the Indemnifying Party, the Indemnified Party shall have the right to select one separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with the   6 -------------------------------------------------------------------------------- reasonable expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the Indemnifying Party as incurred. (d) In order to provide for just and equitable contribution in the event of joint liability under the Securities Act in any case in which either (i) the Purchaser, or any officer, director or controlling person of the Purchaser, makes a claim for indemnification pursuant to this Section 5 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 5 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of the Purchaser or such officer, director or controlling person of the Purchaser in circumstances for which indemnification is provided under this Section 5; then, and in each such case, the Company and the Purchaser will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that the Purchaser is responsible only for the portion represented by the percentage that the public offering price of its securities offered by the Registration Statement bears to the public offering price of all securities offered by such Registration Statement, provided, however, that, in any such case, (A) the Purchaser will not be required to contribute any amount in excess of the public offering price of all such securities offered by it pursuant to such Registration Statement; and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation. 6. Representations and Warranties. (a) The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act and the Company has timely filed all proxy statements, reports, schedules, forms, statements and other documents required to be filed by it under the Exchange Act. The Company has filed (i) its Annual Report on Form 10-K (as amended) for its fiscal year ended December 31, 2005 and (ii) its Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2005, June 30, 2005 and September 30, 2005 (collectively, the “SEC Reports”). Each SEC Report was, at the time of its filing, in substantial compliance with the requirements of its respective form and none of the SEC Reports, nor the financial statements (and the notes thereto) included in the SEC Reports, as of their respective filing dates, contained any untrue statement of a material fact or omitted 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. The financial statements of the Company included in the SEC Reports comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed and are subject to year-end adjustments) and   7 -------------------------------------------------------------------------------- fairly present in all material respects the financial condition, the results of operations and the cash flows of the Company and its subsidiaries, on a consolidated basis, as of, and for, the periods presented in each such SEC Report. (b) The Common Stock is listed for trading on the American Stock Exchange and satisfies all requirements for the continuation of such listing, and the Company shall do all things necessary for the continuation of such listing. The Company has not received any notice that its Common Stock will be delisted from the American Stock Exchange (except for prior notices which have been fully remedied) or that [(except as disclosed in a Form 8-K filed on April 20, 2006)][Subject to review] the Common Stock does not meet all requirements for the continuation of such listing. (c) 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 under circumstances that would cause the offering of the Securities pursuant to the Security Agreement to be integrated with prior offerings by the Company for purposes of the Securities Act which would prevent the Company from selling the Common Stock pursuant to Rule 506 under the Securities Act, or any applicable exchange-related stockholder approval provisions, nor will the Company or any of its affiliates or subsidiaries take any action or steps that would cause the offering of the Securities to be integrated with other offerings. (d) The Warrants and the shares of Common Stock which the Purchaser may acquire pursuant to the Warrants are all restricted securities under the Securities Act as of the date of this Agreement. The Company will not issue any stop transfer order or other order impeding the sale and delivery of any of the Registrable Securities at such time as such Registrable Securities are registered for public sale or an exemption from registration is available, except as required by federal or state securities laws. (e) The Company understands the nature of the Registrable Securities issuable upon the exercise of the Warrant and recognizes that the issuance of such Registrable Securities may have a potential dilutive effect. The Company specifically acknowledges that its obligation to issue the Registrable Securities is binding upon the Company and enforceable regardless of the dilution such issuance may have on the ownership interests of other shareholders of the Company. (f) Except for agreements made in the ordinary course of business, there is no agreement that has not been filed with the Commission as an exhibit to a registration statement or to a form required to be filed by the Company under the Exchange Act, the breach of which could reasonably be expected to have a material and adverse effect on the Company and its subsidiaries, or would prohibit or otherwise interfere with the ability of the Company to enter into and perform any of its obligations under this Agreement in any material respect. (g) The Company will at all times have authorized and reserved a sufficient number of shares of Common Stock for the full exercise of the Warrants.   8 -------------------------------------------------------------------------------- 7. Miscellaneous. (a) Remedies. In the event of a breach by the Company or by a Holder, of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. (b) No Piggyback on Registrations. Except as and to the extent specified in Schedule 7(b) hereto, neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in any Registration Statement other than the Registrable Securities, and the Company shall not after the date hereof enter into any agreement providing any such right for inclusion of shares in the Registration Statement to any of its security holders. Except as and to the extent specified in Schedule 7(b) hereto, the Company has not previously entered into any agreement granting any registration rights with respect to any of its securities to any person or entity that have not been fully satisfied. (c) Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement. (d) Discontinued Disposition. Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a notice from the Company of the occurrence of a Discontinuation Event (as defined below), such Holder will forthwith discontinue disposition of such Registrable Securities under the applicable Registration Statement until such Holder’s receipt of the copies of the supplemented Prospectus and/or amended Registration Statement or until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company may provide appropriate stop orders to enforce the provisions of this paragraph. For purposes of this Agreement, a “Discontinuation Event” shall mean (i) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration Statement (the Company shall provide true and complete copies thereof and all written responses thereto to each of the Holders); (ii) any request by the Commission or any other Federal or state governmental authority for amendments or supplements to such Registration Statement or Prospectus or for additional information; (iii) the issuance by the Commission of any stop order suspending the effectiveness of such Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and/or (v) the occurrence of any event or passage of time that makes the financial statements included in such Registration Statement ineligible for inclusion therein or any statement made in such Registration Statement or   9 -------------------------------------------------------------------------------- Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to such Registration Statement, Prospectus or other documents so that, in the case of such Registration Statement or Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any 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. (e) Piggy-Back Registrations. If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to each Holder written notice of such determination and, if within fifteen (15) days after receipt of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered to the extent the Company may do so without violating registration rights of others which exist as of the date of this Agreement, subject to customary underwriter cutbacks applicable to all holders of registration rights and subject to obtaining any required consent of any selling stockholder(s) to such inclusion under such registration statement. (f) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of the then outstanding Registrable Securities. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of certain Holders and that does not directly or indirectly affect the rights of other Holders may be given by Holders of at least a majority of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence. (g) Notices. Any notice or request hereunder may be given to the Company or the Purchaser at the respective addresses set forth below or as may hereafter be specified in a notice designated as a change of address under this Section 7(g). Any notice or request hereunder shall be given by registered or certified mail, return receipt requested, hand delivery, overnight mail, Federal Express or other national overnight next day carrier (collectively, “Courier”) or telecopy (confirmed by mail). Notices and requests shall be, in the case of those by hand delivery, deemed to have been given when delivered to any party to whom it is addressed, in the case of those by mail or overnight mail, deemed to have been given three (3) business days after the date when deposited in the mail or with the overnight mail carrier, in the case of a Courier, the next business day   10 -------------------------------------------------------------------------------- following timely delivery of the package with the Courier, and, in the case of a telecopy, when confirmed. The address for such notices and communications shall be as follows:   If to the Company:    Path 1 Network Technologies Inc.    6215 Ferris Square, Suite 140    San Diego, California 92121    Attention:    Chief Financial Officer    Facsimile:    858-450-4203    with a copy to:    Heller Ehrman LLP    4350 La Jolla Village Drive, 7th Floor    San Diego, CA 92122    Attention:    Hayden Trubitt, Esq.    Facsimile:    858-587-5903 If to a Purchaser:    To the address set forth under such Purchaser name on the signature pages hereto. If to any other Person who is then the registered Holder:    To the address of such Holder as it appears in the stock transfer books of the Company or such other address as may be designated in writing hereafter in accordance with this Section 7(g) by such Person. (h) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company may not assign its rights or obligations hereunder without the prior written consent of each Holder. Each Holder may assign their respective rights hereunder in the manner and to the persons and entities as permitted under the Note and the Securities Purchase Agreement. (i) Execution and Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof. (j) Governing Law, Jurisdiction and Waiver of Jury Trial. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. The Company   11 -------------------------------------------------------------------------------- hereby consents and agrees that the state or federal courts located in the County of New York, State of New York shall have exclusion jurisdiction to hear and determine any Proceeding between the Company, on the one hand, and the Purchaser, on the other hand, pertaining to this Agreement or to any matter arising out of or related to this Agreement; provided, that the Purchaser and the Company acknowledge that any appeals from those courts may have to be heard by a court located outside of the County of New York, State of New York, and further provided, that nothing in this Agreement shall be deemed or operate to preclude the Purchaser from bringing a Proceeding in any other jurisdiction to collect the obligations, to realize on the Collateral or any other security for the obligations, or to enforce a judgment or other court order in favor of the Purchaser. The Company expressly submits and consents in advance to such jurisdiction in any Proceeding commenced in any such (County of New York) court, and the Company hereby waives any objection which it may have based upon lack of personal jurisdiction, improper venue or forum non conveniens. The Company hereby waives personal service of the summons, complaint and other process issued in any such Proceeding and agrees that service of such summons, complaint and other process may be made by registered or certified mail addressed to the Company at the address set forth in Section 7(g) and that service so made shall be deemed completed upon the earlier of the Company’s actual receipt thereof or five (5) days after deposit in the U.S. mails, proper postage prepaid. The parties hereto desire that their disputes be resolved by a judge applying such applicable laws. Therefore, to achieve the best combination of the benefits of the judicial system and of arbitration, the parties hereto waive all rights to trial by jury in any Proceeding brought to resolve any dispute, whether arising in contract, tort, or otherwise between the Purchaser and/or the Company arising out of, connected with, related or incidental to the relationship established between then in connection with this Agreement. If either party hereto shall commence a Proceeding to enforce any provisions of this Agreement, the Securities Purchase Agreement or any other Related Agreement, then the prevailing party in such Proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding. (k) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. (l) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. (m) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.   12 -------------------------------------------------------------------------------- [Balance of page intentionally left blank; signature page follows]   13 -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.   PATH 1 NETWORK TECHNOLOGIES INC.     LAURUS MASTER FUND, LTD. By:          By:      Name:          Name:      Title:          Title:          Address for Notices:     825 Third Avenue, 14th Floor     New York, NY 10022     Attention:     Eugene Grin     Facsimile:     212-541-4434   14 -------------------------------------------------------------------------------- EXHIBIT A   __________, 200__   Hayden J. Trubitt [email protected] Direct +1.858.450.5754 Direct Fax +1.858.587.5903 Main +1.858.450.8400 Fax +1.858.450.8499   39844.0001 Registrar and Transfer Company 10 Commerce Drive Cranford, NJ 07016-3572 Attn: Daniel M. Flynn     Re: Path 1 Network Technologies Inc. Registration Statement on Form S-3 Ladies and Gentlemen: As counsel to Path 1 Network Technologies Inc., a Delaware corporation (the “Company”), we have been requested to render our opinion to you in connection with the issuance by the Company to transferees of Laurus Master Fund, Ltd., of an aggregate of up to _________ shares (the “Shares”) of the Company’s Common Stock upon exercise of a Warrant dated April 25, 2006. Such transferees will be respectively identified to you from time to time, by Laurus, before issuance of each respective tranche of Shares. A Registration Statement on Form S-3 under the Securities Act of 1933, as amended (the “Act”), with respect to the resale of the Shares was declared effective by the Securities and Exchange Commission on [date]. Enclosed is the Prospectus dated [date]. Laurus has agreed for the benefit of the Company that it would offer and sell the Shares in the manner described in the Prospectus and that the Prospectus would be duly delivered in connection with any sale. Based upon the foregoing, upon request by Laurus at any time while the registration statement remains effective in the situation where Shares are to be issued initially to Laurus’ transferees in respect of a sale by Laurus which occurred before the exercise, it is our opinion that the Shares have been registered for resale under the Act and new certificates evidencing the Shares may be issued directly to such transferees without restrictive legend. We or the Company will advise you if the registration statement is not available or effective at any point in the future. Very truly yours, Hayden J. Trubitt -------------------------------------------------------------------------------- SCHEDULE 7(b)

  EXHIBIT 10.59 ***Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. §§ 200.80(b)(4) and 240.24b-2(b)(1) (IDM LOGO) [a18902a1890204.gif]                                   BIOTECNOL SA                 Pedro de Noronha Pissarra                 TagusPark                 Edificio Inovacao 4, N° 809 2780-920                 OEIRAS                 PORTUGAL                                   Paris, May 18, 2004 Ref : CT 03/100 Mr. Pedro de Noronha Pissara IDM Immuno-Designed Molecules S.A. (“IDM”) and Biotecnol SA (“Biotecnol”) signed on November 4, 2003 an “IL-13 Development and Manufacturing Agreement” (hereinafter “Agreement”) to complete the development according to a programme, of a process of IL-13 to be transferred to a designated GMP manufacturing sub-contractor for subsequent cGMP manufacturing. Based on present discussion it appears that the schedule 1 of the Agreement was modified to reflect actual advance and delays. By signing the present letter, IDM and Biotecnol agree to replace the Programme dated November 13, 2003 which was the Schedule 1 of the Agreement by the enclosed Schedule 1 dated May 12, 2004. Hereby the following milestones of the Agreement are postponed :           Milestones ref :   Initial Calendar   Actual Calendar T5P4   [...***...]   [...***...] T6 P2   [...***...]   [...***...] T6P3   [...***...]   [...***...] T6P4   [...***...]   [...***...] T7P2   [...***...]   [...***...] T7P3   [...***...]   [...***...] T7P4   [...***...]   [...***...] T9P1   [...***...]   [...***...] T9P2   [...***...]   [...***...] T10P1   [...***...]   [...***...] T10P2   [...***...]   [...***...] T1 OP2 (2nd part)   [...***...]   [...***...]       Please sign and return one original copy of this letter to acknowledge your agreement. On behalf of IDM   On behalf of Biotecnol /s/ Jean-Loup Rome-Lemonne   /s/ Pedro de Noronha Pissarra President & CEO   CEO S.A. au capital de 1 360 367,40 € RCS Paris B 382 632 263 NAF 73AZ N° TVA : FR 62 382 632263 Siret : 382 632 263 00036               *   Confidential Treatment Requested         under 17 C.F.R. §§200.80(b)(4) and         240.24b-2(b)(1)

Exhibit 10.66 June 16, 2006 Mr. Joseph G. NeCastro c/o The E. W. Scripps Company 312 Walnut Street 2800 Scripps Center Cincinnati, OH 45202   Re: Employment Agreement Dear Joe: The E. W. Scripps Company (the “Company”) agrees to employ you and you agree to accept such employment upon the following terms and conditions: l. Term. Subject to the provisions for earlier termination provided in paragraph 10 below, the term of your employment hereunder shall become effective as of June 16, 2006 and shall continue through and until June 15, 2009. Such period shall be referred to as the “Term,” notwithstanding any earlier termination of your employment for any reason. The Company shall provide you with at least ninety (90) days’ notice prior to the expiration of the Term if the Company does not intend to continue to employ you beyond the expiration of the Term. If the Company does not provide you with such notice and the parties do not otherwise agree in writing to renew, extend, or replace this agreement, the Term shall automatically renew for one one-year term. 2. Duties. You will be the Executive Vice President and Chief Financial Officer of the Company, reporting to the President and Chief Executive Officer of the Company (“Reporting Senior”). You agree to devote substantially all your business time, and apply your best reasonable efforts, to promote the business and affairs of the Company and its affiliated companies during your employment. You will perform such duties and responsibilities commensurate with your position and title during the Term, and as may be reasonably assigned to you from time to time by your Reporting Senior. You shall not, without the prior written consent of the Company, directly or indirectly, during the Term, other than in the performance of duties naturally inherent to the businesses of the Company and in furtherance thereof, render services of a business, professional, or commercial nature to any other person or firm, whether for compensation or otherwise; provided, however, that so long as it does not interfere with the performance of your duties hereunder, -------------------------------------------------------------------------------- Joseph G. NeCastro June 16, 2006 Page 2 you may serve as a director, trustee or officer of, or otherwise participate in, educational, welfare, social, religious, civic or trade organizations. Your principal place of business shall be in Cincinnati, OH. 3. Compensation. (a) Annual Salary. For all the services rendered by you in any capacity under this Agreement, the Company agrees to pay you Five Hundred Fifty Thousand Dollars ($550,000.00) a year in base salary (“Annual Salary”), less applicable deductions and withholding taxes, in accordance with the Company’s payroll practices as they may exist from time to time during the Term. Your Annual Salary may be increased by the Company’s Compensation Committee in conjunction with your annual performance review conducted pursuant to the guidelines and procedures of the Company applicable to similarly situated executives, but in no event shall your Annual Salary be less than the annual salary amount established under this paragraph 3(a) for the immediately previous calendar year. (b) Bonus. You shall participate in the Company’s executive bonus plan with a target bonus opportunity of 60% of your Annual Salary as established under paragraph 3(a) (“Bonus”). The Bonus amount actually paid shall be based on your attainment, within the range of the minimum and maximum performance objectives, of strategic and financial goals established for you by the Company and approved by the Company’s Compensation Committee. If you are employed for only part of any calendar year during the Term, your Bonus will be prorated accordingly. The Company shall pay to you any Bonus under this paragraph 3(b) by no later than March 15 of the following calendar year. (c) Long-Term Incentive Plans. During your employment hereunder, you shall be eligible to participate in all equity incentive plans of the Company, including but not limited to, the Company’s 1997 Long-Term Incentive Plan, as amended, or any successor to such plan, applicable to similarly situated executives of the Company as shall be determined by the Company’s Compensation Committee. 4. Benefits. During your employment hereunder, you shall be entitled to participate in any employee retirement, pension and welfare benefit plan or program available to similarly situated executives of the Company, or to the Company’s employees generally, as such plans and programs may be in effect from time to time, including, without limitation, pension, profit sharing, savings, estate preservation and other retirement plans or programs, 401(k), medical, dental, life insurance, short-term and long-term disability insurance plans, and all other plans that the Company may have or establish from time to time and in which you would be entitled to participate under the terms of the applicable plan. This provision is not intended, nor shall it have the effect of, reducing any benefit to which you were entitled as of the effective date of this Agreement. However, this provision shall -------------------------------------------------------------------------------- Joseph G. NeCastro June 16, 2006 Page 3 not be construed to require the Company to establish any welfare, compensation or long-term incentive plans, or to prevent the modification or termination of any plan once established, and no action or inaction with respect to any plan shall affect this Agreement. You shall be entitled to be reimbursed by the Company for tax and financial planning up to a maximum of $15,000 per year, and for the annual membership fees and other dues associated with one luncheon club. In addition, the Company shall pay the costs of an annual “senior executive” physical examination. You shall be entitled to no less than five (5) weeks of PTO per calendar year. 5. Business Expenses. During your employment hereunder, the Company shall reimburse you for reasonable travel and other expenses incurred in the performance of your duties as are customarily reimbursed to similarly situated executives of the Company. 6. Entitlements in Event of Death. In the event of your death during your employment hereunder, your beneficiary or estate shall, for the one-year period following your death, receive payments equal to your Annual Salary. Also, your family members who are covered under a Company medical plan at the time of your death shall be entitled to receive commensurate medical coverage at the Company’s expense throughout this same one-year period. In addition, your beneficiary or estate shall receive (i) any Bonus earned in the prior calendar year, but that has not yet been paid; and (ii) the amount equal to the target bonus opportunity described in paragraph 3(b) above, pro-rated to cover the time period commencing on January 1 of the calendar year of your death and ending one (1) year after your death. The payments reflected in 6(i) and (ii) above shall be payable, less applicable deductions and withholding taxes, by March 15th of the year immediately following the relevant calendar year. In addition, your beneficiary or estate shall be entitled to any vested benefits accrued and earned by you hereunder, in each case up to and including the date of your death. Also, in the event of your death during employment, any remaining principal and interest you owe to the Company under that certain loan agreement entered into by you and the Company on or about May 2, 2002 shall be foregiven and such loan agreement terminated, it being understood, however, that the foregoing shall apply only if such loan agreement is not amended or revised in any material respect after the effective date hereof. In the event of your death after the termination of your employment while you are entitled to receive compensation under paragraph 10(d), your beneficiary or estate shall receive any Annual Salary payable under paragraph 10(d)(i) up to the date on which the death occurs. 7. Entitlements in Event of Permanent Disability. In the event of your permanent disability during your employment hereunder (as defined under and covered by a Company employee disability plan), your employment shall immediately terminate. However, for the one-year period beginning on the date of such disability, you shall continue to receive payments equal to your Annual Salary. -------------------------------------------------------------------------------- Joseph G. NeCastro June 16, 2006 Page 4 Also, your family members who are covered under a Company medical plan at the time of your permanent disability shall be entitled to receive commensurate medical coverage at the Company’s expense for that same one-year period. In addition, you shall receive (i) any Bonus earned in the prior calendar year, but that has not yet been paid; and (ii) the amount equal to the target bonus opportunity described in paragraph 3(b) above, pro-rated to cover the time period commencing on January 1 of the calendar year in which your permanent disability occurs and ending one (1) year after you become permanently disabled. The payments reflected in 7(i) and (ii) above shall be payable, less applicable deductions and withholding taxes, by March 15th of the year immediately following the relevant calendar year. In addition, you shall be entitled to any vested benefits accrued and earned by you hereunder, in each case up to and including the date of your permanent disability, and any amount payable to you pursuant to the applicable disability plan. Also, in the event of your permanent disability, any remaining principal and interest you owe to the Company under that certain loan agreement entered into by you and the Company on or about May 2, 2002 shall be foregiven and such loan agreement terminated, it being understood, however, that the foregoing shall apply only if such loan agreement is not amended or revised in any material respect after the effective date hereof. 8. Change in Control Protections. You shall be included in and covered by the Company’s Senior Executive Change in Control Plan, which is incorporated herein by reference. In the event that such plan is terminated or you are excluded from the plan for any reason during the Term, the Company agrees to promptly amend this Agreement so that you are similarly covered and eligible for the same benefits and protection thereunder. 9. Non-Competition, Confidential Information, Etc. (a) Non-Competition. You agree that your employment with the Company is on an exclusive basis and that, while you are employed by the Company, you will not engage in any other business activity that would otherwise conflict with your duties and obligations (including your commitment of substantially all business time) under this Agreement. You agree that, during the Non-Compete Period (as defined below), you shall not directly or indirectly engage in or participate as an owner, partner, stockholder, officer, employee, director, agent of or consultant for any business competitive with any business of the Company, without the prior written consent of the Company; provided, however, that this provision shall not prevent you from investing as a less-than-one-percent (1%) stockholder in the securities of any company listed on a national securities exchange or quoted on an automated quotation system. The Non-Compete Period shall cover the entire Term; provided, however, that, if your employment terminates before the end of the Term, the Non-Compete Period shall terminate, if earlier, (i) six (6) months after you terminate your employment for Good Reason or the Company terminates your employment without Cause, or on such earlier date as you may make the election under -------------------------------------------------------------------------------- Joseph G. NeCastro June 16, 2006 Page 5 paragraph 9(i) (which relates to your ability to terminate your obligations under this paragraph 9(a) in exchange for waiving your right to certain compensation and benefits); or (ii) twelve (12) months after the Company terminates your employment for Cause. (Defined terms used without definitions in the preceding sentence have the meanings provided in paragraphs 10(a) and (b).) (b) Confidential Information. You agree that, during the Term or at any time thereafter, (i) you shall not use for any purpose other than the duly authorized business of the Company, or disclose to any third party, any information relating to the Company or any of its affiliated companies which is proprietary to the Company or any of its affiliated companies (“Confidential Information”), including any trade secret or any written (including in any electronic form) or oral communication incorporating Confidential Information in any way (except as may be required by law or in the performance of your duties under this Agreement consistent with the Company’s policies); and (ii) you will comply with any and all confidentiality obligations of the Company to a third party, whether arising under a written agreement or otherwise. Information shall not be deemed Confidential Information which (x) is or becomes generally available to the public other than as a result of a disclosure by you or at your direction or by any other person who directly or indirectly receives such information from you, or (y) is or becomes available to you on a non-confidential basis from a source which is entitled to disclose it to you. (c) No Solicitation or Interference. You agree that, during the Term and for one (1) year thereafter, you shall not, directly or indirectly:     (i) employ or solicit the employment of any person who is then or has been within six (6) months prior thereto, an employee of the Company or any of its affiliated companies; or     (ii) interfere with, disturb or interrupt the relationships (whether or not such relationships have been reduced to formal contracts) of the Company or any of its affiliated companies with any customer, supplier or consultant. (d) Ownership of Works. The results and proceeds of your services under this Agreement, including, without limitation, any works of authorship resulting from your services to the Company or any of its affiliates during your employment with the Company and/or any of its affiliated companies and any works in progress resulting from such services, shall be works-made-for-hire and the Company shall be deemed the sole owner throughout the universe of any and all rights of every nature in such works, whether such rights are now known or hereafter defined or discovered, with the right to use the works in perpetuity in any manner the Company determines in its sole discretion without any further payment to you. If, for any reason, any of such results and proceeds are not legally deemed a work-made-for-hire and/or there are any rights in such results and proceeds which do not -------------------------------------------------------------------------------- Joseph G. NeCastro June 16, 2006 Page 6 accrue to the Company under the preceding sentence, then you hereby irrevocably assign and agree to assign any and all of your right, title and interest thereto, including, without limitation, any and all copyrights, patents, trade secrets, trademarks and/or other rights of every nature in the work, whether now known or hereafter defined or discovered, and the Company shall have the right to use the work in perpetuity throughout the universe in any manner the Company determines in its sole discretion without any further payment to you. You shall, as may be requested by the Company from time to time, do any and all things which the Company may deem useful or desirable to establish or document the Company’s rights in any such results and proceeds, including, without limitation, the execution of appropriate copyright, trademark and/or patent applications, assignments or similar documents and, if you are unavailable or unwilling to execute such documents, you hereby irrevocably designate your Reporting Senior or his designee as your attorney-in-fact with the power to execute such documents on your behalf. To the extent you have any rights in the results and proceeds of your services under this Agreement that cannot be assigned as described above, you unconditionally and irrevocably waive the enforcement of such rights. This paragraph 9(d) is subject to, and does not limit, restrict, or constitute a waiver by the Company or any of its affiliated companies of any ownership rights to which the Company or any of its affiliated companies may be entitled by operation of law by virtue of being your employer. (e) Litigation.     (i) You agree that, during the Term, for one (1) year thereafter and, if longer, during the pendency of any litigation or other proceeding, and except as may be required by law or legal process, (x) you shall not communicate with anyone (other than your own attorneys and tax advisors), except to the extent necessary in the performance of your duties under this Agreement, with respect to the facts or subject matter of any pending or potential litigation, or regulatory or administrative proceeding involving the Company or any of its affiliated companies, other than any litigation or other proceeding in which you are a party-in-opposition, without giving prior notice to the Company’s General Counsel; and (y) in the event that any other party attempts to obtain information or documents from you with respect to such matter, either through formal legal process such as a subpoena or by informal means such as interviews, you shall promptly notify the Company’s General Counsel before providing any information or documents.     (ii) You agree to cooperate with the Company and its attorneys, both during and after the termination of your employment, in connection with any litigation or other proceeding arising out of or relating to matters in which you were involved prior to the termination of your employment. -------------------------------------------------------------------------------- Joseph G. NeCastro June 16, 2006 Page 7        Your cooperation shall include, without limitation, providing assistance to the Company’s counsel, experts or consultants, and providing truthful testimony in pretrial and trial or hearing proceedings. In the event that your cooperation is requested after the termination of your employment, the Company will (x) seek to minimize interruptions to your schedule to the extent consistent with its interests in the matter; and (y) reimburse you for all reasonable and appropriate out-of-pocket expenses actually incurred by you in connection with such cooperation upon reasonable substantiation of such expenses.     (iii) Except as required by law or legal process, you agree that you will not testify in any lawsuit or other proceeding which directly or indirectly involves the Company or any of its affiliated companies, or which may create the impression that such testimony is endorsed or approved by the Company or any of its affiliated companies. In all events, you shall give advance notice to the Company’s General Counsel of such testimony promptly after you become aware that you may be required to provide it. The Company expressly reserves its attorney-client and other privileges except if expressly waived in writing. (f) Return of Property. All documents, data, recordings, or other property, whether tangible or intangible, including all information stored in electronic form, obtained or prepared by or for you and utilized by you in the course of your employment with the Company or any of its affiliated companies shall remain the exclusive property of the Company. In the event of the termination of your employment for any reason, the Company reserves the right, to the extent permitted by law and in addition to any other remedy either may have, to deduct from any monies otherwise payable to you the following: (i) all amounts you may owe to the Company or any of its affiliated companies at the time of or subsequent to the termination of your employment with the Company; and (ii) the value of the Company property which you retain in your possession after the termination of your employment with the Company. In the event that the law of any state or other jurisdiction requires the consent of an employee for such deductions, this Agreement shall serve as such consent. (g) Non-Disparagement. During the Term hereof and for one (1) year following the termination hereof for any reason, you shall not make, nor cause any one else to make or cause on your behalf, any public disparaging or derogatory statements or comments regarding the Company or its affiliated companies, or its officers or directors; likewise the Company will not make, nor cause any one else to make, any public disparaging or derogatory statements or comments regarding you. (h) Injunctive Relief. The Company has entered into this Agreement in order to obtain the benefit of your unique skills, talent, and experience. You and the -------------------------------------------------------------------------------- Joseph G. NeCastro June 16, 2006 Page 8 Company acknowledge and agree that your violation of paragraphs 9(a) through (h) of this Agreement may result in irreparable damage to the Company and/or its affiliated companies and, accordingly, the Company may obtain injunctive and other equitable relief for any breach or threatened breach of such paragraphs, in addition to any other remedies available to the Company.     (i) Survival; Modification of Terms. The obligations set forth under paragraphs 9(a) through (i) shall remain in full force and effect for the entire period provided therein notwithstanding the termination of your employment under this Agreement for any reason or the expiration of the Term; provided, however, that your obligations under paragraph 9(a) (but not under any other provision of this Agreement) shall cease if you terminate your employment for Good Reason or the Company terminates your employment without Cause and you notify the Company in writing that you have elected to waive your right to receive, or to continue to receive, termination payments and benefits under paragraphs 10(d)(i) through (iv). You and the Company agree that the restrictions and remedies contained in paragraphs 9(a) through (h) are reasonable and that it is your intention and the intention of the Company that such restrictions and remedies shall be enforceable to the fullest extent permissible by law. If a court of competent jurisdiction shall find that any such restriction or remedy is unenforceable but would be enforceable if some part were deleted or the period or area of application reduced, then such restriction or remedy shall apply with the modification necessary to make it enforceable. 10. Termination. (a) Termination for Cause. The Company may, at its option, terminate your employment under this Agreement for Cause and thereafter shall have no obligations under this Agreement, including, without limitation, any obligation to pay Annual Salary or Bonus or provide benefits. “Cause” shall mean exclusively: (i) embezzlement, fraud or other conduct that would constitute a felony; (ii) willful unauthorized disclosure of Confidential Information; (iii) your material breach of this Agreement; (iv) your gross misconduct or gross neglect in the performance of your duties hereunder; (v) your willful failure to cooperate with a bona fide internal investigation or investigation by regulatory or law enforcement authorities, after being instructed by the Company to cooperate, or the willful destruction or failure to preserve documents or other material reasonably known to be relevant to such an investigation, or the willful inducement of others to fail to cooperate or to destroy or fail to produce documents or other material; or (vi) your willful and material violation of the Company’s written conduct policies, including but not limited to the Company’s Employment Handbook and Ethics Code. The Company will give you written notice prior to terminating your employment pursuant to (iii), (iv), (v), or -------------------------------------------------------------------------------- Joseph G. NeCastro June 16, 2006 Page 9 (vi), of this paragraph 10(a), setting forth the nature of any alleged failure, breach or refusal in reasonable detail and the conduct required to cure. Except for a failure, breach or refusal which, by its nature, cannot reasonably be expected to be cured, you shall have twenty (20) business days from the giving of such notice within which to cure any failure, breach or refusal under (iii), (iv), (v), or (vi) of this paragraph 10(a); provided, however, that, if the Company reasonably expects irreparable injury from a delay of twenty (20) business days, the Company may give you notice of such shorter period within which to cure as is reasonable under the circumstances. (b) Good Reason Termination. You may terminate your employment under this Agreement for Good Reason at any time during the Term by written notice to the Company no more than thirty (30) days after the occurrence of the event constituting Good Reason. Such notice shall state an effective date no earlier than thirty (30) business days after the date it is given. The Company shall have ten (10) business days from the giving of such notice within which to cure and, in the event of such cure, your notice shall be of no further force or effect. Good Reason shall mean without your consent (other than in connection with the termination or suspension of your employment or duties for Cause or in connection with your Permanent Disability) exclusively: (i) the assignment to you of duties or responsibilities substantially inconsistent with your position(s) or duties; (ii) the withdrawal of material portions of your duties described in paragraph 2; (iii) the relocation of your position outside the Cincinnati, OH metropolitan area; (iv) the material breach by the Company of this Agreement; or (v) the failure of any successor to all or substantially all of the Company’s assets to assume the Company’s obligations under this Agreement. (c) Termination Without Cause. The Company may terminate your employment under this Agreement without Cause or at any time during the Term by written notice to you. (d) Termination Payments/Benefits. In the event that your employment terminates under paragraph 10(b) or (c), you shall thereafter receive through the end of the Term, less applicable deductions and withholding taxes:     (i) payments equal to your Annual Salary, as in effect on the date on which your employment terminates, paid in accordance with the Company’s then effective payroll practices;     (ii) payments equal to your target bonus opportunity, as in effect on the date on which your employment terminates, paid in accordance with the Company’s then effective bonus payment practices; -------------------------------------------------------------------------------- Joseph G. NeCastro June 16, 2006 Page 10     (iii) medical and dental insurance coverage provided under COBRA at no cost to you (except as hereafter described) pursuant to the plans then covering the employees of the Company (until the end of the Term or, if earlier, the date on which you become eligible for medical and dental coverage from a third party); provided, that, during the period that the Company provides you with this coverage, an amount equal to the applicable COBRA premiums (or such other amounts as may be required by law) will be included in your income for tax purposes to the extent required by law and the Company may withhold taxes from your compensation for this purpose; and provided, further, that you may elect to continue your medical and dental insurance coverage under COBRA at your own expense for the balance, if any, of the period required by law; and     (iv) life insurance coverage pursuant to the policy then covering the employees of the Company in the amount then furnished to the Company employees at no cost (the amount of such coverage will be reduced by the amount of life insurance coverage furnished to you at no cost by a third party employer). Notwithstanding the foregoing, in the event your employment is terminated pursuant to paragraphs 10(b) or (c) with less than eighteen (18) months remaining in the Term, you will be entitled to the benefits described in paragraphs 10(d)(i) – (iv) for a period of eighteen (18) months following the effective date of termination. You understand and agree that notice given by the Company in accordance with paragraph 1 that it does not intend to continue to employ you beyond the expiration of the Term does not constitute termination pursuant to paragraph 10(c). (e) Termination of Benefits. Notwithstanding anything in this Agreement to the contrary (except as otherwise provided in paragraph 10(d) with respect to medical and dental benefits and life insurance), participation in all the Company benefit plans and programs will terminate upon the termination of your employment except to the extent otherwise expressly provided in such plans or programs and subject to any vested rights you may have under the terms of such plans or programs. (f) Resignation from Official Positions. If your employment with the Company terminates for any reason, you shall be deemed to have resigned at that time from any and all officer or director positions that you may have held with the Company or any of its affiliated companies and all board seats or other positions in other entities you held on behalf of the Company. If, for any reason, this paragraph 10(f) is deemed insufficient to effectuate such resignation, you agree to execute, upon the request of the Company, any documents or instruments which the Company may deem necessary or desirable to effectuate such resignation or resignations, and you hereby authorize the Secretary and any Assistant Secretary of the Company to execute any such documents or instruments as your attorney-in-fact. -------------------------------------------------------------------------------- Joseph G. NeCastro June 16, 2006 Page 11 11. Severance Contingent On Release, Waiver and Non-Compete Agreement. If, pursuant to paragraph 1, the Company gives proper notice that it does not intend to employ you beyond the expiration of the Term, and your employment hereunder ends as a result, if you execute and do not later revoke or materially violate the Release, Waiver and Non-Compete Agreement in a form materially similar to the document attached hereto as Exhibit A, you will be entitled to the benefits described in paragraphs 10(d)(i) – (iv) for a period of twelve (12) months following the end of your employment. 12. Company’s Policies. You agree that, during your employment hereunder, you will comply with all of the Company’s written policies, including, but not limited to, the Company’s Employee Handbook and Ethic Code. 13. Indemnification; D&O Liability Insurance. If you are made a party to, are threatened to be made a party to, receive any legal process in, or receive any discovery request or request for information in connection with, any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that you were an officer, director, employee, or agent of the Company or any of its affiliated companies, or were serving at the request of or on behalf of the Company or any of its affiliated companies, the Company shall indemnify and hold you harmless to the fullest extent permitted or authorized by the Company’s Articles of Incorporation or Code of Regulations or, if greater, by the laws of the State of Ohio, against all costs, expenses, liabilities and losses you incur in connection therewith. Such indemnification shall continue even if you have ceased to be an officer, director, employee or agent of the Company or any of its affiliated companies, and shall inure to the benefit of your heirs, executors and administrators. The Company shall reimburse you for all costs and expenses you incur in connection with any Proceeding within 20 business days after receipt by the Company of a written requests for such reimbursement and appropriate documentation associated with such expenses. In addition, the Company agrees to maintain a director’s and officer’s liability insurance policy or policies covering you at a level and on terms and conditions commensurate to the coverage the Company provides other similarly situated executives of the Company. 14. Notices. All notices under this Agreement must be given in writing, by personal delivery facsimile or by mail, if to you, to the address shown on this Agreement (or any other address designated in writing by you), with a copy to any other person you designate in writing, and, if to the Company, to the address shown on this Agreement (or any other address designated in writing by the Company), with a copy, to the attention of the Company’s General Counsel. Any notice given by mail shall be deemed to have been given three days following such mailing. -------------------------------------------------------------------------------- Joseph G. NeCastro June 16, 2006 Page 12 15. Assignment. This is an Agreement for the performance of personal services by you and may not be assigned by you or the Company except that the Company may assign this Agreement to any affiliated company of or any successor-in-interest to the Company. 16. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Ohio. 17. No Implied Contract. Nothing contained in this Agreement shall be construed to impose any obligation on the Company or you to renew this Agreement or any portion thereof. The parties intend to be bound only upon execution of a written agreement and no negotiation, exchange of draft or partial performance shall be deemed to imply an agreement. Neither the continuation of employment nor any other conduct shall be deemed to imply a continuing agreement upon the expiration of the Term. 18. Entire Understanding. Except where specifically stated otherwise herein, this Agreement contains the entire understanding of the parties hereto relating to the subject matter contained in this Agreement, and can be changed only by a writing signed by both parties. 19. Void Provisions. If any provision of this Agreement, as applied to either party or to any circumstances, shall be found by a court of competent jurisdiction to be unenforceable but would be enforceable if some part were deleted or the period or area of application were reduced, then such provision shall apply with the modification necessary to make it enforceable, and shall in no way affect any other provision of this Agreement or the validity or enforceability of this Agreement. 20. Supersedes Prior Agreements. With respect to the period covered by the Term, this Agreement supersedes and cancels all prior agreements relating to your employment by the Company or any of its affiliated companies. 21. Deductions and Withholdings, Payment of Deferred Compensation. All amounts payable under this Agreement shall be paid less deductions and income and payroll tax withholdings as may be required under applicable law and any property (including shares of the Company’s Class A Common Stock), benefits and perquisites provided to you under this Agreement shall be taxable to you as may be required under applicable law. Notwithstanding any other provisions of this Agreement to the contrary, no payment for any restricted shares or distribution of any other deferred compensation shall be made sooner than the earliest date permitted under the provisions of the Internal Revenue Code or the rules or regulations promulgated thereunder, as in effect on the date of such payment, in order for such payment to be taxable at the time of the distribution thereof without imposition of penalty taxes under the American Jobs Creation Act of 2004. -------------------------------------------------------------------------------- Joseph G. NeCastro June 16, 2006 Page 13 If the foregoing correctly sets forth our understanding, please sign, date and return all three (3) copies of this Agreement to the undersigned for execution on behalf of the Company; after this Agreement has been executed by the Company and a fully-executed copy returned to you, it shall constitute a binding agreement between us.   Sincerely yours, THE E. W. SCRIPPS COMPANY By:     Name:     Title:     ACCEPTED AND AGREED:   Joseph G. NeCastro Dated:                      -------------------------------------------------------------------------------- EXHIBIT A RELEASE, WAIVER AND NON-COMPETE AGREEMENT This Release, Waiver and Non-Compete Agreement (the “Agreement”) is entered by and between Joseph G. NeCastro (the “Executive”) and The E. W. Scripps Company (the “Company”). WITNESSETH: WHEREAS, the Company and Executive entered into that certain Employment Agreement dated June 16, 2006 (the “Employment Agreement”); WHEREAS, paragraph 11 of the Employment Agreement specifically provides that, “[i]f, pursuant to paragraph 1, the Company gives proper notice that it does not intend to employ [Executive] beyond the expiration of the Term, and [Executive’s] employment hereunder ends as a result, if [Executive] execute[s] and do[es] not later revoke or materially violate the Release and Waiver Agreement in a form materially similar to the document attached hereto as Exhibit A …, [Executive] will be entitled to the benefits described in paragraphs 10(d)(i) – (iv) for a period of twelve (12) months following the end of [Executive’s] employment”; WHEREAS, the Company and Executive desire to enter into this Agreement to give effect to the foregoing, and to agree on and/or reaffirm certain rights, obligations and understandings that shall survive the Employment Agreement; and NOW, THEREFORE, in consideration of the mutual promises contained herein and in the Employment Agreement and other valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows: 1. Reference and Definitions. The Employment Agreement shall be incorporated herein for reference, but only to the extent specifically called for hereunder. The capitalized terms contained in this Agreement shall, to the extent they are the same as those used in the Employment Agreement, shall carry the same meaning as in the Employment Agreement. -------------------------------------------------------------------------------- 2. Severance and Other Benefits. In consideration for Executive executing and not revoking or materially violating this Agreement and for his/her compliance with its terms and those certain Covenants that shall survive the Employment Agreement specified in paragraph 5 below, the Company shall provide the following benefits to Executive, less any applicable deductions and withholding taxes, for the twelve (12) months immediately following the expiration of his employment:     (i) payments equal to Executive’s Annual Salary, as in effect on the date on which his employment expires, paid in accordance with the Company’s then effective payroll practices;     (ii) payments equal to Executive’s target bonus opportunity, as in effect on the date on which his employment expires, paid in accordance with the Company’s then effective bonus payment practices;     (iii) medical and dental insurance coverage provided under COBRA at no cost to Executive (except as hereafter described) pursuant to the plans then covering the employees of the Company; provided, that, during the period that the Company provides Executive with this coverage, an amount equal to the applicable COBRA premiums (or such other amounts as may be required by law) will be included in his income for tax purposes to the extent required by law and the Company may withhold taxes from Executive’s compensation for this purpose; and provided, further, that Executive may elect to continue his medical and dental insurance coverage under COBRA at his own expense for the balance, if any, of the period required by law; and     (iv) life insurance coverage pursuant to the policy then covering the employees of the Company in the amount then furnished to the Company employees at no cost (the amount of such coverage will be reduced by the amount of life insurance coverage furnished to you at no cost by a third-party employer).   2 -------------------------------------------------------------------------------- 3. General Release and Waiver of Claims. In exchange for and in consideration of the benefits described and set forth in paragraph 2 above, Executive, on behalf of himself/herself and his/her successors, assigns, heirs, executors, and administrators, hereby releases and forever discharges the Company and its parents, affiliates, associated entities, representatives, successors and assigns, and their officers, directors, shareholders, agents and employees from all liability, claims and demands, actions and causes of action, damages, costs, payments and expenses of every kind, nature or description arising out of his/her employment relationship with the Company, or the ending of his/her employment on                     , 200  . These claims, demands, actions or causes of action include, but are not limited to, actions sounding in contract, tort, discrimination of any kind, and causes of action or claims arising under federal, state, or local laws, including, but not limited to, claims under Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, as amended by the Older Workers Benefit Protection Act of 1990, the Americans With Disabilities Act, and any similar state or local laws. Executive further agrees that Executive will neither seek nor accept any further benefit or consideration from any source whatsoever in respect to any claims which Executive has asserted or could have asserted against the Company. Executive represents to his/her knowledge neither Executive nor any person or entity acting on Executive’s behalf or with Executive’s authority has asserted with any federal, state, or local judicial or administrative body any claim of any kind based on or arising out of any aspect of Executive’s employment with the Company or the ending of that employment. If Executive, or any person or entity representing Executive, or any federal, state, or local agency, assert any such claim, this Release and Waiver Agreement will act as a total and complete bar to recovery of any judgment, award, damages, or remedy of any kind.,   4 -------------------------------------------------------------------------------- 4. No Admission of Liability. It is understood and agreed that this Agreement is a compromise of any alleged claims and that the making of this offer, the entering into of this Agreement, and the benefits paid to Executive are not to be construed as an admission of liability on the part of the Company, and that all liability is expressly denied by the Company. 5. Non-Compete. In exchange for and in consideration of the benefits described and set forth in paragraph 2 above Executive agrees that, for the twelve (12) months following the effective date hereof, he/she shall not directly or indirectly engage in or participate as an owner, partner, stockholder, officer, employee, director, agent of or consultant for any business competitive with any business of the Company, without the prior written consent of the Company; provided, however, that this provision shall not prevent Executive from investing as a less-than-one-percent (1%) stockholder in the securities of any company listed on a national securities exchange or quoted on an automated quotation system. 6. SURVIVING COVENANTS. EXECUTIVE AND THE COMPANY HEREBY ACKNOWLEDGE AND AFFIRM, TO THE EXTENT APPLICABLE, THEIR RESPECTIVE CONTINUING OBLIGATIONS WITH RESPECT TO THOSE CERTAIN COVENANTS CONTAINED IN THE EMPLOYMENT AGREEMENT, WHICH ARE INCORPORATED HEREIN BY REFERENCE, SPECIFICALLY: SECTION 9(B) CONFIDENTIAL INFORMATION; SECTION 9(C) NO SOLICITATION OR INTERFERENCE; SECTION 9(E) LITIGATION; AND SECTION 9(G) NON-DISPARAGEMENT. 7. Return of Property. Executive agrees to return, as soon as practicable and no later than three (3) business days after his/her execution hereof, any and all property, including duplicates or copies thereof, belonging to the Company, including, but not limited to: keys, security cards, documents, equipment, supplies, customer lists, customer information, and confidential information. 8. Business Expense Reports and Reconciliation of Company Charge Card Expenses. Executive agrees that the severance pay defined in paragraph 2 above shall not be paid until Executive submits all required business expense reports, if any, and pays for any and all non-business charges on the Company’s charge card or otherwise for which he/she is personally responsible.   4 -------------------------------------------------------------------------------- 9. Severability/Waivers. Executive agrees that if any provision of this Agreement shall be held invalid or unenforceable, that such provision shall be modified to the extent necessary to comply with the law, or if necessary stricken, but the parties agree that the remainder of this Agreement shall nevertheless remain in full force and effect. No waiver of any term or condition of this Agreement or any part thereof shall be deemed a waiver of any other terms or conditions of this Agreement or of any later breach of this Agreement. 10. Confidentiality. The terms of this Agreement shall remain confidential, and neither Executive nor the Company will publish or publicize the terms of this Agreement in any manner, unless specifically required to do so by valid law or regulatory requirement, which, in such case, the disclosing party shall provide the other party reasonable advance notice. Executive shall not discuss or reveal the terms of this Agreement to any persons other than his/her immediate family, personal attorney, and financial advisors. 11. Binding Agreement. The rights and obligations of the Company under this Agreement shall inure to the benefit of, and shall be binding on, the Company and its successors and assigns, and the rights and obligations (other than obligations to perform services) of Executive under this Agreement shall inure to the benefit of, and shall be binding upon, Executive and his/her heirs, personal representatives and successors and assigns. Except to the extent specifically provided for in paragraphs 1 and 5 above, upon its execution, this Agreement shall supersede and render null and void any and all previous agreements, arrangements, or understandings between you and the Company pertaining to Executive’s employment with the Company, including, but not limited to the Employment Agreement. 12. Notices. Notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when sent by certified mail, postage prepaid, addressed to the intended recipient at the address set forth below, or at such other address as such intended recipient hereafter may have designated most recently to the other party hereto with specific reference to this Section.   5 -------------------------------------------------------------------------------- If to the Company:    The E. W. Scripps Company    28th Floor    312 Walnut Street    Cincinnati, Ohio 45202    Attn: Jennifer Weber, Senior Vice President, Human Resources    A.B. Cruz III, Senior Vice President & General Counsel If to Executive: 13. Governing Law. This Agreement shall be governed by and construed exclusively in accordance with the laws of the State of Ohio. The Parties agree that any conflict of law rule that might require reference to the laws of some jurisdiction other than Ohio shall be disregarded. Each Party hereby agrees for itself and its properties that the courts sitting in Hamilton County, Ohio shall have sole and exclusive jurisdiction and venue over any matter arising out of or relating to this Agreement, or from the relationship of the Parties, or from the Executive’s employment with the Company, or from the termination of the Executive’s employment with the Company, whether arising from contract, tort, statute, or otherwise, and hereby submits itself and its property to the venue and jurisdiction of such courts. 14. Revocation Period. Executive agrees that Executive has read this Agreement and is hereby advised and fully understands his/her right to discuss all aspects of this Agreement with Executive’s attorney prior to signing this Agreement. Executive has carefully read and fully understands all of the provisions of this Agreement. Executive acknowledges that he/she has been given at least twenty-one (21) days to discuss, review, and consider all of the terms, conditions, and covenants of this Agreement. Executive understands that this Agreement does not become effective or enforceable until seven (7) days after it has been executed by Executive. During the seven-day period following its execution, Executive may revoke this Agreement in its entirety by providing written revocation to the Company by notice to the Company pursuant to Section 12, in which case this Agreement shall be on no further legal force or effect.   6 -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate on the date(s) specified below.       THE E. W. SCRIPPS COMPANY Executive’s Name (Please Print)         By:     Employee’s Signature                                     (Date)       Its:         Date:                      Witness’s Name (Please Print)       Witness’s Signature                                          (Date)       7

Exhibit 10(c) xxv AMERICAN SCIENCE AND ENGINEERING, INC. 2005 Equity and Incentive Plan Nonstatutory Stock Option Grant Agreement Performance Vested Options American Science and Engineering, Inc. (the “Company”), a Massachusetts corporation, hereby grants to the person named below an option to purchase shares of Common Stock, $0.66 2/3 par value, of the Company (the “Option”) under and subject to the Company’s 2005 Equity and Incentive Plan (the “Plan”) exercisable on the terms and conditions set forth below and those attached hereto and in the Plan: Grant Date           Optionee           Options Granted           Exercise Price           Expiration Date             Exercisability Schedule and Vesting:  The options shall vest and become exercisable upon the achievement of performance targets of the Company, as more particularly described herein (“Performance-Vested Options”). Specifically, Performance-Vested Options shall become exercisable in accordance with the following terms: as soon as practicable following the delivery to the Company of its audited financial statements for the fiscal year, the Compensation Committee shall determine whether the Performance Goals (as defined in the Plan) have been met (the “Target”). If the Target has been met, 100% of restrictions on the Performance-Vested Shares will lapse. If the Company has not met the Target prior to the end of the fiscal year ending on or before March 31, 2010 (“Final Target Date”), the Performance-Vested Shares shall be automatically and immediately forfeited.  The Target shall be established by the Committee based on one or more of the following objective criteria prior to the beginning of such Performance Period or within such period after the beginning of the Performance Period (as defined in the Plan) as shall meet the requirements to be considered “pre-established objective performance goals” for purposes of the regulations issued under Section 162(m) of the Code: (i) increases in the price of the Common Stock, (ii) market share, (iii) sales, (iv) revenue, (v) return on equity, assets, or capital, (vi) economic profit (economic value added), (vii) total shareholder return, (viii) costs, (ix) expenses, (x) margins, (xi) earnings (including EBITDA) or earnings per share, (xii) cash flow (including adjusted operating cash flow), (xiii) customer satisfaction, (xiv) operating profit, (xv) net income, (xvi) research and development, (xvii) product releases, (xviii) manufacturing, or (xix) any combination of the foregoing, including without limitation, goals based on any of such measures relative to appropriate peer groups or market indices, as more particularly outlined on Exhibit A, attached to this Agreement This Option shall not be treated as an Incentive Stock Option under section 422 of the Internal Revenue Code of 1986, as amended. By acceptance of this Option, the Participant agrees to the terms and conditions set forth above and those attached hereto and in the Plan. PARTICIPANT   AMERICAN SCIENCE AND ENGINEERING, INC.                   By:     1 -------------------------------------------------------------------------------- AMERICAN SCIENCE AND ENGINEERING, INC. 2005 EQUITY AND INCENTIVE PLAN Nonstatutory Stock Option Terms And Conditions 1.           Plan Incorporated by Reference. This Option is issued pursuant to the terms of the Plan. This Grant Agreement does not set forth all of the terms and conditions of the Plan, which are incorporated herein by reference. Capitalized terms used and not otherwise defined in this Grant Agreement have the meanings given to them in the Plan. The Committee administers the Plan and its determinations regarding the operation of the Plan are final and binding. A copy of the Plan may be obtained upon written request without charge from the Human Resources Department of the Company. 2.           Option Price. The price to be paid for each share of Common Stock issued upon exercise of the whole or any part of this Option is the Option Price set forth on the face of this Grant Agreement. 3.           Exercisability and Vesting Schedule. As long as the Participant remains continuously employed by the Company or an Affiliate, this Option will vest and may be exercised (in whole or in part) in accordance with the Exercisability and Vesting Schedule set forth on the face of this Grant Agreement, but only for the purchase of whole shares. This Option may not be exercised as to any shares after the Expiration Date. 4.           Effect of Termination of Employment. If the Participant’s status as an employee of the Company or an Affiliate is terminated for any reason (voluntary or involuntary), this Option shall not thereafter become vested or exercisable as to any additional shares, and the already vested portion of this Option shall remain exercisable (to the extent not previously exercised) for ninety (90) days after the day on which the Participant’s employment is terminated, whereupon this Option shall terminate; except that (a)                                  If the Participant is on military leave, sick leave, or other leave of absence approved by the Company or the Affiliate, his or her employment with the Company or the Affiliate will be treated as continuing intact during the period of such leave. The Participant’s employment will be deemed to have terminated on the first day after the expiration of such leave. (b)                                 If the Participant’s employment is terminated by reason of his or her death, this Option shall become exercisable and vested on a prorated basis reflecting the percentage of such Option that was accrued by the Company on its books at the time of the Participant’s death, without regard to the Exercisability and Vesting Schedule. In such event, such prorated portion of this Option may be exercised at any time within twelve (12) months after the date of the Participant’s death by the person(s) to whom the Participant’s option rights pass by will or by the applicable laws of descent and distribution. (c)                                  If the Participant’s employment is terminated by the Company or the Affiliate for “cause,” this Option, to the extent vested and exercisable upon such termination of employment, may be exercised by the Participant only through the close of regular business hours on the date of termination. Unless otherwise defined in any written employment agreement between the Company or the Affiliate and the Participant, cause shall be determined by the Committee in its discretion. In no event, however, may this Option be exercised after the Expiration Date set forth on the face of this Grant Agreement. 5.           Method of Exercise. To exercise this Option, the Participant shall deliver notice of exercise to the Company specifying the number of shares with respect to which the Option is being exercised accompanied by payment of the Option Price for such shares (i) by cash, (ii) by actual delivery or attestation of ownership of shares of Common Stock owned by the Participant, including vested Restricted Stock, (iii) by retaining shares of Common Stock otherwise issuable pursuant to the Option, (iv) for consideration received by the Company under a broker-assisted cashless exercise program acceptable to the Company, or (v) for such other lawful consideration as the Committee may determine. Such exercise notice must be given at the time and in the manner as specified by the Committee from time to time. Upon payment of the exercise price and applicable taxes, and assuming satisfaction of all applicable securities laws and exchange listing requirements, the Company shall delivery, or make available to the Participant through the Plan’s designated broker, the net shares or cash proceeds (as the case may be) resulting from the Option exercise. 2 --------------------------------------------------------------------------------   6.           Change of Control. To preserve the Participant’s rights under this Option in the event of a Change in Control of the Company (as defined below) occurring while the Participant is employed by the Company or an Affiliate, the Committee shall fully accelerate the vesting of this Option and may in its discretion take one or more of the following actions: (i) provide for payment to the Participant of cash or other property with a Fair Market Value equal to the amount that would have been received upon the exercise or payment of the Option had the Option been exercised or paid upon the Change in Control of the Company, (ii) adjust the terms of the Option in a manner determined by the Committee to reflect the Change in Control of the Company, (iii) cause the Option to be assumed, or new rights substituted therefore, by another entity, or (iv) make such other provision as the Committee may consider equitable to the Participant and in the best interests of the Company. For purposes of this Section, a “Change in Control of the Company” shall mean:  (i) the consummation of (a) any consolidation or merger of the Company in which the Company is not the continuing or surviving entity or pursuant to which the Company’s Common Stock is converted into cash, securities, or other property, other than a merger of the Company in which the ownership by the Company’s stockholders of the securities in the surviving entity is at least two-thirds of the combined voting power; or (b) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company; (ii) the stockholders of the Company have approved any plan or proposal for the liquidation or dissolution of the Company; (iii) any person (as that term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) has become the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the Company’s outstanding Common Stock; or (iv) that during any period of two consecutive years, individuals who, at the beginning of such period, constitute the entire Board of Directors of the Company shall cease, for any reason, to constitute a majority thereof, unless the election, or the nomination for election by the Company’s stockholders, of each new director was approved by a vote of at least three-quarters of the directors then still in office who were directors at the beginning of the period. 7.           Option Not Transferable. This Option is not transferable by the Participant other than by will or the laws of descent and distribution, and is exercisable, during the Participant’s lifetime, only by the Participant. The naming of a Designated Beneficiary does not constitute a transfer. The Committee may, in its sole discretion, allow the Participant to transfer this Option under a domestic relations order in settlement of marital or domestic property rights. 8.           Payment of Taxes. The Participant shall pay to the Company, or make provision satisfactory to the Committee for payment of, any taxes required by law to be withheld with respect to the exercise of the Option no later than the date of the event creating the tax liability. The Company and its Affiliates may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind due to the Participant. In the Committee’s discretion, the minimum tax obligations required by law to be withheld with respect to the exercise of the Option may be paid in whole or in part in shares of Common Stock, including shares retained from the exercise of the Option, valued at their Fair Market Value on the date of retention. 9.           No Right To Employment. No person shall have any claim or right to be granted an Option. Neither the Plan nor this Option shall be deemed to give any Participant the right to continued employment or to limit the right of the Company or an Affiliate to discharge any Participant at any time. 10.         Amendment of Option. The Committee may amend, modify, or terminate this Option, including substituting therefore another option of the same or a different type, changing the date of exercise or realization and converting an incentive stock option to a nonstatutory stock option, provided that the Participant’s consent to such action shall be required unless (i) the Committee determines that the action, taking into account any related action, would not materially and adversely affect the Participant, or (ii) the action is permitted by the terms of the Plan. 11.         Data Privacy and Electronic Delivery. By executing this Grant Agreement, the Participant: (i) authorizes the Company, its Affiliates, and any agent of the Company or its Affiliates administering the Plan or providing Plan recordkeeping services, to disclose to the Company, its Affiliates or third-party service providers such information and data as may be deemed necessary or appropriate to facilitate the grant of Options and the administration of the Plan; (ii) waives any data privacy rights he or she may have with respect to such information; and (iii) authorizes the Company, its Affiliates, and third-party service providers to store and transmit such information in electronic form. The Participant agrees that the Company, its Affiliates, and their agents may deliver electronically all documents relating to the Plan or this Option (including, without limitation, prospectuses required by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its stockholders. 12.         Cancellation and Rescission of Option. In consideration of this Option the Participant agrees that if Participant breaches Participant’s obligations under the terms of the American Science & Engineering Employee Representation, Rights in Data, and Non-Compete Agreement, then the Company may cancel, suspend, withhold, or otherwise limit or restrict (in whole or in part) the exercise of this Option. If this Option has been exercised prior to the occurrence or discovery by the Company of any such breach, then the Committee may rescind the exercise of this Option at any time within the two (2) year period after such exercise. In the event of any rescission, the Participant shall pay to the Company the amount of income recognized upon exercise of the Option and 3 -------------------------------------------------------------------------------- any additional gain realized upon any sale of Option shares in such manner and on such terms and conditions as may be required by the Committee, and the Company shall be entitled to set-off the amount of any such income or gain against any amount that may be owed to the Participant. 13.         Impact of Restatement of Financial Statements Upon Option. If any of the Company’s financial statements are required to be restated as a result of errors, omissions, or fraud, the Committee may (in its sole discretion, but acting in good faith) direct that the Company recover all or a portion of the amount of income recognized upon the exercise of this Option and any additional gain realized upon any sale of the Option shares with respect to any fiscal year of the Company the financial results of which are negatively affected by such restatement. The amount to be recovered from the Participant shall be the amount by which the Option income at exercise, and any gain upon sale of the Option shares of the affected award, exceed the amount that would have been payable to the Participant had the financial statements been initially filed as restated, or any greater or lesser amount that the Committee shall determine. The Committee may determine to recover different amounts from different participants or different classes of participants on such bases as it shall deem appropriate. In no event shall the amount to be recovered by the Company be less than the amount required to be repaid or recovered as a matter of law. The Committee shall determine whether the Company shall effect any such recovery (i) by seeking repayment from the Participant, (ii) by reducing (subject to applicable law and the terms and conditions of the applicable plan, program, or arrangement) the amount that would otherwise be payable to the Participant under any compensatory plan, program, or arrangement maintained by the Company or any of its Affiliates, (iii) by withholding payment of future increases in compensation (including the payment of any discretionary bonus amount) or grants of compensatory awards that would otherwise have been made in accordance with the Company’s otherwise applicable compensation practices, or (iv) by any combination of the forgoing. 4 --------------------------------------------------------------------------------

Exhibit 10.5 SUBORDINATION AGREEMENT This Subordination Agreement (this “Agreement”) dated March __, 2006, is between ______________________ (“Creditor”), and Silicon Valley Bank (“Bank”). Recitals A.           GlobalOptions Group, Inc., a Nevada corporation (“Guarantor”) has guaranteed payment and performance of certain loans from Bank to Guarantor’s wholly-owned subsidiary, GlobalOptions, Inc., a Delaware corporation (“Subsdiary”). B.           Guarantor is now offering on a “best efforts” basis (the “Offering”) a minimum of 5,000 promissory notes (“Notes”) at a purchase price of $1,000 per Note, up to a maximum of 20,000 Notes for up to an aggregate purchase price of $20,000,000.   B. Pursuant to the Offering, Guarantor has issued a Note to the Creditor. D.           To induce Bank to grant its consent for the Offering, Creditor will subordinate all of Guarantor’s indebtedness and obligations to Creditor, existing now or later (the “Subordinated Debt”), to all of Subsidiary’s indebtedness and obligations to Bank.. THE PARTIES AGREE AS FOLLOWS: 1.            Creditor subordinates to Bank any security interest or lien that it has in any property of Guarantor. Despite attachment or perfection dates of Creditor’s security interest and Bank’s security interest, Bank’s security interest in the Collateral (defined in the Security Agreement between Guarantor and Bank, dated March __, 2006, the “Security Agreement”) is prior to Creditor’s security interest, if any. 2.            All Subordinated Debt payments are subordinated to all of Guarantor’s obligations to Bank existing now or later, together with collection costs of the Obligations (including attorneys’ fees), including, interest accruing after any bankruptcy, reorganization or similar proceeding and all obligations (the “Senior Debt”) under the Amended and Restated Loan and Security Agreement dated February 3, 2006 between GlobalOptions, Inc., a Delaware corporation and wholly-owned subsidiary of Borrower, and Bank (the “Loan Agreement”).   3. Creditor will not: (a)          demand or receive from Guarantor (and Guarantor will not pay, other than through payment described in Section 1(c) of the Note permitting payment in equity of Guarantor) any part of the Subordinated Debt, by payment, prepayment, or otherwise, or (b)          accelerate the Subordinated Debt, or begin to or participate in any action against Guarantor, until all the Senior Debt is paid. 4.            Creditor must deliver to Bank in the form received (except for endorsement or assignment by Creditor) any payment, distribution, security or proceeds it receives on the Subordinated Debt other than according to this Agreement.       --------------------------------------------------------------------------------     5.            These provisions remain in full force and effect, despite Guarantor’s insolvency, reorganization or any case or proceeding under any bankruptcy or insolvency law, and Bank’s claims against Guarantor and Guarantor’s estate will be fully paid before any payment is made to Creditor. 6.            Until the Senior Debt is paid, Creditor irrevocably appoints Bank as its attorney-in-fact, with power of attorney with power of substitution, in Creditor’s name or in Bank’s name, for Bank’s use and benefit without notice to Creditor, to do the following in any bankruptcy, insolvency or similar proceeding involving Guarantor: (i)           File any claims for the Subordinated Debt for Creditor if Creditor does not do so at least 30 days before the time to file claims expires, and (ii)          Accept or reject any plan of reorganization or arrangement for Creditor and vote Creditor’s claims in respect of the Subordinated Debt in any way it chooses. 7.            Creditor will immediately put a legend on the Subordinated Debt instruments that the instruments are subject to this Agreement. No amendment of the Subordinated Debt documents will modify this Agreement in any way that terminates or impairs the subordination of the Subordinated Debt or the subordination of the security interest or lien that Bank has in Subsidiary’s property. For example, instruments may not be amended to (i) increase the interest rate of the Subordinated Debt, or (ii) accelerate payment of principal or interest or any other portion of the Subordinated Debt. 8.            All necessary action on the part of Creditor, its officers, directors, partners, members and shareholders, as applicable, necessary for the authorization of this Agreement and the performance of all obligations of the Creditor hereunder has been taken. Additionally, the execution, delivery and performance of and compliance with this Agreement will not result in any material violation or default of any term of any of its charter, formation or other organizational documents (such as Articles or Certificate of Incorporation, bylaws, partnership agreement, operating agreement, etc.). 9.            This Agreement is effective while Subsidiary or Guarantor owes any amounts to Bank. If after full payment of the Senior Debt, Bank must disgorge any payments made on the Senior Debt, this Agreement and the relative rights and priorities provided in it, will be reinstated as to all disgorged payments as though the payments had not been made, and Creditor will immediately pay Bank all payments received under the Subordinated Debt to the extent the payments would have been prohibited under this Agreement. At any time without notice to Creditor, Bank may take actions it considers appropriate on the Senior Debt such as terminating advances, increasing the principal, extending the time of payment, increasing interest rates, renewing, compromising or otherwise amending any documents affecting the Senior Debt and any collateral securing the Senior Debt, and enforcing or failing to enforce any rights against Subsidiary or any other person. No action or inaction will impair or otherwise affect Bank’s rights under this Agreement. Creditor waives any benefits of California Civil Code Sections 2809, 2810, 2819, 2845, 2847, 2848, 2849, 2850, 2899 and 3433.   -2-   --------------------------------------------------------------------------------     10.          This Agreement binds Creditor, its successors or assigns, and benefits Bank’s successors or assigns. This Agreement is for Creditor’s and Bank’s benefit and not for the benefit of Guarantor, Subsidiary or any other party. If Subsidiary is refinancing any of the Senior Debt with a new lender, upon Bank’s request of creditor, Creditor will enter into a new subordination agreement with the new lender on substantially the terms of this Agreement. 11.          This Agreement may be executed in two or more counterparts, each of which is an original and all of which together constitute one instrument. 12.          California law governs this agreement without giving effect to conflicts of laws principles. Creditor and Bank submit to the exclusive jurisdiction of the courts in Santa Clara County, California. CREDITOR AND BANK EACH WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION FROM THIS AGREEMENT. 13.          This Agreement represents the entire agreement about this subject matter, and supersedes prior negotiations or agreements. Creditor is not relying on any representations by Bank, Subsidiary or Guarantor in entering into this Agreement. Creditor will keep itself informed of Guarantor’s and Subsidiary’s financial and other conditions. This Agreement may be amended only by written instrument signed by Creditor and Bank. 14.          If there is an action to enforce the rights of a party under this Agreement, the party prevailing will be entitled, in addition to other relief, all reasonable costs and expenses, including reasonable attorneys’ fees, incurred in the action. “Creditor” “Bank”                                                     SILICON VALLEY BANK (Print Name)   By:                                                         By:                                                Title:                                                       Title:                                                                Each of the Guarantor and Subsidiary approve the terms of this Agreement.                       “Guarantor”                         GLOBALOPTIONS GROUP, INC.                       By:                                                                                       Title: Chairman and Chief Executive Officer     -3-   --------------------------------------------------------------------------------                             “Subsidiary”                         GLOBALOPTIONS, INC.                       By:                                                                                       Title: Chairman       -4-      

  Exhibit 10.10 ORANGE BLOSSOM BUSINESS CENTER NET COMMERCIAL LEASE       LANDLORD:   Transwestern Commercial Services (agent for owner/landlord) 501 Brickell Key Drive, Suite 210 Miami, Florida 33131 (305) 808-7310       TENANT:   NationsHealth, Inc. 13650 NW 8th Street, Suite 109 Sunrise, Florida 33325       PREMISES:   ORANGE BLOSSOM BUSINESS CENTER Suite 50 4300 Okeechobee Road Fort Pierce, FL 34947       DATE OF EXECUTION:   October 13, 2006     --------------------------------------------------------------------------------   Exhibit 10.10 INDEX                       PAGE               LEASE SUMMARY   iv-vi               ARTICLE I   TERM         1.1   Grant and Premises     01   1.2   Term     01   1 .3   Construction of Premises     01   1.4   Fixturing Period     01                 ARTICLE II   RENT         2.1   Covenant to Pay     01   2.2   Minimum Rent and CPI Escalation     01   2.3   Payment of Business Taxes     02   2.4   Payment of Operating Costs     03   2.5   Rent Past Due     03   2.6   Security Deposit     02   2.7   Net Lease     03   2.8   Payment of Rent     03                 ARTICLE III   USE OF PREMISES         3.1   Permitted Use and Business Name     04   3.2   Hours of Business     04   3.3   Opening and Continuous Occupancy     04   3.4   Tenant’s Covenants as to Use and Occupancy     04   3.5   Display Windows     05   3.6   Compliance with Laws     05   3.7   Advertising, Trade Names and Restricted Marks     05   3.8   Signs     05   3.9   Prohibited Uses     05   3.10   Indemnity for Toxic Waste     05                 ARTICLE IV   ACCESS AND ENTRY         4.1   Right of Examination     06   4.2   Right to Show Premises     06   4.3   Entry not Forfeiture     06                 ARTICLE V   MAINTENANCE. REPAIRS AND ALTERATIONS         5.1   Maintenance and Repairs by Landlord     06   5.2   Maintenance and Repairs by Tenant     06   5.3   Approval of Tenants Alterations     07   5.4   Repair Where Tenant at Fault     07   5.5   Removal of Improvements and Fixtures     07   5.6   Liens     07   5.7   Notice by Tenant     08                 ARTICLE VI   UTILITIES/HVAC         6.1   Utilities     08   6.2   Heating, Ventilating and Air Conditioning     08       --------------------------------------------------------------------------------   Exhibit 10.10                       PAGE               ARTICLE VII   INSURANCE AND INDEMNITY         7.1   Tenants Insurance     08   7.2   Increase in Insurance Premiums     09   7.3   Cancellation of Insurance     09   7.4   Loss or Damage     10   7.5   Indemnification of Landlord     10                 ARTICLE VIII   DAMAGE AND DESTRUCTION         8.1   Rent Abatement     10   8.2   Damage to Premises     10   8.3   Termination for Damage to Premises     11   8.4   Destruction of Building     11   8.5   Architect’s Certificate     11                 ARTICLE IX   ASSIGNMENT. SUBLETTING. AND TRANSFERS         9.1   Assignments, Subleases and Transfers     11   9.2   Landlord’s Right to Terminate     12   9.3   Conditions of Transfer     12   9.4   Change of Control     12   9.5   No Advertisement     13   9.6   Assignment by Landlord     13                 ARTICLE X   DEFAULT         10.1   Defaults     13   10.2   Remedies     14   10.3   Costs     14   10.4   Allocation of Payments     15   10.5   Section Deleted     15   10.6   Landlord’s Other Rights     15                 ARTICLE XI   ATTORNMENT AND SUBORDINATION         11.1   Estoppel Certificate     15   11.2   Subordination     15   11.3   Attornment     15                 ARTICLE XII   CONTROL OF BUILDING BY LANDLORD         12.1   Use and Maintenance of Common Areas     15   12.2   Alterations by Landlord     16   12.3   Tenant Relocation     16                 ARTICLE XIII   CONDEMNATION         13.1   Total Taking     16   13.2   Partial Taking     16   13.3   Award     17                 ARTICLE XIV   GENERAL PROVISIONS         14.1   Rules and Regulations     17   14.2   Delay     17   14.3   Holding Over     17   14.4   Waiver     18   14.5   Recording     18   14.6   Notices     18   14.7   Successors     18   14.8   Joint and Several Liability     18   14.9   Captions and Section Numbers     18   14.10   Extended Meanings     18       --------------------------------------------------------------------------------   Exhibit 10.10                       PAGE 14.11   Partial Invalidity     19   14.12   Entire Agreement.     19   14.13   Governing Law     19   14.14   Time     19   14.15   No Partnership     19   14.16   Quiet Enjoyment     19   14.17   Radon Gas     19   14.18   Authority     19   14.19   Lease Validity     19   14.20   Brokerage     19   14.21   Trial by Jury     19                 SCHEDULES             A   Site Plan of Premises     21   B   Landlord’s and Tenant’s Work     22   C   Rent Schedule     23   D   Definitions     24   E   Rules and Regulations     28                 RIDERS             1   Option to Renew     30   2   Guaranty     31       --------------------------------------------------------------------------------   Exhibit 10.10 LEASE SUMMARY The following is a summary of basic lease provisions with respect to the Lease described below. It is an integral part of the Lease and terms defined or dollar amounts specified herein shall have the meanings or amounts set forth herein unless other meanings are expressly set forth or expanded upon in the text of this Lease or the Exhibits or Schedules attached hereto.                   1.   Approximate Date of Lease Execution:   October 15. 2006                   2.   Landlord:   Transwestern Commercial Services, agent for the owner     Landlord’s Address:   501 Brickell Key Drive, Suite 210 Miami, FL 33131                   3.   Tenant:   NationsHealth, Inc.     Principal:                 Business Entity:   NationsHealth, Inc.     Tenant’s Address:   13650 NW 8th Street, Suite 109; Sunrise, Florida 33325 Phone: 954-903-5000 Fax: 954-903-5850 Email: [email protected]                   4.   Guarantor:   N/A   Relationship to Client: N/A     Guarantors Address:   N/A             Phone: N/A     Fax: N/A     Email: N/A                   5.   Premises:   Suite 50 Orange Blossom Business Center     Address:   4300 Okeechobee Road, Fort Pierce, FL 34947     Gross Rentable Area of Premises:   Approximately 6,193 square feet     Total square footage of premises:   Approximately 282,787 square feet     Pro rata share occupied:   2.19%     Permitted Use of Premises:   General office                   6.   Term of Lease:   3 Years and 0 Months     Commencement Date:    October 15, 2006   Expiration Date:    October 14, 2009     Expected Possession Date:   October 15, 2006 or receipt of certificate of occupancy     Fixturing Period:   From October 15, 2006                   7.   Option to Renew (Rider 1, if applicable)     Number of Options: 0   Term of each option: N/A                       8.   Parking: General                   9.   Signage: Tenant is responsible for the installation costs. All signs must be approved by the Landlord prior to installation by providing a graphic to-scale, colors to be used and location to be installed.                   10.   Other:     Insurance Req’d: $1,000,000 per occurrence, liability only. Contract: Continental Casualty Exp. Date: 2/26/07     HVAC Contract Req’d by:   Tenant Contract with: Sey Culhan   Exp. Date: 9/30/07     Assign/Sublet No   Janitorial TBD   Security TBD   Pest Control TBD     --------------------------------------------------------------------------------   Exhibit 10.10 11.   Broker: Transwestern Commercial Services, whose commission will be paid by Landlord. Transwestern Commercial Services agrees to compensate Stuart Kaminsky, US Realty Advisors, Inc., in the amount of 4% of the base rental income for the initial term of the Lease. No other compensation will be made to the co-broker. 12.   Special Provisions:   a.   Tenant agrees to premises “as is, where is”, and Landlord makes no representations or warranties of any kind for any of the internal equipment, filters, improvements, fixtures, etc.     b.   Landlord agrees to provide within thirty (30) days following Commencement Date:   1)   All damaged or discolored ceiling tiles to be replaced;     2)   Existing carpet and tile flooring to be professional cleaned;     3)   Interior walls to be repainted;     4)   The two existing door openings to be closed up;     5)   HVAC to be in good working order; and,     6)   to provide independent electrical and HVAC system as well as to meter subject space separately.   c.   All tenant improvements not included in 12(b) above will be paid for by the Tenant     d.   As described in the lease, the Tenant is responsible for the following expenses:   •   Electric consumed in the subject space will be paid by the Tenant     •   All trash and garbage removal created by the Tenant or resulting from deliveries to the Tenant need to be put in the common refuse container     •   All water and sewer charges including the water used by the center at Tenant’s proportionate share     •   Annual backflow re-certification, repair or replacement (if applicable)     •   All signs of any kind (subject to Landlord’s approval prior to installation)     •   All business insurance (liability as described in the lease)     •   All HVAC systems’ maintenance, repairs and replacements     •   All pass-through expenses (real estate taxes, insurance, and CAM) proportionately   e.   Tenant is responsible for providing the following checked items to the Landlord before the Landlord will execute a lease containing the terms and conditions outlined herein:       ü   Insurance Certificate as described herein         ü   HVAC service agreement, no less than one complete service each year         ü   Pest control service agreement on a monthly basis         ü   El Grease trap and/or hood service agreement, quarterly or as required       Possession of the Premises will not be granted to the Tenant until receipt of the above checked items has been received by the Landlord.     f.   Tenant will have right of first refusal on 28,000 square feet of shell space.                       13.   Initial Minimum Rent:   Square Feet:     6,193                                     Per Square Foot:   $ 11.50                                     Annual:   $ 71,219.50                                     Monthly:   $ 5,934.95                                 --------------------------------------------------------------------------------                                                                   Exhibit 10.10                               One month of free gross rent         Increases at 3% per annum or CPI, whichever is greater.         Rent Due Date: 1st    Late Fee %: 10         Taxable/Exempt?: Taxable Commencing Sales Tax Rate %: 6.5, or applicable rate. Applicable sales tax to be paid by Tenant.         Commencing CPI %: 3   CPI Date (Month/Year): TBD         CAM pass thrus?: Yes CAM Rate%: 2.19 Any Non-Chargeable CAMs?: No 14.   Schedule of Rents:           a.   First Month’s Rent:   $5,934.95 payable at lease execution           b.   Last Month’s Rent:   $6,296.40 payable at lease execution           c.   Security Deposit (Section 2.6):   $5,934.95 payable at lease execution           d.   Cost Pass-Through:   All insurance, real estate taxes and operating costs (estimated at $2.75 per square foot for the first twelve (12) months of the Lease)     --------------------------------------------------------------------------------   Exhibit 10.10 THIS LEASE, dated October 13, 2006, is made between ORANGE BLOSSOM INVESTMENTS, LLC, a Florida limited liability company, (“Landlord”), and, NATIONSHEALTH, INC., (“Tenant”), a Delaware corporation. Certain capitalized words used herein are defined in Schedule C. ARTICLE I TERM 1.1   Grant and Premises. Subject to the provisions of this Lease, Landlord leases the Premises to Tenant for the Term. The Premises are identified on the site plan attached hereto as Schedule A. The Gross Rentable Area of the Premises is approximately as shown on the Lease Summary. If construction of the Premises is completed (as evidenced by a certificate of occupancy or certificate of completion from appropriate governmental authority) as of the date of execution hereof, the above stated approximation of area (and Minimum Rent as provided in Section 2.2) shall be binding on the parties and not subject to re-computation. If such construction is not so completed at such time, as soon as reasonably possible after such completion of construction, the Architect, whose decision shall be final and binding on the parties, shall measure the Premises, and the Gross Rentable Area of the Premises and Minimum Rent as set out in this Lease shall be adjusted accordingly. 1.2   Term. The Term of the Lease is the period from the Commencement Date through the Expiration Date. The Commencement Date is the opening of Tenant’s business in any part of the Premises. The Expiration Date is the last day of the month in which the Commencement Date occurs, in the Expiration Year. However, if the Commencement Date is the first day of a month, the Term shall expire in the Expiration Year on the last day of the month previous to the month in which the Commencement Date occurs. 1.3   Construction of Premises. If the Premises are being constructed, Landlord shall, at its sole cost and expense, perform the work specified to be performed by Landlord in Schedule B (the “Landlord’s Work”). Tenant shall, at its sole expense, perform all work necessary to complete the Premises for its business purposes, including the work specified to be performed by Tenant in Schedule B hereto (collectively, the “Tenant’s Work”). Tenant will also pay any additional charges, if any, specified in Schedule B. If the Premises have been previously occupied, Tenant accepts the Premises “as is” and agrees that all alterations and improvements shall be at its expense and done in compliance with the provisions of the Lease. ARTICLE II RENT 2.1   Covenant to Pay. Tenant shall pay to Landlord Rent from the Commencement Date without prior demand, together with all applicable Florida sales tax thereon; however, unless otherwise provided in this Lease, Additional Rent shall be payable by Tenant to Landlord within five days following demand. Minimum Rent and Additional Rent for any Lease Year greater or less than twelve (12) months shall be pro-rated on a per diem basis, based upon a period of 365 days. Tenant agrees that its covenant to pay Rent is an independent covenant and that all such amounts are payable without counterclaim, set-off, deduction, abatement or reduction whatsoever, except as expressly provided for in this Lease. 2.2   Minimum Rent and CPI Escalation. Subject to any escalation which may be provided for in this Lease, Tenant shall pay Minimum Rent for the Term in the initial amount specified in the Lease Summary, which shall be payable throughout the Term in equal monthly installments in advance on the first day of each calendar month in the amounts (subject to escalation) specified in the Lease Summary.     --------------------------------------------------------------------------------   Exhibit 10.10 The Minimum Rent described above shall be adjusted at the beginning of the second and each succeeding Lease Year during the Term by multiplying such Minimum Rent by a fraction, the numerator of which shall be the Consumer Price Index — U.S. City Average for All Urban Consumers, All Items, (1982-84 equals 100) (“CPI”) for the third month preceding the month of adjustment, and the denominator of which shall be the CPI for the 15th month preceding the month of adjustment. Should the CPI become unavailable, a reasonable substitute prepared by the U.S. Department of Labor or other source, as designated by Landlord, shall be used. Minimum Rent shall continue to be payable in monthly installments as otherwise described above until Landlord notifies Tenant of the new monthly Minimum Rent installment amount. Landlord shall attempt to so nofify Tenant prior to commencement of each new Lease Year. However, failure of Landlord to timely notify Tenant of the new monthly Minimum Rent installment amount shall not be deemed a waiver by Landlord of the increased rental; the new monthly amount (or any portion not previously paid) shall be payable, retroactive to the commencement of the new Lease Year, upon notification by Landlord to Tenant of the new monthly Minimum Rent installment amount. At the beginning of the second and each succeeding Lease Year during the Term, the base rent will be increased 3% per annum or CPI, whichever is greater. 2.3   Payment of Business Taxes. Tenant shall pay when due all Business Tax. If Tenant’s Business Tax is payable by Landlord to the relevant taxing authority, Tenant shall pay the amount thereof to Landlord or as Landlord directs. Tenant shall provide Landlord with a copy of the paid intangible tax for personal property on or before December 31 of each year the Lease is in force. Failure to do so will constitute a default of the Lease. 2.4   Payment of Operating Costs. Tenant shall pay to Landlord Tenant’s Proportionate Share of Operating Costs. The amount of Operating Costs payable to Landlord may be estimated by Landlord for such period as Landlord determines from time to time (not to exceed 24 months), and Tenant agrees to pay to Landlord the amounts so estimated in equal installments, in advance, on the first day of each month during such period. Notwithstanding the foregoing, when bills for all or any portion of Operating Costs so estimated are actually received by Landlord, Landlord may bill Tenant for Tenant’s Proportionate Share thereof, less any amount previously paid by Tenant to Landlord on account of such item(s) by way of estimated Operating Costs payments. Within a reasonable period of time after the end of the period for which estimated payments have been made, Landlord shall submit to Tenant a statement from Landlord setting forth the actual amounts payable by Tenant based on actual costs. If the amount Tenant has paid, based on estimates, is less than the amount due based on actual costs, Tenant shall pay such deficiency within 10 days after submission of such statement. If the amount paid by Tenant is greater than the amount actually due, the excess may be retained by Landlord to be credited and applied by Landlord to the next due installments of Tenant’s Proportionate Share of Operating Costs, or as to the final Lease Year, provided Tenant is not in default, Landlord will refund such excess to Tenant. Tenant’s Proportionate Share of actual Operating Costs for the final estimate period of the Term of this Lease shall be due and payable even though it may not be finally calculated until after the expiration of the Term. Accordingly, Landlord shall, as long as Tenant is not in default, return Tenant’s security deposit thirty (30) days following expiration of the Term. Landlord shall, within thirty (30) days following reconciliation of said Operating Expenses, issue a final statement of any and all remaining balances due, if applicable, and Tenant hereby agrees to remit such balance, if applicable, within fifteen (15) days of receipt. 2.5   Rent Past Due. If any installment of Rent shall remain overdue for more than 10 days, an additional late charge in an amount equal to 10% of the delinquent amount plus applicable sales tax may be charged by Landlord, such charge to include the entire period for which the amount is overdue and which shall be in addition to and not in lieu of any other remedy available to Landlord.     --------------------------------------------------------------------------------   Exhibit 10.10 2.6   Security Deposit. Landlord acknowledges receipt of a security deposit in the amount specified on the Lease Summary to be held by Landlord, without any liability for interest thereon, as security for the performance by Tenant of all its obligations under this Lease. In the event of default by Tenant of any of its obligations under this Lease, Landlord may at its option, but without prejudice to any other rights which Landlord may have, apply all or part of the security deposit to compensate Landlord for any loss, damage or expense sustained by Landlord as a result of such default. If all or any part of the security deposit is so applied, Tenant shall restore the security deposit to its original amount on demand of Landlord. Within 30 days following termination of this Lease, if Tenant is not then in default, the security deposit will be returned by Landlord to Tenant. If Landlord sells its interest in the Premises, it may deliver the security deposit to the purchaser and Landlord will thereupon be released from any further liability with respect to the security deposit or its return to Tenant and the purchaser shall become directly responsible to Tenant. 2.7   Net Lease. This Lease is a completely net lease to Landlord, and except as otherwise expressly herein stated, Landlord is not responsible for any expenses or outlays of any nature arising from or relating to the Premises, the use or occupancy thereof, the contents thereof or the business carried on therein. Tenant shall pay all charges, impositions and outlays of every nature and kind relating to the Premises except as expressly herein stated. 2.8   Payment of Rent. Rent shall be paid as follows to: Property Manager #412 6278 N Federal Highway Fort Lauderdale, FL 33308 Landlord will provide payment coupons for each twelve-month period from the commencement date. Failure to use coupons by the Tenant will cost the Tenant $25.00 per occurrence. Loss of the coupon book by the Tenant will require Landlord to order a new coupon book at a cost of $25.00. These items are deductible from the Security Deposit if not paid at the expiration of the lease. ARTICLE III USE OF PREMISES 3.1   Permitted Use and Business Name. The Premises shall be used and occupied as NationsHealth, Inc. and other wholly-owned subsidiaries and/or entities doing business as under said entity. The business of Tenant in the Premises shall be carried on under the name and style provided herein and under no other name and style unless approved by Landlord in writing. 3.2   Hours of Business. During the term, Tenant may conduct its business in the Premises on Monday through Sunday from 8 am. to 7 p.m., but these times must comply with the local authorities rules and regulations. 3.3   Opening and Continuous Occupancy. Tenant shall continuously, actively and diligently carry on the business specified in Section 31 on the whole of the Premises during the Term, during such hours and upon such days as are herein required, except when prevented from doing so by force majeure, Tenant acknowledges that its continued occupancy of the Premises and the regular conduct of its business therein are of utmost importance to neighboring tenants and to Landlord in the renting of space in the Building. Tenant acknowledges that Landlord is executing this Lease in reliance thereon and that the same is a material element inducing Landlord to execute this Lease.     --------------------------------------------------------------------------------   Exhibit 10.10 3.4   Tenant’s Covenants as to Use and Occupancy. a.    Tenant shall carry on its business on the Premises in a reputable manner and shall not do, omit, permit or suffer to be done or exist upon the Premises anything which might tend to lower the first-class character of the Building or which could result in a nuisance, hazard or breach of any provision of this Lease or any applicable municipal or other governmental law or regulation. If Tenant is notified of any breach or violation of such governmental laws or regulations, it shall promptly notify Landlord. b.    Tenant shall not use in the Premises any traveling or flashing lights or signs or any loudspeakers, television, phonographs, radio or other audio-visual or mechanical devices in a manner so that they can be heard or seen outside the Premises without in each case prior written consent of Landlord. If Tenant uses any such equipment without receiving the prior written consent of Landlord, Landlord shall be entitled to remove such equipment without notice at any time and at the cost of Tenant payable as Additional Rent forthwith on demand. c.    Tenant shall not burn any trash or garbage in or about the Premises or anywhere else in the Building, nor cause, permit or suffer upon the Premises or anywhere else in the Building any unusual or objectionable noises or odors or anything which may disturb the enjoyment of the Building and all the Common Areas and facilities thereof by customers and other tenants of the Building. d.    Tenant shall not keep or display any merchandise on or otherwise obstruct the Common Areas and shall not sell, advertise, conduct or solicit business anywhere within the Building other than in the Premises. e.    Tenant shall not overload any floor in the Premises, or any utility or service, or commit any act of waste or damage any part of the Premises. f.    Tenant shall ship and receive supplies, fixtures, equipment, furnishings, wares and merchandise only through the appropriate service and delivery facilities provided by Landlord; shall cause its employees to park in parts of the parking areas designated by Landlord for such purpose; and shall not park its trucks or other delivery vehicles or allow suppliers or others making deliveries to or receiving shipments from the Premises to park in the parking areas, except in those parts thereof as may from time to time be allocated by Landlord for such purpose. g.    No aspect of Tenant’s business operation shall feature the display of any nude body parts or pornographic material. h.    Tenant shall not install in, on, or over its storefront any lights, shades, awnings or similar items without the prior written consent of Landlord. 3.5   Display Windows. Tenant shall keep display windows neatly dressed. Display windows and lighted signs (if any) shall be kept illuminated by Tenant on all business days until at least one-ha[f hour after the Building closes for business. 3.6   Compliance with Laws. The Premises shall be used and occupied in a safe, careful and proper manner so as not to contravene any present or future governmental or quasi-governmental laws, regulations or orders, or the requirements of Landlord’s or Tenants insurers. If due to Tenant’s use of the Premises, repairs, improvements or alterations are necessary to comply with any of the foregoing, Tenant shall pay the entire cost thereof. 3.7   Advertising, Trade Names and Restricted Marks. In its advertising, Tenant may use the name of the Building and such trade names, symbols and slogans as may be designated by Landlord, but Tenant shall not indulge in any advertising or sales promotion which might reflect unfavorably on the Building. The name for the Building which Landlord may from time to time adopt and every name or mark adopted by Landlord in connection with the Building shall be used by Tenant only in association with sales made at or from the business carried on in the Premises during the Term and Tenant’s use thereof shall be subject to such regulations as Landlord may from time to time impose. Tenant shall not acquire any rights in any such restricted name or mark, and upon the termination of this Lease all its interest herein shall be deemed to have been surrendered to Landlord and Tenant shall thereafter cease and abandon all use thereof. If Landlord so requests, Tenant shall execute registered user applications to protect Landlord’s trademark rights.     --------------------------------------------------------------------------------   Exhibit 10.10 3.8   Signs. The design and specification of all signs shall be prepared by Tenant in accordance with Landlord’s sign and storefront rules as adopted from time to time and shall be submitted for Landlord’s prior approval. Except with the prior written consent of Landlord at Landlord’s sole discretion, Tenant shall not erect, install, display, inscribe, paint or affix any other signs, lettering or advertising medium upon or above any exterior portion of the Premises including the storefront and all interior as well as exterior glass surfaces thereof. 3.9   Prohibited Uses. Notwithstanding any other provisions of this Lease, Tenant shall not use the Premises nor permit them to be used for any of the following purposes: (A) for the sale by Tenant, as its principal business purpose, of any merchandise which Tenant, in the course of its normal business practice, purchases at manufacturers’ clearances or purchases of ends-of-runs, bankruptcy stock, seconds or other similar merchandise; (B) for the sale of second-hand goods, war surplus articles, insurance salvage stock, fire sale stock, merchandise damaged by or held out to be damaged by fire, except merchandise damaged by fire or smoke occurring in the Building, and then only for 30 days after the date of any such damage; (C) as an auction or flea market; (D) for a bankruptcy sale or going-out-of-business sale or liquidation sale or any similar sale, unless Tenant is in fact in bankruptcy or is going out of business or is in liquidation, in which case such sale shall not continue beyond 30 days; or, (E) any business in which Tenant is engaged in intentionally deceptive or fraudulent advertising or selling practices or any other act or business practice contrary to honest retail practices. 3.10   Indemnity for Toxic Waste. Tenant (and any Guarantor) hereby agree to indemnify, defend and hold Landlord, any Mortgagee, and their successors and assigns harmless from and against any cost, claim, damage, expense and liability of any kind whatsoever, including but not limited to attorneys’ fees and costs at all tribunal levels, arising out of any act or omission of Tenant, its agents or any other person on the Premises under color of authority of Tenant, giving rise to any toxic waste, chemical pollution, or similar environmental hazard regardless of whether any such act or omission is, at the time of occurrence, a violation of any law or regulation. The foregoing indemnity shall survive the termination or expiration of this Lease, anything else herein to the contrary notwithstanding. ARTICLE IV ACCESS AND ENTRY 4.1   Right of Examination. Landlord and its agents shall be entitled, with reasonable notice, to enter the Premises to examine them; to make such repairs, alterations or improvements thereto as Landlord considers necessary or desirable; to have access to underfloor facilities and access panels to mechanical shafts and to check, calibrate, adjust and balance controls and other parts of the heating, air conditioning, ventilating and climate control systems. Landlord reserves to itself the right to install, maintain, use and repair pipes, ducts, conduits, vents, wires and other installations leading in, through, over, or under the Premises and for this purpose, Landlord may take all material into and upon the Premises which is required therefor. Tenant shall not unduly obstruct any pipes, conduits or mechanical or other electrical equipment so as to prevent reasonable access thereto. Landlord reserves the right to use all exterior walls and roof area. Landlord shall exercise its rights under this Section, to the extent possible in the circumstances, in such manner so as to minimize interference with Tenant’s use and enjoyment of the Premises. If any excavation is made on the Land, the person making such excavation may enter the Premises or the Building to support them by proper foundations. Rent will not abate or be reduced while the repairs, alterations, or improvements are being made. 4.2   Right to Show Premises. Landlord and its agents have the right to enter the Premises, with reasonable notice, to show them to prospective purchasers or Mortgagees and, during the last six months of the Term (or the last six months of any renewal term if this Lease is renewed), to show them to prospective tenants.     --------------------------------------------------------------------------------   Exhibit 10.10 4.3   Entry not Forfeiture. No entry into the Premises by Landlord pursuant to a right granted by this Lease shall constitute a breach of any covenant for quiet enjoyment, or (except where expressed by Landlord in writing) shall constitute a retaking of possession by Landlord or forfeiture of Tenant’s rights hereunder. ARTICLE V MAINTENANCE, REPAIRS AND ALTERATIONS 5.1   Maintenance and Repairs by Landlord. (A)    Landlord covenants to keep the following in good repair as a prudent owner: (i) the structure of the Building including exterior walls and roofs; (ii) the mechanical, electrical, and other base building systems of the Building pertaining to the Common Areas; and (Hi) the entrances, sidewalks, corridors, parking areas and other facilities from time to time comprising the Common Areas. The cost of such maintenance and repairs (other than repair of inherent structural defects) shall be included in Operating Costs. (B)    So long as Landlord is acting in good faith, Landlord shall not be responsible for any damages caused to Tenant by reason of failure of any equipment or facilities serving the Building or delays in the performance of any work for which Landlord is responsible pursuant to this Lease. 5.2 Maintenance and Repairs by Tenant. Tenant shall, at its sole cost, keep all non-structural elements including, without limitation, the store front, signs, windows, plate glass, doors and the interior of the Premises, together with all electrical, plumbing, and other mechanical installations therein in good order and repair and will make all replacements thereto at its expense. All glass, both interior and exterior is at the sole risk of Tenant and Tenant agrees to repair at Tenant’s own expense, any glass broken during the term. All repairs and replacements shall be made to a standard consistent with a first class Building shall be performed by contractors or workmen designated or approved by Landlord. At the expiration or earlier termination of the Term, Tenant shall surrender the Premises to Landlord in as good condition and repair as Tenant is required to maintain the Premises throughout the Term. Landlord shall have the right to charge Tenant’s security deposit for any repairs required to be made by Landlord to bring the Premises up to such condition. Tenant shall be responsible for all damages and repairs to the Premises caused by burglary, vandalism and/or lack of maintenance. Tenant shall arrange for the maintenance of all heating and air conditioning equipment with a recognized heating and air conditioning contractor who will carry out such maintenance on a scheduled basis. Tenant will furnish the name of the contractor and a copy of the maintenance program to Landlord annually for Landlord’s approval. Said maintenance contract to provide for no less than service every six (6) months. Tenant will provide a maintenance contract for Landlord’s review upon execution of the lease. 5.3   Approval of Tenant’s Alterations. No Alterations shall be made to the Premises without Landlord’s written approval. Tenant shall submit to Landlord details of the proposed work including drawings and specifications prepared by qualified architects or engineers conforming to good engineering practice. All such Alterations shall be performed: (i) at the sole cost of Tenant; (ii) by contractors and workmen approved in writing by Landlord; (iii) in a good and workmanlike manner; (iv) in accordance with drawings and specifications approved in writing by Landlord; (v) in accordance with all applicable laws and regulations; (vi) subject to the reasonable regulations, supervision, control and inspection of Landlord; and (vu) subject to such indemnification against liens and expenses as Landlord reasonably requires. Tenant shall reimburse Landlord for all professional fees and costs incurred by Landlord in connection with its consent to Alterations requested by Tenant. If any Alterations would affect the structure of the Building or any of the electrical, plumbing, mechanical, heating, ventilating or air conditioning systems or other base building systems, such work shall, at the option of Landlord, be performed by Landlord at Tenant’s cost. The cost of the work performed by Landlord plus a sum equal to 20% of said cost representing Landlord’s overhead shall be paid by Tenant to Landlord upon demand.     --------------------------------------------------------------------------------   Exhibit 10.10 5.4   Repair Where Tenant at Fault. Notwithstanding any other provisions of this Lease, if any part of the Building is damaged or destroyed or requires repair, replacement or alteration as a result of the act or omission of Tenant, its employees, agents, invitees, licensees, or contractors, Landlord shall have the right to perform same and the cost of such repairs, replacement or alterations plus a sum equal to 20% of such cost, representing Landlord’s overhead, shall be paid by Tenant to Landlord upon demand. 5.5   Removal of Improvements and Fixtures. All Leasehold Improvements (other than Trade Fixtures) shall immediately upon their placement in the Premises become Landlord’s property without compensation to Tenant. Except as otherwise agreed by Landlord in writing, no Leasehold Improvements shall be removed from the Premises by Tenant either during or at the expiration or sooner termination of the Term except that: (a) Tenant may, during the Term, in the usual course of its business, remove its Trade Fixtures, provided that Tenant is not in default under this Lease; and (b) Tenant shall, at the expiration or earlier termination of the Term, at its sole cost, remove such of the Leasehold Improvements and Trade Fixtures in the Premises as Landlord shall require to be removed and restore the Premises to a good condition, reasonable wear and tear excepted. Tenant shall at its own expense repair any damage caused to the Building by such removal. If Tenant does not remove its Trade Fixtures at the expiration or earlier termination of the Term, the Trade Fixtures shall, at the option of Landlord, become the property of Landlord and may be removed from the Premises and sold or disposed of by Landlord in such manner as it deems advisable without any accounting to Tenant. Tenant shall also return to Landlord a workable set of keys to the Premises at the expiration of the Term. 5.6   Liens. The right, title and interest of Landlord in all or any portion of the Premises, Land or Building shall not be subject to any liens arising directly or indirectly out of any improvements, alterations or changes made to the Premises, Land or Building by or on the behalf of Tenant, its officers, employees, servants or agents. Tenant shall promptly pay for all materials supplied and work done with respect to the Premises. Tenant covenants and agrees that it shall not incur any indebtedness giving a right to a lien of any kind or character upon the right, title or interest of Landlord in and to all or any portion of the Premises, Land or Building. Pursuant to Section 713.10, Florida Statutes, as amended from time to time, the parties will, at the option of Landlord, execute, acknowledge, deliver and record a Short Form of Lease in the form attached hereto and made a part hereof. If any lien resulting from work contracted for by Tenant shall be filed against all or any part of the Premises, Land or Building, then Tenant shall cause the same to be discharged or transferred to bond in a manner as provided by law within 10 days after the filing of the lien by the lienor upon the public records. Failure to do so shall constitute a default hereunder and Landlord shall have the right to remove such lien by bonding or payment and the cost thereof shall be paid immediately from Tenant to Landlord. Tenant has no right or authority to create any mechanics’ or materialmen’s lien on the Land, Building or Landlord’s right, title or interest therein and Tenant shall so notify all suppliers of labor or materials, in writing, and obtain written acknowledgment thereof, prior to ordering such labor or materials. Tenant agrees to indemnify and save harmless Landlord from any and all liabilities, expenses, costs, expenditures or otherwise, including attorneys’ fees at all judicial levels, for breach of this provision. 5.7   Notice by Tenant. Tenant shall notify Landlord of any accident, defect, damage or deficiency in any part of the Premises or the Building, which comes to the attention of Tenant, its employees or contractors notwithstanding that Landlord may have no obligation in respect thereof.     --------------------------------------------------------------------------------   Exhibit 10.10 ARTICLE VI UTILITIES/H VAC 6.1   Utilities. If utilities are separately metered, Tenant shall pay directly to the provider of such utility services all meter installation costs, deposits, impact fees and other charges for use or consumption for electricity and power services, telephone service and all other utilities used by Tenant in and around the Premises. Utility charges for services to the Common Areas and utility services not separately metered shall be computed proportionately and included within Operating Expenses. 6.2   Heating, Ventilating and Air Conditioning (HVAC). The heating, ventilating, air conditioning equipment and refrigeration system (if any) for the Premises shall be maintained, repaired and replaced, if necessary, by Tenant at its sole cost and expense. ARTICLE VII INSURANCE AND INDEMNITY 7.1   Tenant’s Insurance. Tenant shall, throughout the Term (and any other period when Tenant is in possession of the Premises), maintain at its sole cost the following insurance. The Tenant must provide the Landlord with a Certificate of Insurance at the execution of the lease as a condition precedent to possession of the space and must continue providing a new certificate of Insurance each year. a.    All risks (including flood and earthquake) property insurance, naming Tenant as an insured party and naming Landlord as additional named insured, containing a waiver of subrogation rights which Tenant’s insurers may have against Landlord and against those for whom Landlord is in law responsible, including, without limitation, its directors, officers, agents and employees, and (except with respect to Tenant’s chattels) incorporating a standard New York mortgagee endorsement (without contribution). Such insurance shall insure (i) property of every kind owned by Tenant or for which Tenant is legally liable located on or in the Building, including, without limitation, Leasehold Improvements, in an amount not less than the full replacement cost thereof (new), with such cost to be adjusted no less than annually subject to an agreed amount coinsurance clause; and (U) twelve months direct or indirect loss of earnings including prevention of access to the Premises or to the Building. Such policy or policies, except with respect to Tenant’s chattels and loss of earnings insurance, shall provide that loss thereon shall be adjusted and payable to Landlord, with the proceeds to be held in trust to be used for repair and replacement of the property so insured. b.    Comprehensive machinery insurance on a blanket repair and replacement basis with limits for each accident in an amount of at least the replacement cost of all Leasehold Improvements and all boilers, pressure vessels, air conditioning equipment and miscellaneous electrical apparatus owned or operated by Tenant or by others (except for Landlord) on behalf of Tenant in the Premises, or relating to, or serving the Premises and twelve months direct or indirect loss of earnings including prevention of access to the Premises or to the Building. Such insurance shall (except with respect to Tenant’s chattels) incorporate a standard New York mortgagee endorsement (without contribution) for the benefit of the Mortgagee and contain a waiver of subrogation rights which Tenant’s insurers may have against Landlord and against those for whom Landlord is in law responsible including, without limitation, its directors, officers, agents and employees. c.    Commercial General Liability insurance. Such policy shall (i) contain inclusive limits of not less than $1,000,000 per occurrence, (ii) provide for cross liability, (Hi) cover Tenant’s contractual liability under the indemnity provided in this Lease, (iv) include Landlord and Mortgagee named as additional insureds, and (v) in the event such policy contains a general aggregate, be endorsed to provide that the general aggregate applies separately per location.     --------------------------------------------------------------------------------   Exhibit 10.10 d.    Worker’s compensation and employer’s liability insurance in compliance with applicable legal requirements. e.    Plate glass coverage f.    Any other form of insurance which Tenant or Landlord, acting reasonably, or the Mortgagee requires from time to time in form, in amounts and for risks and such higher limits against which a prudent tenant would insure. All policies referred to above shall: (i) be taken out with insurers licensed to do business in Florida and reasonably acceptable to Landlord; (ii) be in a form reasonably satisfactory to Landlord; (Ni) be non-contributing with, and shall apply only as primary and not as excess to any other insurance available to Landlord or the Mortgagee; and (iv) contain an undertaking by the insurers to notify Landlord by certified mail not less than 30 days prior to any material change (which includes, without limitation, any change that reduces or restricts coverage), cancellation or termination. Certificates of insurance on Landlord’s standard form or, if required by the Mortgagee, copies of such insurance policies certified by an authorized officer of Tenant’s insurer as being complete and current, shall be delivered to Landlord promptly upon request. Tenant shall be required to pay all premiums for all policies as they become due and Tenant shall promptly deliver a certificate of payment to Landlord within 10 days prior to the expiration of any policy. If (a) Tenant fails to take out or to keep in force any insurance referred to in this Section 7.1, or should any such insurance not be approved by either Landlord or the Mortgagee, and (b) Tenant does not commence and continue to diligently cure such default within 48 hours after written notice by Landlord to Tenant specifying the nature of such default, then Landlord has the right, without assuming any obligation in connection therewith, to effect such insurance at the sole cost of Tenant and all outlays by Landlord shall be treated as additional rent and shall be paid by Tenant to Landlord without prejudice to any other rights or remedies of Landlord under this Lease. 7.2   Increase in Insurance Premiums. Tenant shall not keep or use in the Premises any article of a combustible, toxic or dangerous nature or any article which may be prohibited by any fire or casualty insurance policy in force from time to time covering the Premises or the Building. Tenant will comply promptly with the requirements of any insurer pertaining to the Premises or the Building. If (a) the conduct of business in the Premises or (b) any acts or omissions of Tenant in the Building or any part thereof, cause or result in any increase in premiums for the insurance carried from time to time by Landlord with respect to the Building, if Landlord allows such act or omission to continue, Tenant shall pay any such increase in premium. In determining whether increased premiums are caused by or result from the use or occupancy of the Premises, a schedule issued by the organization computing the insurance rate on the Building showing the various components of such rate, shall be conclusive evidence of the several items and charges which make up such rate. 7.3   Cancellation of Insurance. If any insurance policy upon the Building or any part thereof shall be canceled or shall be threatened by the insurer to be canceled or the coverage thereunder reduced in any way by the insurer by reason of the use of the Premises by Tenant or any assignee or subtenant of Tenant, or by anyone permitted by Tenant to be upon the Premises, and if Tenant fails to remedy such condition with 48 hours after notice thereof by Landlord, Tenant shall be deemed to have committed a material default of this Lease, in which event in addition to any other remedies available to Landlord, Landlord may enter upon the Premises and remedy the condition giving rise to such cancellation, threatened cancellation or reduction, including removal of any offending article, and Tenant shall pay the cost of such remedy to Landlord and Landlord shall not be liable for any damage or injury caused to any property of Tenant or of others located on the Premises as a result of any such entry. 7.4   Loss or Damage. Landlord shall not be liable, unless due to landlord’s act, omission or negligence, for any death or injury arising from or out of any occurrence in, upon, at or relating to the Building or damage to property of Tenant or of others located on the Premises or elsewhere in the Building, nor shall it be responsible for any loss of or damage to any property of Tenant or others from any cause, unless due to Landlord’s act, omission or negligence.     --------------------------------------------------------------------------------   Exhibit 10.10 Without limiting the generality of the foregoing, landlord shall not, unless due to landlord’s act, omission or negligence, be liable for any injury or damage to Persons or property resulting from fire, explosion, falling plaster, falling ceiling tile, falling fixtures, steam, gas, electricity, water, rain, flood, or leaks from any part of the Premises or from the pipes, sprinklers, appliances, plumbing works, roof, windows or subsurface of any floor or ceiling of the Building or from the street or any other place or by dampness or by any other cause whatsoever. Landlord shall not be liable, unless due to landlord’s act, omission or negligence, for any such damage caused by other tenants or persons in the Building or by occupants of adjacent property thereto, or the public, or caused by construction or by any private, public or quasi-public work. All property of Tenant kept or stored on the Premises shall be so kept or stored at the risk of Tenant only, and Tenant releases and agrees to indemnify Landlord and save it harmless from any claims or liability arising out of any damage to the same including, without limitation, any subrogation claims by Tenant’s insurers. Tenant covenants with Landlord that Tenant shall not bring or abet any claim or action based on any item for which Tenant has above agreed Landlord shall not be responsible or liable. 7.5   Indemnification of Landlord. Notwithstanding any other provision of this Lease, Tenant agrees to indemnify Landlord and hold it harmless from and against any and all loss (including loss of Minimum Rent and Additional Rent payable in respect to the Premises) claims, actions, damages, liability and expense of any kind whatsoever (including attorneys’ fees and costs at all tribunal levels), whether or not caused in whole or in part by the negligence of landlord or its agents, arising from any occurrence in, upon or at the Premises, or the occupancy, use or improvement by Tenant or its agents or invitees of the Premises, any parking facilities, or any part thereof, or occasioned wholly or in part by any act or omission of Tenant its agents, employees and invitees or by anyone permitted to be on the Premises or common areas by Tenant. Landlord may, at its option and at Tenant’s expense as part of the foregoing indemnity, participate in or assume carriage of all or any part of any litigation or settlement discussions relating to the foregoing or any other matter for which Tenant is required to indemnify Landlord hereunder. ARTICLE VIII DAMAGE AND DESTRUCTION 8.1   Rent Abatement. If the Premises or the Building are damaged or destroyed in whole or part by fire or any other occurrence, this Lease shall continue in full force and effect and there shall be no abatement of Rent except as specifically provided in this Article VIII. 8.2   Damage to Premises. If the Premises are at any time destroyed or damaged as a result of fire or any other casualty insured against by Landlord, then the following provisions shall apply: a.    If the Premises are rendered untenantable only in part Landlord shall diligently repair the Premises, to the extent only of its obligations under Section 5.1, excluding those provisions provided therein as they pertain to operating expenses, and Minimum Rent shall abate proportionately to the portion of the Premises rendered untenantable from the date of destruction or damage until Landlord’s repairs have been substantially completed. b.    If the Premises are rendered wholly untenantable, Landlord shall diligently repair the Premises to the extent only of its obligations pursuant to Section 5.1, excluding those provisions provided therein as they pertain to operating expenses, Minimum Rent shall abate entirely from the date of destruction or damage to such date which is the earlier of i) the date tenantable, or H) 30 days after Landlord’s repairs have been substantially completed. c.    If the Premises are not rendered untenantable in whole or in part, Landlord shall diligently perform such repairs to the Premises to the extent only of its obligations under Section 5.1, but in such circumstances Minimum Rent shall not terminate or abate.     --------------------------------------------------------------------------------   Exhibit 10.10 d.    Upon being notified by Landlord that Landlord’s repairs have been substantially completed, Tenant shall diligently perform all repairs to the Premises which are Tenant’s responsibility under Section 5.2, and all other work required to fully restore the Premises for use in Tenant’s business, in every case at Tenant’s cost and without any contribution to such cost by Landlord, whether or not Landlord has at any time made any contribution to the cost of supply, installation or construction of Leasehold Improvements in the Premises. e.    Nothing in this Section requires Landlord to rebuild the Premises in the condition which existed before any such damage or destruction so long as the Premises as rebuilt will have reasonably similar facilities to those in the Premises prior to such damage or destruction, having regard, however, to the age of the Building at such time. 8.3   Termination for Damage to Premises. Notwithstanding Section 8.2, if the damage or destruction which has occurred to the Premises is such that in the reasonable opinion of Landlord the Premises cannot be rebuilt or made fit for the purposes of Tenant within 120 days of the happening of the damage or destruction, Landlord may, at its option, terminate this Lease on notice to Tenant given within 30 days after such damage or destruction and Tenant shall, within a commercially reasonable time, deliver vacant possession of the Premises in accordance with the terms of this Lease. 8.4   Destruction of Building. Notwithstanding any other provision of this Lease, it (i) 20% or more of the Gross Rentable Area of the retail component of the Building is destroyed or damaged by any cause, or (U) portions of the Building which affect access or services essential thereto are damaged or destroyed and, in the reasonable opinion of Landlord, cannot reasonably be repaired within 180 days after the occurrence of the damage or destruction, then Landlord may, by notice to Tenant given within 30 days of such damage or destruction, terminate this Lease, in which event neither Landlord nor Tenant shall be bound to repair and Tenant shall surrender the Premises to Landlord within 30 days after delivery of its notice of termination and Rent shall be apportioned and paid to the date on which Tenant delivers vacant possession of the Premises, subject to any abatement to which Tenant may be entitled pursuant to Section 8.2. If Landlord is entitled to, but does not elect to terminate this Lease, Landlord shall, following such damage or destruction, diligently repair that part of the Building damaged or destroyed, but only to the extent of Landlord’s obligations pursuant to the terms of this Lease (as to Common Areas) and the various leases for other rentable space in the Building (as to such other damaged rentable space), excluding any tenant’s responsibilities with respect to such repair. If Landlord elects to repair the Building, Landlord may do so in accordance with plans and specifications other than those used in the original construction of the Building. 8.5   Architects Certificate. The certificate of the Architect, if applicable, shall bind the parties as to: (a) the percentage of the Gross Rentable Area of the retail component of the Building damaged or destroyed; (b) whether or not the Premises are rendered partially or wholly untenantable and the percentage of the Gross Rentable Area of the Premises rendered untenantable; (c) the date upon which either Landlord’s or Tenant’s work of reconstruction or repair is substantially completed, (d) the date when the Premises are rendered tenantable. ARTICLE IX ASSIGNMENT, SUBLETING AND TRANSFERS 9.1   Assignments, Subleases and Transfers. Tenant shall not enter into, consent to or permit any Transfer without the prior written consent of Landlord in each instance, which consent shall not be unreasonably withheld but shall be subject to Landlord’s rights under Sections 9.2 and 9.3. It shall not be considered unreasonable for Landlord to take into account the following factors (and other reasonable factors) in deciding whether to grant or withhold its consent: (a) Whether such Transfer (or the potential consequences thereof) might result in violation or breach of any covenants or restrictions made or granted by Landlord to other tenants or occupants or prospective tenants or occupants of the Building. (b) Whether, in Landlord’s opinion, the financial background, business history and capability of the proposed Transferee is satisfactory. In this regard, it is agreed that the Transferee must be an experienced and successful owner/operator of a business of the same type and quality and     --------------------------------------------------------------------------------   Exhibit 10.10 respecting the same type of merchandise which is required to be operated in the Premises pursuant to this Lease; has agreed to operate its business in the Premises under a name which is as well known as and of equal or better reputation than the name under which Tenant is required to conduct its business in the Premises; and has demonstrated to Landlord’s satisfaction that it is likely to attract as large a number of members of the public to the Building as Tenant. (c) Whether the Transfer is to an existing tenant of Landlord. (d) Whether the conduct of business in the Premises by the Transferee would adversely affect the tenant-mix or merchandising balance within the Building. Consent by Landlord to any Transfer, if granted, shall not constitute a waiver of the necessity for such consent to any subsequent Transfer. This prohibition against Transfer shall include a prohibition against any Transfer by operation of law and no Transfer shall take place by reason of the failure of Landlord to give notice to Tenant within 30 days as required by Section 9.2. 9.2   Landlord’s Right to Terminate. If Tenant intends to effect a Transfer, Tenant shall give prior notice to Landlord of such intent specifying the identity of the Transferee and providing such financial, business or other information relating to the Transfer, the proposed Transferee and its principals as Landlord or any Mortgagee requires, together with copies of sufficient documents to evidence the particulars of the proposed Transfer, including the total consideration to be paid by the Transferee. Landlord shall, within 30 days after having received such notice and all requested information, notify Tenant either that: (a) it consents or does not consent to the Transfer in accordance with the provisions and qualifications of this Article IX, or (b) it elects to cancel this Lease as to the whole or part, as the case may be, of the Premises affected by the proposed Transfer, in preference to giving such consent. If Landlord fails to timely give any notice, Landlord shall be deemed to have refused consent to the Transfer. If Landlord elects to cancel this Lease, it shall stipulate in its notice the termination date of this Lease, which date shall be no less than 30 days nor more than 90 days following the giving of such notice of termination, in which case Tenant shall notify Landlord within 10 days thereafter of Tenant’s intention either to refrain from such Transfer or to accept the cancellation of this Lease or the portion thereof in respect of which Landlord has exercised its rights. If Tenant fails to timely deliver such notice or notifies Landlord that it accepts Landlord’s termination, this Lease will as to the whole or affected part of the Premises, as the case may be, be terminated on the date of termination stipulated by Landlord in its notice of termination. If Tenant timely advises Landlord it intends to refrain from such Transfer, then Landlord’s election to terminate this Lease shall become void. 9.3   Conditions of Transfer. a.    Any consent by Landlord shall be subject to Tenant and Transferee executing an agreement with Landlord agreeing that the Transferee will be bound by all of the terms of this Lease as if such Transferee had originally executed this Lease as tenant. Notwithstanding any Transfer permitted or consented to by Landlord, or acceptance of Rent from the Transferee, Tenant shall be jointly and severally liable with the Transferee under this Lease and shall not be released from performing any of the terms of this Lease. b.    Landlord’s consent to any Transfer shall be subject to the further condition that if the Minimum Rent and Additional Rent pursuant to such Transfer exceeds the Minimum Rent and Additional Rent and payable under this Lease, the amount of such excess shall be paid to Landlord. If, pursuant to a permitted Transfer, Tenant receives from the Transferee, either directly or indirectly, any consideration other than Minimum Rent or Additional Rent and for such Transfer, either in the form of cash, goods or services Tenant shall, upon receipt thereof, pay to Landlord an amount equivalent to such consideration. Tenant and the Transferee shall execute any agreement required by Landlord to effect the foregoing provisions. c.    Notwithstanding the effective date of any permitted Transfer as between Tenant and the Transferee, all Minimum Rent and Additional Rent for the month in which such effective date occurs shall be paid by Tenant so that Landlord will not be required to accept partial payments of Minimum Rent and Additional Rent for such month from either Tenant or Transferee.     --------------------------------------------------------------------------------   Exhibit 10.10 d.    Any document evidencing any Transfer permitted by Landlord, or setting out any terms applicable to such Transfer or the rights and obligations of Tenant or Transferee thereunder, shall be prepared by Landlord or its attorneys and all legal costs with respect thereto shall be paid by Tenant. 9.4   Change of Control. If Tenant is at any time a corporation, partnership or other entity, any actual or proposed Change of Control in such corporation, partnership, trust or other entity shall be deemed to be a Transfer and subject to all of the provisions of this Article IX. Tenant shall make available to Landlord or its representatives all of its corporate, partnership or other such records, as the case may be, for inspection at all reasonable times, in order to ascertain whether there has been any Change of Control of Tenant. 9.5   No Advertisement. Tenant shall not advertise the whole or any part of the Premises for the purposes of a Transfer and shall not permit any broker or other person to do so unless the complete text and format of any such advertisement is first approved in writing by Landlord. No such advertisement shall contain any reference to the rental rate of the Premises. 9.6   Assignment by Landlord. Landlord shall have the unrestricted right to sell, lease, convey or otherwise dispose of the Building or any part thereof and this Lease or any interest of Landlord in this Lease. The term “Landlord” as used in this Lease, so far as covenants or obligations on the part of Landlord are concerned, shall be limited to mean and include only the owner or owners at the time in question of the fee of the Premises. In the event of any transfer or transfers of the title in such fee, Landlord herein named (and in case of any subsequent transfers, the then grantor) shall be relieved from and after the date of such transfer of all liability with respect to performance of any covenants or obligations on the part of Landlord contained in this Lease thereafter to be performed. Without further agreement, the transferee of such title shall be deemed to have assumed and agreed to observe and perform any and all obligations of Landlord hereunder during Landlord’s ownership of the Premises. ARTICLE X DEFAULT 10.1   Defaults. A default by Tenant shall be deemed to have occurred hereunder if: a.    any Minimum Rent is in arrears whether or not any notice or demand for payment has been made by Landlord; b.    any Additional Rent is in arrears and is not paid within three (3) days after written demand by Landlord; c.    Tenant has breached any of its obligations in this Lease (other than the payment of Rent) and Tenant fails to remedy such breach within 15 days (or such shorter period as may be provided in this Lease), or if such breach cannot reasonably be remedied within 15 days (or such shorter period), then if Tenant fails to immediately commence to remedy and thereafter proceed diligently to remedy such breach, in each case after notice in writing from Landlord; d.    Tenant or any Guarantor or any of the affiliates, shareholders, principals or officers of either Tenant or Guarantor becomes bankrupt, insolvent (i.e., unable to pay its debts as they arise, or with liabilities greater than assets), or takes the benefit of any statute for bankrupt or insolvent debtors or makes any proposal, assignment or arrangement with its creditors, or any steps are taken or proceedings commenced by any person for the dissolution, winding-up or other termination of Tenants existence or the liquidation of its assets; e.    a trustee, receiver, or like person is appointed with respect to the business or assets of Tenant or any Guarantor; f.    Tenant makes a sale in bulk of all or a substantial portion of its assets other than in conjunction with a Transfer approved by Landlord; g.    this Lease or any of Tenant’s assets are taken under a writ of execution;     --------------------------------------------------------------------------------   Exhibit 10.10 h.    Tenant proposes to make a Transfer other than in compliance with the provisions of this Lease; i.    Tenant abandons or attempts to abandon the Premises or disposes of its goods so that there would not after such disposal be sufficient goods of Tenant on the Premises subject to distress to satisfy Rent for at least three months, or the Premises become vacant or unoccupied for a period of five consecutive days or more without the consent of Landlord; j.    any of Landlords policies of insurance with respect to the Building are actually or threatened to be cancelled or adversely changed as a result of any use or occupancy of the Premises; or k.    any obligations of Tenant or any Guarantor owing to Landlord, whether or not related to this Lease and however arising (whether by operation of law, contract, acquired, or otherwise) shall be in default. 10.2   Remedies. In the event of any default hereunder by Tenant, then without prejudice to any other rights which it has pursuant to this Lease or at law or in equity, Landlord shall have the following rights and remedies, which are cumulative and not alternative: a.    Landlord may terminate this Lease by notice to Tenant and retake possession of the Premises for Landlord’s account. b.    Landlord may re-take possession of the Premises for the account of Tenant and recover from Tenant Landlord’s damages arising from Tenant’s default and Landlord’s retaking of possession. If this remedy is elected by Landlord, Landlord’s damages shall be determined as follows: a) The fair market value of the Premises for the remaining Term of this Lease after Tenant’s default, reduced to its present value using a then current discount rate, shall be determined by a licensed Florida real estate appraiser mutually agreed to by both parties, Such appraiser shall take into consideration the actual terms of any re-rental of the Premises, if Landlord has been able to re-rent same, and any other factors deemed relevant by such appraiser. The conclusion of such appraiser as to such present value shall be binding on the parties. b) Such present value shall be subtracted from the present value of the Rent reserved under this Lease for the remainder of the Term following Tenant’s default. Such present value shall be determined by the same appraiser, using a discount rate of 6%. The conclusion of such appraiser as to such present value shall be binding on the parties. c) The difference between the two present values computed under a) and b) above shall have added to it all sums owing to Landlord and accrued prior to Tenant’s default, plus all of Landlords costs, direct and indirect, of re-taking possession, preparing the Premises for re-rental, and re-renting the Premises. It the Premises are not re-rented at the time Landlord brings its action for damages under this provision, or if the term of the re-rental is for a period less than the remaining Term of this Lease and therefor additional re-rentals may be required to fill the remaining Term, then in either case Landlord shall make a reasonable estimate of such costs and such estimate shall be binding on the parties. The costs referred to above shall include, but not be limited to, legal fees, cleaning, painting, re-fixturing, partitioning, repairs, advertising, lease commissions and an administrative fee to Landlord equal to 20% of all the costs referred to in this Section 10.2(c). c.    Landlord may remedy or attempt to remedy any default of Tenant under this Lease for the account of Tenant and enter upon the Premises for such purposes. No notice of Landlord’s intention to perform such covenants need be given Tenant unless expressly required by this Lease. Landlord shall not be liable to Tenant for any loss or damage caused by acts of Landlord in remeddng or attempting to remedy such default, and Tenant shall pay to Landlord all expenses incurred by Landlord in connection with remedying or attempting to remedy such default. d.    Landlord may recover from Tenant all damages and expenses incurred by Landlord as a result of any breach by Tenant.     --------------------------------------------------------------------------------   Exhibit 10.10 e.    If default is undisputed by Tenant, Landlord may accelerate all Rent for the entire Term and may further declare any option periods null and void. Nothing herein, however, shall excuse any obligation on the part of landlord to mitigate and/or re-let Premises. 10.3   Costs. Tenant shall pay to Landlord on demand all costs incurred by Landlord, including attorneys’ fees and costs at all tribunal levels, incurred by Landlord in enforcing any of the obligations of Tenant under this Lease. 10.4   Allocation of Payments. Landlord may at its option apply any sums received from Tenant against any amounts due and payable by Tenant under this Lease in such manner as Landlord sees fit and regardless of the express purpose for which the tender was made and regardless of any endorsement placed on the check by which payment is made. 10.5   Section Deleted. 10.6   Landlord’s Other Rights. In the event Tenant has filed for protection under the Federal Bankruptcy Law, and the trustee desires to assume or assign this Lease, the trustee must take into account the provisions contained in 11 U.S.C. ‘365(b)(3) which include adequate assurance of the source of the rent, protection for exclusive use provisions, and that any assignment will not substantially disrupt any Tenant’s use, and provided further that reasonable attorneys’ fees that were incurred by Landlord in the bankruptcy proceedings will be reimbursed. In the event of a default by Tenant for the nonpayment of rent or failure of Tenant to surrender possession after expiration of the term hereof, Tenant hereby expressly waives its right to the three-day notice of default as required by Florida Statutes 83.20 (2). Landlord shall have a Landlord’s lien upon all furnishings, fixtures, equipment, decorations, supplies, accessories and other property which Tenant owns or in which it has an interest located on the Premises to secure the payment of all rental and other sums due hereunder, and the performance of all other obligations of Tenant under this Lease. ARTICLE XI ATTORNMENT AND SUBORDINATION 11.1   Estoppel Certificate. Within 10 days after written request by Landlord, Tenant shall deliver in a form supplied by Landlord an estoppel certificate to Landlord as to the status of this Lease, including whether this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect as modified and identifying the modification agreements); the commencement and expiration dates of the Term; the amount of Minimum Rent and Additional Rent then being paid and the dates to which same have been paid; whether or not there is any existing or alleged default by either party with respect to which a notice of default has been served and if there is any such default, specifying the nature and extent thereof; and any other matters pertaining to this Lease as to which Landlord shall request such certificate. Tenant’s failure to timely provide Landlord with such estoppel certificate shall constitute (a) a material, uncurable default under this Lease, at Landlord’s option, and (b) Tenants acquiescence to Landlord’s statements concerning the Lease which may be relied upon by any person holding or intending to acquire any interest whatsoever in the Premises or the Building and shall constitute as to any persons entitled to rely on such statements a waiver by Tenant of any defaults by Landlord or defenses or offsets against the enforcement of this Lease by Landlord which may exist prior to the date of the written request. 11.2   Subordination. This Lease and all rights of Tenant shall be subject and subordinate to any and all Mortgages from time to time in existence against the Building, whether now existing or hereafter created. On request, and from time to time, Tenant shall further evidence its agreement to subordinate this Lease and its rights under this Lease to any and all Mortgages and to all advances made under such Mortgages. The form of such subordination shall be made as required by Landlord or any Mortgagee.     --------------------------------------------------------------------------------   Exhibit 10.10 11.3   Attornment. Tenant shall promptly on request attorn to any Mortgagee, or to the future owner(s) of the Building, or the purchaser at any foreclosure or sale under proceedings taken under any Mortgage, and shall recognize such Mortgagee, owner, or purchaser as Landlord under this Lease. On request, and from time to time, Tenant shall further evidence its agreement to attorn. The form of such attornment shall be made as required by the Mortgagee or future owner which requests such attornment. 11.4   Subordination, Nondisturbance and Attornment Agreement. Upon request by Tenant, Landlord agrees to make commercially reasonable efforts to execute a Subordination, Nondisturbance and Attornment Agreement. ARTICLE XII CONTROL OF BUILDING BY LANDLORD 12.1   Use and Maintenance of Common Areas. Tenant and those doing business with Tenant for purposes associated with Tenant’s business on the Premises, shall have a non-exclusive right to use the Common Areas for their intended purposes during normal business hours in common with others entitled thereto and subject to any rules and regulations imposed by Landlord. Landlord shall keep the Common Areas in good repair and condition and shall clean the Common Areas when necessary. Tenant acknowledges that its non-exclusive right to use any parking facilities forming part of the Building is subject to such rules and regulations as imposed by Landlord from time to time, and to Landlord’s absolute right to allocate certain areas of the parking facilities for the exclusive use by invitees to the Building. Tenant acknowledges that all Common Areas shall at all times be under the exclusive control and management of Landlord. Landlord may at any time and from time to time, in its sole discretion, eliminate, relocate, expand, reduce, modify or prescribe changes in the permitted use of any or all of the present or future Common Areas, and no such action of Landlord shall be deemed to be an eviction of Tenant. Said Common Areas of the Building may be expanded, contracted or changed by Landlord from time to time as required or deemed desirable. If Landlord deems it necessary to prevent the acquisition of public rights, Landlord from time to time may temporarily close portions of the Common Area, erect private boundary marks or take further appropriate action for that purpose and such action shall not be deemed an eviction or disturbance of Tenant’s use of the Premises. 12.2   Alterations by Landlord. Landlord may (a) alter, add to, subtract from, construct improvements on, re-arrange, and construct additional facilities in, adjoining or proximate to the Building; (b) relocate the facilities and improvements in or comprising the Building or erected on the Land; (c) do such things on or in the Building as required to comply with any laws, regulations, orders or directives affecting the Land or any part of the Building; and (d) do such other things on or in the Building as Landlord, in the use of good business judgment determines to be advisable, provided that notwithstanding anything contained in this Section 12.2, access to the Premises shall be available at all times. Landlord shall not be in breach of its covenants for quiet enjoyment or liable for any loss, costs or damages, whether direct or indirect, incurred by Tenant due to any of the foregoing. 12.3   Tenant Relocation. Landlord shall have the right, at any time upon sixty (60) days written notice to Tenant, to relocate Tenant into other space within the Building. Upon such relocation, such new space shall be deemed the Premises and the prior space originally demised shall in all respects be released from the effect of this Lease. If Landlord elects to relocate Tenant as above described, (i) the new space shall contain approximately the same as or greater useable area than the original space, (H) Landlord shall improve the new space, at Landlord’s sole cost, to at least the standards of the original space, (Ni) Landlord shall pay the reasonable costs of moving Tenant’s Trade Fixtures and furnishings from the original space to the new space, (iv) as total compensation for all other costs, expenses and damages which Tenant may suffer in connection with the relocation, including but not limited to lost profit or business interruption, no Minimum Rent, or Operating Costs shall be due or payable for the first full calendar month of Tenant’s occupancy of the new space, and Landlord shall not, unless such is reasonably foreseeable, be liable for any further indirect or special expenses of Tenant resulting from the relocation, (v) Rent, Tenant’s Proportionate Share of Operating Costs and all other charges hereunder shall be the same for the new space as for the original space, notwithstanding that the new space may be larger than the original space, and (vi) all other terms of this Lease shall apply to the new space as the Premises, except as otherwise provided in this paragraph.     --------------------------------------------------------------------------------   Exhibit 10.10 ARTICLE XIII CONDEMNATION 13.1   Total Taking. If the whole of the Premises shall be taken by any public authority under the power of eminent domain or sold to public authority under threat or in lieu of such taking, the Term shall cease as of the day possession or title shall be taken by such public authority, whichever is earlier (“Taking Date”), whereupon the Rent shall be paid up to the Taking Date with a proportionate refund by Landlord of any Rent paid for a period subsequent to the Taking Date. 13.2   Partial Taking. a.    If less than the whole but more than 25% the Premises, or more than 50% of the area of that portion of Common Areas serving the retail component of the Building, or more than 50% of the Gross Rentable Area of the retail component of the Building shall be taken under eminent domain, or sold to public authority under threat or in lieu of such a taking, Tenant shall have the right upon notice to Landlord within 10 days after the Taking Date either to terminate this Lease as of the Taking Date, or, subject to Landlord’s right of termination as set forth in Subsection 14.2(C), to continue in possession of the remainder of the Premises. In the event Tenant elects to remain in possession, all of the terms of this Lease shall continue in effect, except that as of the Taking Date, Minimum Rent and other charges payable by Tenant shall be reduced in proportion to the floor area of the Premises taken. Landlord shall, at its cost, but only to the extent of net proceeds of condemnation received by Landlord, make all necessary repairs or alterations within the scope of Landlord’s Work and Landlord’s duties under Section 5.1 so as to constitute the remaining Premises a complete architectural unit, and Tenant, at Tenant’s cost, shall be obligated to perform all of Tenant’s Work and Tenant’s duties under Section 5.2 and otherwise restore the Premises and Tenant’s Trade Fixtures. b.    If 25% or less of the Premises shall be so taken, the Term shall cease only as to the part so taken as of the Taking Date, and Tenant shall pay Rent and other charges up to the Taking Date, with appropriate credit by Landlord (toward the next installment of Rent due from Tenant) of any Rent or charges paid for a period subsequent to the Taking Date. Minimum Rent and other charges payable to Landlord shall be reduced in proportion to the amount of the Premises taken. Landlord shall, at its expense, but only to the extent of net proceeds of condemnation received by Landlord, make all necessary repairs or alterations within the scope of Landlord’s Work so as to constitute the remaining Premises a complete architectural unit, and Tenant, at Tenant’s expense, shall be obligated to perform all of Tenant’s Work and otherwise restore the Premises and Tenant’s trade fixtures. c.    If more than 20% of (i) the area of that portion of Common Areas serving the retail component of the Building, (U) the Gross Rentable Area of the retail component of the Building, or (Hi) the Premises shall be taken under power of eminent domain, or sold to public authority under the threat or in lieu of such a taking, Landlord may, by notice to Tenant delivered on or before the thirtieth (30th) day following the Taking Date, terminate this Lease as of the Taking Date. Rent and other charges shall be paid up to the Taking Date, with an appropriate refund by Landlord of any Rent paid for a period subsequent thereto. 13.3   Award. All compensation awarded or paid upon a total or partial taking of the Premises, Common Areas or Building including the value of the leasehold estate created hereby shall belong to and be the property of Landlord without any participation by Tenant; Tenant shall have no claim to any such award based on Tenant’s leasehold interest. However, nothing contained herein shall be construed to preclude Tenant, at its cost, from independently prosecuting any claim directly against the condemning authority in such condemnation proceeding for damage to, or cost of removal of, stock, trade fixtures, furniture and other personal property belonging to Tenant; provided, however, that no such claim shall diminish or otherwise adversely affect Landlord’s award or the award of any Mortgagee.     --------------------------------------------------------------------------------   Exhibit 10.10 ARTICLE XIV GENERAL PROVISIONS 14.1   Rules and Regulations. Tenant shall comply with all Rules and Regulations, and amendments thereto, adopted by Landlord from time to time including those set out in Schedule “D”, so long as such Rules and Regulations are not inconsistent with and do not contradict this Lease. The Rules and Regulations may differentiate between different types of businesses in the Building. Landlord shall not be responsible to Tenant for any non-observance of such Rules or Regulations by any other tenant of the Building. Defined terms in the Rules and Regulations shall have the meanings set forth in this Lease. 14.2   Delay. Except as expressly provided in this Lease, whenever Landlord or Tenant is delayed in the fulfillment of any obligation under this Lease, other than the payment of Rent, by an unavoidable occurrence which is not the fault of the party delayed in performing such obligation, then the time for fulfillment of such obligation shall be extended during the period in which such circumstances operate to delay the fulfillment of such obligation. 14.3 Holding Over. If Tenant remains in possession of the Premises after the end of the Term with the consent of Landlord but without having executed and delivered a new lease or an agreement extending the Term, there shall be no tacit renewal of this Lease or the Term, and Tenant shall be deemed to be occupying the Premises as a Tenant from month to month at a monthly Minimum Rent payable in advance on the first day of each month equal to twice the monthly amount of Minimum Rent payable during the last month of the Term, and otherwise upon the same terms as are set forth in this Lease including all other payments of Rent, so far as they are deemed applicable by Landlord to a monthly tenancy. 14.4   Waiver. Landlord’s failure to take or delay in taking advantage of any default or breach of covenant on the part of Tenant shall not be construed as a waiver thereof, nor shall any custom or practice which may grow between the parties in the course of administering this Lease be construed to waive or to lessen the right of Landlord to insist upon the strict performance by Tenant of any term, covenant or condition hereof, or to exercise any rights of Landlord on account of any such default. In no case will Landlord be deemed to have waived any of Landlord’s rights under this Lease, law or equity, unless Landlord delivers to Tenant a written waiver executed by an officer of Landlord which expressly identifies the right being waived. A waiver of a particular breach or default shall not be deemed to be a waiver of the same or any other subsequent breach or default. The acceptance of rent hereunder shall not be, or be construed to be, a waiver of any breach of any term, covenant or condition of this Lease. The presentation of any rent or other charge hereunder in the form of a check marked by Tenant to constitute a waiver of any default shall not constitute such waiver even though endorsed and cashed by Landlord unless Landlord expressly agrees to waive such default by separate written instrument. No surrender of the Premises for the remainder of the term hereof shall operate to release Tenant from liability hereunder. 14.5   Recording. Neither Tenant nor anyone claiming under Tenant shall record this Lease or any memorandum hereof in any public records without the prior written consent of Landlord. 14.6   Notices. Any notice, consent or other instrument required or permitted to be given under this Lease shall be in writing and shall be delivered in person, or sent by certified mail, return receipt requested, or nationally recognized overnight courier service postage prepaid, addressed (a) if to Landlord, at the address set forth in the Lease Summary; and (b) if to Tenant, at the Premises or, prior to Tenant’s occupancy of the Premises, at the address set forth on the Lease Summary. Any such notice or other instruments shall be deemed to have been given and received on the day upon which personal delivery is made or, if mailed, then two business days following the date of mailing or, if sent nationally recognized overnight courier service, then on the business days after consignment to such service. Either party may give notice to the other of any change of address and after the giving of such notice, the address therein specified shall be deemed to be the address of such party for the giving of notices.     --------------------------------------------------------------------------------   Exhibit 10.10 14.7   Successors. The rights and liabilities created by this Lease extend to and bind the successors and assigns of Landlord and the heirs, executors, administrators and permitted successors and assigns of Tenant. No rights, however, shall inure to the benefit of any Transferee unless the provisions of Article IX are complied with. 14.8   Joint and Several Liability. If there is at any time more than one Tenant or more than one person constituting Tenant, their covenants shall be considered to be joint and several and shall apply to each and every one of them. 14.9   Captions and Section Numbers. The captions, section numbers, article numbers and table of contents appearing in this Lease are inserted only as a matter of convenience and in no way affect the substance of this Lease. 14.10   Extended Meanings. The words “hereof”, ‘hereto” and “hereunder” and similar expressions used in this Lease relate to the whole of this Lease and not only to the provisions in which such expressions appear, and the word “include” or “including” or words of similar import shall be deemed to be followed by the words “without limitation”. This Lease shall be read with all changes in number and gender as may be appropriate or required by the context. Any reference to Tenant includes, where the context allows, the employees, agents, invitees and licensees of Tenant and all others over whom Tenant might reasonably be expected to exercise control. This Lease has been fully reviewed and negotiated by each party and their counsel and shall not be more strictly construed against either party. 14.11   Partial Invalidity. All of the provisions of this Lease are to be construed as covenants even though not expressed as such. If any such provision is held or rendered illegal or unenforceable it shall be considered separate and severable from this Lease, and the remaining provisions of this Lease shall remain in force and bind the parties as though the illegal or unenforceable provision had never been included in this Lease. 14.12   Entire Agreement. This Lease and the Schedules addenda and riders, if any, attached hereto are incorporated herein and set forth the entire agreement between Landlord and Tenant concerning the Premises and there are no other agreements or understandings between them. This Lease and its Schedules and Riders may not be modified except by agreement in writing executed by Landlord and Tenant. 14.13   Governing Law. This Lease shall be construed in accordance with and governed by the laws of the State of Florida. In the event of any litigation arising under this Lease or any Guaranty, proper venue shall be in the county wherein the Premises are located. 14.14   Time. Time is of the essence of Tenant’s obligations under the lease. Any time period herein specified of five days or less shall mean business days; any period in excess of five days shall mean calendar days. 14.15   No Partnership. Nothing in this Lease creates any relationship between the parties other than that of lessor and lessee and nothing in this Lease constitutes Landlord a partner of Tenant or a joint venturer or member of a common enterprise with Tenant. 14.16   Quiet Enjoyment. If Tenant pays Rent and fully observes and performs all of its obligations under this Lease, Tenant shall be entitled to peaceful and quiet enjoyment of the Premises for the Term without interruption or interference by Landlord or any person claiming through Landlord. 14.17   Radon Gas. Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it overtime. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit.     --------------------------------------------------------------------------------   Exhibit 10.10 14.18   Authority. Tenant is a duly authorized and qualified to do business in the state in which the Premises are located, and Tenant has full right and authority to enter into this Lease, and each of the persons signing on Tenant’s behalf are authorized to do so. In addition, Tenant warrants that it is not necessary for any other person, firm, corporation, or entity to join in the execution of this Lease to make Tenant’s execution complete, appropriate and binding. 14.19   Lease Validity. Notwithstanding anything to the contrary contained herein or in this Lease, the submission of this Lease for examination and/or execution by Tenant does not constitute a reservation of or option for the Premises for the benefit of Tenant and the Lease and/or any Addendum shall have no force or validity unless and until duly executed by Landlord and delivered by Landlord to Tenant. 14.20   Brokerage. Tenant warrants that it has had no dealings with any broker or agent in connection with this Lease other than the Broker, if any, named in the Lease Summary, and covenants to pay, defend, hold harmless and indemnify Landlord from and against any and all cost, expense or liability for any compensation, commissions and charges claimed by any other broker or agent with respect to this Lease or the negotiation thereof with whom Tenant had, or is alleged to have had, dealings. 14.21   TRIAL BY JURY. TENANT AND LANDLORD HEREBY WAIVE ANY AND ALL RIGHT TO A JURY TRIAL ON ANY ISSUE OR CONTROVERSY ARISING UNDER THIS LEASE. IN WITNESS WHERE, Landlord and Tenant have duly executed this Lease in several counterparts as of the day and year first above written, each of which counterpart shall be considered an executed original. In making proof of this Lease, it shall not be necessary to produce or account for more than one counterpart. Landlord may act under this Lease through its attorney, agent or other designee. Further, in the event it is necessary to file a lawsuit to enforce any of Landlord’s rights under this Lease, the parties agree that such lawsuit may be filed in the name of the Landlord, its agent or other designee at the Landlord’s complete discretion.       Witness:   OWNER/LANDLORD                       ORANGE BLOSSOM INVESTMENTS, LLC, a Florida limited liability company     By: Jacques Mamann, Managing Member           /s/ Jacques Mamann           Date October 13, 2006       Witness:   TENANT       /s/ Adelaida Savard   NATIONSHEALTH, INC., a Delaware corporation           By: Glenn Parker, MD., Chief Executive Officer           /s/ Glenn M. Parker           Date October 13, 2006     --------------------------------------------------------------------------------   Exhibit 10.10 SCHEDULE A SITE PLAN OF PREMISES     --------------------------------------------------------------------------------   Exhibit 10.10 SCHEDULE B 1.   LANDLORD’S WORK   1)   All damaged or discolored ceiling tiles to be replaced     2)   Existing carpet and tile flooring to be professional cleaned.     3)   Interior walls to be repainted     4)   The two existing door openings to be closed up.     5)   HVAC to be in good working order and,     6)   to provide independent electrical and HVAC system as well as to meter subject space separately 2.   TENANT’S WORK   a.   Tenant agrees to take possession of the property in “as is, where is” condition and perform all work as required to place Premises in satisfactory condition for business operation. All leasehold improvements must be approved by the Landlord prior to their commencement and receive the proper permits as required by the local and state governmental authorities. Tenant is permitted to make improvements upon written approval, not unreasonably withheld, of said improvement plans by the Landlord prior to commencement. All licenses and permits, if required, are the Tenant’s responsibility.     --------------------------------------------------------------------------------   Exhibit 10.10 SCHEDULE C RENT SCHEDULE                                                               Base     Base     Base     %     Est. Pass-               Sq Ft   Rate     Yearly     Monthly     Increase     Thrus /               6,193   per SF     Rental Rate     Rental Rate     Per Year     S.F. $2.75     Sales Tax     Total   YEAR I   $ 11.50     $ 71,219.50     $ 5,934.96             $ 1,419.23     $ 441.25     $ 7,795.44   YEAR II   $ 11.85     $ 73,356.09     $ 6,113.01       3%   $ 1,419.23     $ 451.93     $ 7,984.17   YEAR III   $ 12.20     $ 75,556.77     $ 6,296.40       3%   $ 1,419.23     $ 462.94     $ 8,178.56                                                             Monies Due al Lease Signing                         1st Month’s Rent           $ 7,795.44                                                                   Last Month’s Rent           $ 8,178.56                                                                   Security Deposit           $ 7,795.44                                                                   Other                                                                                 TOTAL MONIES DUE AT LEASE SIGNING ON OR BEFORE           $ 23,769.44                                                                       --------------------------------------------------------------------------------   Exhibit 10.10 SCHEDULE D DEFINITIONS In this Lease and in Schedules to this Lease: 1.    “Additional Rent” means all sums of money required to be paid by Tenant under this Lease (except Minimum Rent and Percentage Rent) whether or not the same are designated Additional Rent” or are payable to Landlord or otherwise. 2.    “Alterations” means all repairs, replacements, additions or modifications to the Premises by Tenant, including, but not limited to, Tenants Work. 3.   “Architect” means the architect from time to time named by Landlord. 4.    “Business Tax” means all taxes, levies, assessments, licenses and fines (whether imposed on Landlord or Tenant) attributable to the personal property, trade fixtures, business, income, occupancy or sales of Tenant or any other occupant of the Premises and to the use of the Building by Tenant. 5.    “Change of Control” means, in the case of any corporation, trust, partnership or other entity, the transfer or issue by sale, assignment, subscription, transmission on death, mortgage, charge, security interest, operation of law or otherwise, of any shares, voting rights or partnership or beneficial interest which would result in any change in the effective control of such corporation, trust, partnership or other entity unless such change occurs as a result of trading in the shares of a corporation listed on a recognized stock exchange in Canada or the United States and then only so long as Landlord receives assurances reasonably satisfactory to it that there will be a continuity of management and of the business practices of such entity notwithstanding such Change of Control. 6.    “Commencement Date” means the date on which the Term commences, as provided under Section 1.2. 7.    “Common Areas” means those areas, facilities, utilities, improvements, equipment and installations in or adjacent to the Building which serve or are for the benefit of the tenants of more than one component of the Building and which are not designated or intended by Landlord to be leased, from time to time, or which are provided or designated from time to time by Landlord for the benefit or use of all tenants in the Building, their employees, customers and invitees, in common with others entitled to the use or benefit of same, and shall include, without limitation, parking lots, landscaped areas, passages for trucks and automobiles, areaways, private roads, walks, curbs, corridors, garden courts and arcades, together with public facilities, if any, such as wash rooms, comfort rooms, lounges, drinking fountains, toilets, public stairs, ramps, elevators, escalators, shelters, porches, bus stations and loading docks together with interior service corridors giving access thereto, with facilities appurtenant to each, or any other area or premises in the entire Building tract not under lease or designed for lease to a tenant for use and occupancy. 8.    “CPI” has the meaning set forth in Section 2.2. 9.    “Expiration Date” means the date on which the Term expires, as provided under Section 1.2, or any sooner date on which this Lease is terminated pursuant to the provisions hereof. 10.    “Expiration Year” means the calendar year, that number of years following the year of the Commencement Date, equal to the number of years of the Term as set forth on the Lease Summary. 11.    “First Partial Month” means, in the event the Commencement Date is not the first day of a month, the period from the Commencement Date to the first day of the next month. 12.    “Fixturing Period” means the period so specified in the Lease Summary.     --------------------------------------------------------------------------------   Exhibit 10.10 13.    “Force Majeure” means a delay arising from or as a result of strike, lockout or labor difficulty; explosion, sabotage, accident, riot or civil commotion; act of war; fire or other catastrophe; a legal requirement; an act by Tenant; or any cause beyond the reasonable control of Landlord. 14.    “Gross Rentable Area of the Premises” means the number of square feet of space in the Premises whether above or below grade and shall be calculated by Landlord’s architect to extend (i) to the centerline of the structural portion of every wall or division separating the Premises from rented or rentable space, (H) (except in the case of any storefront) to the exterior face of any other wall or division marking the boundaries of the Premises, (Hi) to include all space on the exterior of storefronts up to the lease lines shown on the sketch of the Premises attached hereto as Schedule A (storefronts shall not be deemed walls), (iv) to extend from the top surface of the structural sub-floor to the bottom of the structural ceiling, and (v) to include all interior space whether or not occupied by interior projections, stairways, shafts, ventilation spaces, columns, pipes, conduits or the like, and other physical features. 15.    “Gross Rentable Area of the Building” means the sum of the aggregate gross rentable areas of all portions of the Building which are leased or designated for lease, with the area for all of such portions to be calculated on a similar basis as the Gross Rentable Area of the Premises was calculated. 16.    “Gross Revenue” means the entire amount of the sale price, whether for cash or otherwise, of all sales (including rentals) of merchandise and services and of all other receipts whatsoever in respect of all business conducted at, in, upon or from the Premises, although orders for same may be filled elsewhere, and including all sales by any sub-lessee, concessionaire, licensee, vending machine, coin operated machine, or otherwise in the Premises and including all insurance proceeds received in respect of loss or damage to stock and compensation for loss of business sales or profits. Gross Revenue shall not include, however, (i) any sums (other than any commission or service fee to Tenant) shown separately from the price, collected and paid out for any sales, service, or similar tax, levied by any governmental authority which Tenant is required to remit to such authority; (ii) the exchange of goods or merchandise between the stores of Tenant, if any, where such exchange of goods or merchandise is made solely for the convenient operation of the business of Tenant and not for the purpose of consummating a sale which has been made at, in, from or upon the Premises; (Hi) the amount of any discount on sales actually given to bona fide employees of Tenant, (iv) the amount of returns to shippers or to manufacturers; (v) the amount of merchandise sold or some part thereof which is thereafter returned by the purchaser and accepted by Tenant; (vi) sales of fixtures or other capital items sold by Tenant after use thereof in the conduct of Tenant’s business in the Premises; (vH) deposits on merchandise until the sale is final or the deposit permanently retained by Tenant; (vii) uncollected credit accounts; or (vHi) income from bona fide charitable collections. 17.    “Guarantor” means any person who has executed or agreed to execute any guaranty of Tenant’s obligations hereunder. 18.    “Land” means the land situated in the City of Fort Pierce, St. Lupie County, Florida, on which the Building is or will be constructed, as more particularly described in Schedule E, or as such lands may be expanded or reduced from time to time. 19.    “Landlord” means Transwestern Commercial Services, agent for the owner, and its successors and assigns. 20.    “Landlord’s Work” means that work to be performed by Landlord described in Section 1-3. 21.    “Lease Summary” means the outline of basic terms, dollar amounts and other information forming a part of this Lease and appearing as the first pages of this Lease.     --------------------------------------------------------------------------------   Exhibit 10.10 22.    “Lease Year” means the 12 full calendar months commencing on the first day of the month immediately following the month in which the Commencement Date occurs and each consecutive 12 month period thereafter unless the Commencement Date is the first day of a month, in which event the first Lease Year shall commence on the Commencement Date. However, the final Lease Year may contain less than 12 months due to expiration or sooner termination of the Term. If the Commencement Date is not on the first day of a month, the period from the Commencement Date to the first day of the next month is referred to herein as the “First Partial Month” and shall be deemed included in the first Lease Year. 23.    “Leasehold Improvements” means leasehold improvements in the Premises determined according to common law, and shall include, without limitation: all fixtures, improvements, installations, alterations and additions from time to time made, erected or installed in the Premises by or on behalf of Tenant or any previous occupant of the Premises, including signs and lettering, partitions, doors and hardware however affixed and whether or not movable; all mechanical, electrical and utility installations and all carpeting and drapes with the exception only of furniture and equipment not in the nature of fixtures. 24.    “Minimum Rent” means the minimum rent payable by Tenant pursuant to Section 22. 25.    “Mortgage” means any and all mortgages, security agreements, ground leases or like instruments resulting from any financing, refinancing, collateral financing or other transactions (including renewals, extensions, modifications, replacements, consolidations or substitutions thereof and all advances made or to be made thereunder and all interest thereon) made or arranged by Landlord of its interest in all or any part of the Building. 26.    “Mortgagee” means the holder of, or secured party under, any Mortgage and includes any trustee for bondholders. 27.    “Opening Date” means the joint opening date for the Building, if any, as designated by Landlord. 28.    “Operating Costs” means any amounts paid or payable whether by Landlord or by others on behalf of Landlord, arising out of Landlord’s ownership, maintenance, operation, repair, replacement and administration of the Building including without limitation: a.    the cost of Taxes, including all costs associated with the appeal of any assessment on Taxes; b.    the cost of insurance, including, without limitation, fees to agents and administrative fees in connection with such insurance, which Landlord is obligated or permitted to obtain under this Lease (including, but not limited to, rent insurance) and any deductible amount applicable to any claim made by Landlord under such insurance; c.    the cost of security, repairs and maintenance of the parking lot, re-striping of the parking lot, exterior painting, any other improvements as may be required by a regulatory authority, janitorial, landscaping, window cleaning, garbage removal and trash removal services; d.    the cost of repair and replacement of heating, ventilating and air conditioning equipment serving any portion of the Building including any rentable space; e.    the cost of all fuel, water, electricity, telephone and other utilities used in the maintenance, operation or administration of the Building; f.    salaries, wages and other amounts paid or payable for all personnel involved in the repair, maintenance, operation, security, supervision or cleaning of the Building, including fringe benefits, unemployment and workmen’s compensation insurance premiums, pension plan contributions and other employment costs and the cost of engaging independent contractors to perform any of the foregoing services; g.    auditing and accounting fees and costs; h.    the cost of repairing replacing, operating, and maintaining the Building and the equipment serving the Building, except where such costs are attributable to inherent structural defects in the Building;     --------------------------------------------------------------------------------   Exhibit 10.10 i.    the cost of the rental of any equipment and signs; j.    amortization of the costs referred to in h. immediately above, to the extent not charged fully in the year in which they are incurred, all as determined by Landlord in accordance with sound accounting principles, together with interest on any unamortized balance of such costs calculated at average prime rate during the period of calculation of any major bank designated by Landlord; k.    a management fee equal to 15 % of Operating Costs excluding Taxes. Operating Costs shall exclude only: (1) all amounts which otherwise would be included in Operating Costs which are actually recovered by Landlord from specic tenants by separate agreement or as a result of any act, omission, default or negligence of such tenants; (2) income taxes on Landlord’s income from the Building; (3) such of the Operating Costs as are recovered from insurance proceeds; (4) interest on debt and retirement of debt principal (except as above provided); (5) the cost of any additional capital item not part of the initial construction of the Building. 29.    “Person” means any person, firm, partnership or corporation, or any group or combination of persons, firms, partnerships or corporations. 30.    “Premises” means the premises leased to Tenant described in Section 1.1 and includes Leasehold Improvements in such Premises. 31.    “Proportionate Share” means a fraction which has as its numerator the Gross Rentable Area of the Premises and as its denominator the Gross Rentable Area of the Building; provided, however, in the event Landlord, acting in good faith and in a reasonable manner, determines that the foregoing fraction does not accurately reflect Tenant’s proper share of Operating Costs as to any one or more items of Operating Costs, then Landlord shall have the right to adjust Tenant’s share of Operating Costs as to those items and such adjusted fraction shall be Tenant’s Proportionate Share as to those items. In making such determination, Landlord may consider the nature and intensity of use of any service or facility made by Tenant, and any use or improvement made by Tenant affecting the Premises or the Building. 32.   “Rent” means the aggregate of Minimum Rent and Additional Rent. 33.    “Rules and Regulations” mean the rules and regulations adopted and promulgated by Landlord from time to time pursuant to Section 13.1. The Rules and Regulations existing as at the Commencement Date are those set out in Schedule D. 34.    “Building” means the Building buildings and the Land on which same is erected, known generally as Orange Blossom Business Center and includes all facilities and buildings erected from time to time on the Land and further includes each and every part of any such building or facilities whether or not rented or rentable, together with areas and facilities serving the Building or having utility in connection therewith such as malls, sidewalks, parking facilities, mechanical areas, truck and receiving areas, loading docks, driveways and the like. 35.    “Taxes” means all real estate, personal property and other ad valorem taxes, and any other levies, charges, local improvement rates and assessments whatsoever assessed or charged against the Building, the equipment and improvements therein contained, or any part thereof, by any lawful taxing authority and including any amounts assessed or charged in substitution for or in lieu of any such taxes, excluding only income or capital gains taxes, to the extent such taxes are not levied in lieu of any of the foregoing against the Building or Landlord and excluding any Business Tax. 36.    “Tenant” means the party so identified on the first page of this Lease, such parts/s permitted successors and assigns, and is deemed to include the word “lessee” and includes every Person mentioned as Tenant in this Lease.     --------------------------------------------------------------------------------   Exhibit 10.10 37.    “Tenant’s Work” means that work to be performed by Tenant described in Section 1.3. 38.    “Term” means the period set out in Section 1.2 and any renewal periods, if any (and any other periods during which Tenant has possession of the Premises). 39.    “Trade Fixtures” means trade fixtures as determined at common law, but shall not include: (a) heating, ventilating or air conditioning systems, facilities and equipment in or serving the Premises; (b) floor covering affixed to the floor of the Premises; (c) light fixtures; (d) internal stairways and doors; and (e) any fixtures, facilities, equipment or installations installed by or at the expense of Landlord, all of which are deemed to be Leasehold Improvements. 40.    “Transfer” means an assignment of this Lease in whole or in part; a sublease of all or any part of the Premises; the granting of a concession of any sort; any transaction whereby the rights of Tenant under this Lease or to the Premises are transferred to another; any transaction by which any right or use or occupancy of all or any part of the Premises is conferred upon anyone; any mortgage or encumbrance of this Lease or the Premises or any part thereof or other arrangement under which either this Lease or the Premises become security for any indebtedness or other obligations and includes any transaction or occurrence whatsoever (including, but not limited to, expropriation, receivership proceedings, seizure by legal process and transfer by operation of law), which has changed or might change the identity of the Persons having lawful use or occupancy of any part of the Premises. 41.    “Transferee” means the Person or Persons to whom a Transfer is to be made.     --------------------------------------------------------------------------------   Exhibit 10.10 SCHEDULE E RULES AND REGULATIONS 1.     Security. Landlord may from time to time adopt appropriate systems and procedures for the security or safety of the Building, any Persons occupying, using or entering the same, or any equipment, furnishings or contents thereof, and Tenant shall comply with Landlord’s reasonable requirements relative thereto. 2.    Return of Keys. At the end of the Term, Tenant shall promptly return to Landlord all keys for the Building and Premises which are in the possession of Tenant. In the event any Tenant fails to return keys, Landlord may retain $50.00 of Tenant’s security deposit for locksmith work and administration. 3.    Repair, Maintenance. Alterations and Improvements. Tenant shall carry out Tenant’s repair, maintenance, alterations, and improvements in the Premises only during times agreed to in advance by Landlord and in a manner which will not interfere with the rights of other tenants in the Building. 4. Water Fixtures. Tenant shall not use water fixtures for any purpose for which they are not intended, nor shall water be wasted by tampering with such fixtures. Any cost or damage resulting from such misuse by Tenant shall be paid for by Tenant. 5.    Personal Use of Premises. The Premises shall not be used or permitted to be used for residential, lodging or sleeping purposes or for the storage of personal effects or property not required for business purposes. 6.    Heavy Articles. Tenant shall not place in or move about the Premises without Landlord’s prior written consent any safe or other heavy article which in Landlord’s reasonable opinion may damage the Building, and Landlord may designate the location of any such heavy articles in the Premises. 7.    Bicycles, Animals. Tenant shall not bring any animals or birds into the Building, and shall not permit bicycles or other vehicles inside or on the sidewalks outside the Building except in areas designated from time to time by Landlord for such purposes. 8.    Deliveries. Tenant shall ensure that deliveries of supplies, fixtures, equipment, furnishings, wares and merchandise to the Premises are made through such entrances, elevators and corridors and at such times as may from time to time be designated by Landlord, and shall promptly pay or cause to be paid to Landlord the cost of repairing any damage in the Building caused by any person making improper deliveries. 9.    Solicitations. Landlord reserves the right to restrict or prohibit canvassing, soliciting or peddling in the Building. 10.    Food and Beverages. Only persons approved from time to time by Landlord may prepare, solicit orders for, sell, serve or distribute foods or beverages in the Building, or use the Common Areas for any such purpose. 11.    Refuse. Tenant shall place all refuse in proper receptacles provided by Tenant at its expense in the Premises or in receptacles (if any) provided by Landlord for the Building, and shall keep sidewalks and driveways outside the Building free of all refuse. 12.    Obstructions. Tenant shall not obstruct or place anything in or on the sidewalks or driveways outside the Building or in the lobbies, corridors, stairwells or other Common Areas, or use such locations for any purpose except access to and exit from the Premises without Landlord’s prior written consent. Landlord may remove at Tenant’s expense any such obstruction or thing caused or placed by Tenant (and unauthorized by Landlord) without notice or obligation to Tenant. 13.    Proper Conduct. Tenant shall not conduct itself in any manner which is inconsistent with the character of the Building as a first quality Building or which will impair the comfort and convenience of other tenants in the Building.     --------------------------------------------------------------------------------   Exhibit 10.10 14.    Employees, Agents and lnvitees. In these Rules and Regulations, Tenant includes the employees, agents, invitees and licensees of Tenant and others permitted by Tenant to use or occupy the Premises. 15.    Parking. If Landlord designates tenant parking areas in the Building, Tenant shall park its vehicles and shall cause its employees and agents to park their vehicles only in such designated parking areas. Tenant shall furnish Landlord, upon request, with the current license numbers of all vehicles owned or used by Tenant or its employees and agents and Tenant thereafter shall notify Landlord of any changes in such numbers within five (5) days after the occurrence thereof. In the event of failure of Tenant or its employees and agents to park their vehicles in such designated parking areas, Tenant shall forthwith on demand pay to Landlord, the sum of TWENTY DOLLARS ($20.00) per day per each car so parked. Landlord may itself or through any agent designated for such purpose, make, administer, and enforce additional rules and regulations regarding parking by tenants and by their employees and agents in the Building, including, without limitation, rules and regulations permitting Landlord or such agent to move any vehicles improperly parked to the designated tenant or employee parking areas. No disabled vehicles shall be left in the parking areas of the Building for more than 24 hours, 16.    Pest Control. In order to maintain satisfactory and uniform pest control throughout the Building, Tenant shall engage for its own Premises and at its sole cost, a qualified pest extermination contractor either designated or approved by Landlord, who shall pertorm pest control and extermination services in the Premises at such intervals as reasonably required or as may be directed by Landlord.     --------------------------------------------------------------------------------   Exhibit 10.10 RIDER 1 OPTION TO RENEW   Intentionally Deleted     --------------------------------------------------------------------------------   Exhibit 10.10 RIDER 2 GUARANTY Intentionally Deleted    

EXHIBIT 10 (r) THE BLACK & DECKER EXECUTIVE SALARY CONTINUANCE PLAN         The purpose of The Black & Decker Executive Salary Continuance Plan is to assist covered executives who are separated from employment by the Black & Decker Companies to cushion the financial effects of the transition period following separation. SECTION I. DEFINITIONS.         The following terms shall have the meanings set forth below:     1.1.        “Black & Decker” means The Black & Decker Corporation, a Maryland corporation, and its successors. “Black & Decker Companies” means Black & Decker and all of its subsidiaries and affiliates. “Black & Decker Company” means Black & Decker or any of its subsidiaries and affiliates.     1.2.        “Cause” means: (a) an Employee’s willful and repeated failure to substantially perform his or her duties after written notice to the Employee specifying such failure, or (b) fraud, misappropriation or intentional material damage to the property or business of a Black & Decker Company, or (c) commission of a felony.     1.3.        “Continuance Period” means the period determined by the Chief Executive Officer and stated in the participation agreement.     1.4.        “Effective Date” means May 1, 1995.     1.5.        “Employee” means an employee of a Black & Decker Company whose participation in the Plan has been authorized by the Chief Executive Officer of Black & Decker and who has executed a participation agreement containing such terms, conditions, and limitations as may be prescribed by the Chief Executive Officer of Black & Decker from time to time.     1.6.        “ERISA” means the Employee Retirement Security Act of 1974, as it may be amended from time to time.     1.7.        “Manager of the Plan” means the Senior Vice President-Human Resources and Corporate Initiatives of Black & Decker.     1.8.        “Plan” means The Black & Decker Executive Salary Continuance Plan, as set forth herein, as it may be amended from time to time.     1.9.        “Plan Administrator” means The Black & Decker Corporation Pension Management Committee.     1.10.        “Salary Continuance” means payments made to an Employee pursuant to Section 2.1 below.     1.11        “Severance” means the termination after the Effective Date of an Employee’s employment with the Black & Decker Companies by a Black & Decker Company for any reason other than for Cause. An Employee shall not be considered to have incurred a Severance if his employment is discontinued by reason of: (a) termination by the Employee -------------------------------------------------------------------------------- for any reason, including but not limited to any change in job or job duties, compensation, benefits (including participation in the Plan) or workplace for any reason, (b) the Employee’s death, (c) a physical or mental condition that causes the Employee to be unable substantially to perform his duties, including without limitation, any condition that entitles the Employee to benefits under any sick pay or disability income policy or program of a Black & Decker Company, (d) the Employee’s mandatory retirement as permitted by applicable law, or (e) termination by the Employee before the Severance Date scheduled by the Black & Decker Company that employs the Employee.     1.12.        “Severance Date” means the effective date of an Employee’s Severance from employment with all Black & Decker Companies. SECTION 2. BENEFITS.     2.1.        Each Employee who incurs a Severance shall be entitled to continue to receive his monthly salary during the Continuance Period, or until he obtains another position (including a position with a Black & Decker Company), or until his death, whichever comes first; provided, however, that monthly salary payments shall be accumulated and paid to the Employee in a single-sum payment (with interest at an annualized rate of 4.5%) on the date that is six months and one day following the Employee’s “separation from service” as defined at Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations issued thereunder. If the Employee obtains another position during the Continuance Period, the amount of monthly salary paid to the Employee shall be reduced by the amount of gross compensation paid or payable to the Employee or credited to his account or for his benefit in connection with the other position.     2.2.        No Employee shall be eligible to receive Salary Continuance or any other benefits under the Plan unless he first executes a valid and legally binding release in writing, in a form and manner prescribed by the Manager of the Plan, releasing the Black & Decker Companies and their employees, officers and directors from claims and liabilities of any kind relating to the Employee’s employment.     2.3.        If a Black & Decker Company is or should become obligated by law or by contract to pay an Employee severance pay, vacation pay, salary continuance, notice pay, a termination indemnity, or the like, or if a Black & Decker Company is or should become obligated by law or by contract to provide advance notice of separation (“Notice”) to an Employee, then any Salary Continuance otherwise payable under the Plan to the Employee shall be reduced by the amount of any such severance pay, salary continuance, notice pay, termination indemnity, vacation pay, or the like, and by the amount of any compensation received with respect to any Notice period (including any Notice period that may be required under the Worker Adjustment and Retraining Notification Act) during which the Employee is not required to work. If an Employee applies for and receives unemployment compensation payments for any period of time for which Salary Continuance payments are made, any Salary Continuance payments remaining to be made shall be reduced by the amount of the unemployment compensation payments.     2.4.        Each Employee who incurs a Severance shall also be entitled to continue to receive the employee benefits described below during the Continuance Period, or until he obtains another position (including a position with a Black & Decker Company), or until his death, whichever comes first; provided the Employee continues to pay the required employee contribution for the coverage. Provided the Employee was eligible for and received these 2 -------------------------------------------------------------------------------- employee benefits before the Severance Date, and provided that the Black & Decker Company which employed the Employee continues to provide such benefits to similarly situated employees, and subject to such amendments and changes in such benefit plans, programs, practices and policies as may be made from time to time, the benefits that will be continued are: medical, dental, basic life insurance, executive life insurance, tax preparation expense reimbursement, automobile allowance, executive physical examination and country club memberships. If the Employee obtains another position prior to the first anniversary of the Severance Date, and if the position does not offer each of these benefits, then the benefits that are not offered by the other position will be continued during the Continuance Period, or until the benefits are offered by the other position, or until the Employee’s death, whichever occurs first, strictly on a benefit-by-benefit basis. A benefit will not be continued after the Employee obtains another position if that benefit is available in the other position, even if the benefit offered by the other position is inferior to the benefit offered before the Severance Date, or requires larger employee contributions for the coverage.     2.5.        All other benefits, including vacation pay and short term and long term disability, shall be discontinued on the Severance Date. The Employee’s employment shall be deemed to have terminated on his or her Severance Date for purposes of any pension, profit-sharing, deferred compensation, stock option, stock bonus or stock purchase plan, whether tax-favored or otherwise, that is sponsored or administered by a Black & Decker Company and in which the Employee participated prior to the Severance Date. SECTION 3. CLAIMS, OPERATION AND INTERPRETATION.     3.1.        The Plan shall be interpreted, administered, and operated by the Manager of the Plan and the Plan Administrator, each of whom shall have complete authority, in his or their sole discretion, to interpret the Plan, to prescribe, amend, interpret and rescind rules and regulations relating to the Plan, and to make all of the determinations necessary or advisable for the administration of the Plan. It is intended that the Plan comply with Section 409A of the Code and the regulations and guidance issued thereunder, and it shall be interpreted accordingly.     3.2.        All questions of any character whatsoever arising in connection with the interpretation of the Plan or its administration or operation shall be submitted to and settled and determined by the Manager of the Plan or the Plan Administrator in an equitable and fair manner in accordance with the procedure for claims and appeals described in Section 3.4. Subject to the provisions of Section 7.4, any such settlement and determination shall be final and conclusive, and shall bind and may be relied upon by the Black & Decker Companies, each of the Employees, and all other parties in interest.     3.3.        The Plan Administrator and the Manager of the Plan may delegate any of their duties hereunder to such person or persons as they may designate from time to time.     3.4.        An Employee shall file a written claim with the Manager of the Plan in order to receive Salary Continuance or any other benefits under the Plan. The Manager of the Plan shall, within 60 days after receipt of the written claim, send a written notification to the Employee as to its disposition. In the event the claim is wholly or partially denied, the written notification shall (a) state the specific reason or reasons for the denial, (b) make specific reference to pertinent Plan provisions on which the denial is based, (c) provide a description of any additional material or information necessary for the Employee to perfect the claim and an explanation of why such material or information is necessary, and (d) set forth the 3 -------------------------------------------------------------------------------- procedure by which the Employee may appeal the denial of his claim. In the event an Employee wishes to appeal the denial of his claim, he may request a review of the denial by making application in writing to the Plan Administrator within 60 days after receipt of the denial. The Employee (or his duly authorized legal representative) may, upon written request to the Plan Administrator, review any documents pertinent to his claim, and submit in writing issues and comments in support of his position. Within 60 days after receipt of a written appeal (unless the Plan Administrator determines that special circumstances, such as the need to hold a hearing, require an extension of time, but in no event more than 120 days after such receipt) the Plan Administrator shall notify the Employee of the final decision. The final decision shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant, and specific references to the pertinent Plan provisions on which the decision is based. In the event the Employee wishes to appeal from the Plan Administrator’s decision, the Employee may submit the claim to final and binding arbitration, in accordance with Section 7.4, by giving written notice to the Plan Administrator within 60 days after receipt of the Plan Administrator’s decision. No arbitration for benefits under the Plan may be commenced unless and until the Employee has submitted a written claim for benefits, has been notified that the claim has been denied, has filed a written request for review of the denied claim, and has been notified in writing that the denial of the claim has been affirmed, all in accordance with the claims procedure described above. SECTION 4. PLAN MODIFICATION OR TERMINATION.     4.1.        The Plan may be modified or amended at any time by the Plan Administrator, with or without notice. Without limiting the foregoing, the Plan may be modified or amended to increase, decrease or eliminate Salary Continuance and benefits payable to any Employee who incurs a Severance after such modification or amendment.     4.2.        It is the intention of Black & Decker to continue the Plan and to pay Salary Continuance to all Employees who have incurred a Severance. However, Black & Decker, by action of the Board of Directors, may for any reason terminate the Plan, or the Chief Executive Officer of Black & Decker may withhold its application as to some or all Employees, at any time or from time to time, in each case with or without notice.     4.3.        Any modification, amendment, termination, withholding, extension or other action shall only apply to Employees who incur a Severance after such action. No such action shall reduce or eliminate the Salary Continuance of any Employee whose Severance Date occurs on or before such action is taken. Notwithstanding the foregoing, the Plan may be amended at any time, including retroactively, to conform the Plan to the provisions of Section 409A of the Code and the regulations and guidance thereunder. No such amendment shall be considered prejudicial to any interest of any Employee hereunder. SECTION 5. GOVERNMENT LAWS AND REGULATIONS.     5.1.        The Plan, as a “severance pay arrangement” within the meaning of Section 3(2)(B)(i) of ERISA, is intended to be excepted from the definitions of “employee pension benefit plan” and “pension plan” in Section 3(2) of ERISA, and is intended to meet the descriptive requirements of a plan constituting a “severance pay plan” within the meaning of regulations published by the Secretary of Labor at Title 29, Code of Federal Regulations, Section 2510.3-2(b), and shall be interpreted accordingly. 4 --------------------------------------------------------------------------------     5.2.        The Plan and the rights of Employees to Salary Continuance and benefits under the Plan shall be subject to all applicable governmental laws and regulations. Notwithstanding any other provision of the Plan to the contrary, the Manager of the Plan and the Plan Administrator may in his or their discretion make such changes in the Plan as may be required to conform the Plan to all applicable governmental laws and regulations. SECTION 6. EMPLOYEE CONDUCT.     6.1.        Notwithstanding anything to the contrary, all of an Employee’s rights to Salary Continuance and to benefits under the Plan will be forfeited if the Employee discloses confidential information of a Black & Decker Company or if the Employee, without the written consent of the Manager of the Plan, enters into competition with a Black & Decker Company.     6.2.        For purposes of this Section 6, the Employee shall be deemed to be in competition with a Black & Decker Company if the Employee, directly or indirectly, solicits as a customer any company that is or was a customer of a Black & Decker Company during the Employee’s employment, or that is or was a potential customer of a Black & Decker Company with which a Black & Decker Company has made or will make business contacts during the Employee’s employment; provided, however, that solicitation of a company as a customer of any business that is not in direct or indirect competition with any of the types of business conducted by a Black & Decker Company within any of the same territories as the Black & Decker Company shall not be prohibited hereby. In addition, an Employee shall be deemed to be in competition with a Black & Decker Company if the Employee directly or indirectly becomes an owner, officer, director, operator, sole proprietor, partner, joint venturer, contractor or consultant, or participates in or is connected with the ownership, operation, management or control of any company in direct or indirect competition with any of the types of businesses conducted by a Black & Decker Company within any of the same territories as a Black & Decker Company; provided, however, that the ownership for investment of less than 5% of the outstanding stock of any of the classes of stock issued by a publicly-held company shall not be prohibited hereby.     6.3.        For the purposes of this Section 6, the Employee shall be deemed to have disclosed “confidential information” if the Employee fails to preserve as confidential and uses, communicates, or discloses to any person, to the actual or potential detriment of a Black & Decker Company, orally, in writing or by publication, any information, regardless of when, where or how acquired, relating to or concerning the affairs of a Black & Decker Company; provided, however, that the foregoing obligations shall not apply to information that is or becomes public through no fault of the Employee.     6.4.        The Manager of the Plan and the Plan Administrator shall have the absolute right to determine in his or their sole discretion (a) whether or not an Employee’s employment was terminated for Cause, and (b) whether or not an Employee has entered into competition with a Black & Decker Company or has disclosed confidential information so as to cause a forfeiture of the Employee’s rights and benefits hereunder. SECTION 7. GENERAL PROVISIONS.     7.1.        Nothing in the Plan shall be deemed to give any Employee the right to be retained in the employ of any Black & Decker Company or to interfere with the right of any Black & Decker Company to discharge an Employee at any time and for any lawful reason, 5 -------------------------------------------------------------------------------- with or without notice or cause. In addition, nothing in the Plan shall restrict an Employee’s right to terminate his employment at any time.     7.2.        Except as otherwise provided herein or by law, no right or interest of an Employee under the Plan shall be assignable or transferable, in whole or in part, either directly or by operation of law or otherwise, including without limitation by execution, levy, garnishment, attachment, pledge, or any other manner; no attempted assignment or transfer thereof shall be effective; and no right or interest of an Employee under the Plan shall be liable for, or subject to, any obligation or liability of an Employee. When a payment is due under the Plan to an Employee and the Employee is unable to care for his affairs, payment may be made directly to his legal guardian or personal representative.     7.3.        Black & Decker may, at any time and from time to time, without any Employee’s consent, assign its interest in the Plan with respect to one or more Employees to a Black & Decker Company, which shall assume all of Black & Decker’s obligations hereunder with respect to such Employees and, upon such assignment, the assignee shall be substituted for Black & Decker for all purposes under the Plan with respect to such Employees. Any such assignment and assumption shall constitute a novation and the assignee(s) shall be substituted automatically for Black & Decker with respect to such Employees. Any such assignee shall have the same rights as the assignor to further assign the Plan.     7.4.        Any dispute or controversy arising out of or relating to the Plan (or to payor benefits that may be provided under the Plan), as well as any dispute or controversy arising out of or relating to the termination of an Employee’s employment, including any claims based on federal, state or local laws (including employment discrimination or wrongful dismissal laws), shall be settled exclusively by final and binding arbitration, conducted in Towson, Maryland before a neutral arbitrator with expertise in employment law, including ERISA, in accordance with the Voluntary Labor Arbitration Rules of the American Arbitration Association. In reaching a decision, the arbitrator shall interpret, apply and be bound by the Plan and by applicable law. The arbitrator shall apply the same standard of review in disputes relating to the Plan or to Plan benefits as a court of competent jurisdiction would apply under ERISA. The arbitrator shall have no authority to add to, detract from, or modify the Plan or any law in any respect. The arbitrator may grant any remedy or relief that may be necessary to make the injured party whole, provided that in no event may the arbitrator grant any remedy or relief that a court of competent jurisdiction could not grant, nor any relief greater than that sought by the injured party. Judgment may be entered on the arbitrator’s award in any court of competent jurisdiction.     7.5.        The Plan is unfunded. Except as provided in Section 7.3, the liability for Salary Continuance and other benefits under the Plan are solely the responsibility of Black & Decker. Salary Continuance shall be payable from Black & Decker’s general assets, and no other company shall have any responsibility or liability under the Plan. However, Black & Decker’s liabilities under the Plan shall be discharged to the extent of any payment or benefit received by the Employee from any other company made for that purpose and on Black & Decker’s behalf or for its benefit.     7.6.        If any provision of the Plan shall be held void or unenforceable, the remainder of the Plan shall remain in full force and effect, and the Plan shall be construed as if such void or unenforceable provision were omitted; provided that in interpreting this Plan the arbitrator shall replace such void or unenforceable provision with an effective and legally 6 -------------------------------------------------------------------------------- permissible provision, the effect of which shall be identical to, or as close as reasonably possible to, the effect of the original provision.     7.7.        As used in this Plan, any reference to the masculine, feminine, or neuter gender shall include all genders, the plural shall include the singular, and the singular shall include the plural.         ADOPTED BY THE BOARD OF DIRECTORS OF THE BLACK & DECKER CORPORATION, APRIL 25, 2005, AND AMENDED EFFECTIVE JANUARY 1, 2005. /s/ BARBARA B. LUCAS       Barbara B. Lucas, Secretary 7 -------------------------------------------------------------------------------- THE BLACK & DECKER EXECUTIVE SALARY CONTINUANCE PLAN PARTICIPATION AGREEMENT         I understand that this Agreement supersedes all agreements, plans or policies relating to the provision of salary continuance or severance pay and benefits (e.g., health, life insurance, etc.), other than providing severance payor benefits upon or following a change in control of The Black & Decker Corporation. I agree not to make any claim for salary continuance or severance payor benefits other than a claim for salary continuance and benefits under The Black & Decker Executive Salary Continuance Plan (the “Plan”).         I understand that by agreeing to participate in the Plan, I am agreeing to submit to final and binding arbitration all disputes regarding the Plan as well as any disputes arising out of or relating to any termination of my employment.         I have carefully read and fully understand all the provisions of this Agreement which together with the Plan set forth the entire agreement between me and the Company. I have not relied upon any statement or representation, written or oral, not set forth in this document or in the Plan. By signing this Agreement, I confirm that I have obtained whatever legal or other advice I felt necessary.        Signed at ____________________, this _____ day of ___________________, 200__.     _______________________ Employee                               8 --------------------------------------------------------------------------------

  Exhibit 10.2 Pharmion Corporation 2006 Employee Stock Purchase Plan Offering Adopted by the Board of Directors April 27, 2006      In this document, capitalized terms not otherwise defined shall have the same definitions of such terms as in the Pharmion Corporation 2006 Employee Stock Purchase Plan. 1. Grant; Offering Date.      (a) The Board hereby authorizes a series of Offerings pursuant to the terms of this Offering document.      (b) The Initial Offering shall begin on August 1, 2006. The Initial Offering shall end on January 31, 2007, unless terminated earlier as provided below. Thereafter, an Offering shall begin on the day after the Purchase Date of the immediately preceding Offering. The first day of an Offering is that Offering’s “Offering Date.” A “Purchase Date” is the last day of an Offering. Each Offering shall be six (6) months in duration, with a single Purchase Date.      (c) Notwithstanding the foregoing: (i) if any Offering Date falls on a day that is not a Trading Day, then such Offering Date shall instead fall on the next subsequent Trading Day, and (ii) if any Purchase Date falls on a day that is not a Trading Day, then such Purchase Date shall instead fall on the immediately preceding Trading Day.      (d) Prior to the commencement of any Offering, the Board may change any or all terms of such Offering and any subsequent Offerings. The granting of Purchase Rights pursuant to each Offering hereunder shall occur on each respective Offering Date unless prior to such date (i) the Board determines that such Offering shall not occur, or (ii) no shares of Common Stock remain available for issuance under the Plan in connection with the Offering.      (e) Offerings after the Initial Offering shall continue on the terms and conditions set forth herein, with no action required by the Board for such continuance, subject to the Board’s power to amend this Offering document or the Plan, or suspend or discontinue the Plan or Offerings. 2. Eligible Employees.      (a) Each Employee of the Company or of a Subsidiary incorporated in the United States on the Offering Date of an Offering hereunder who has been an Employee of the Company or a Subsidiary for a continuous period ending on the applicable Offering Date of at least fifteen (15) days (an “Eligible Employee”), shall be eligible to participate in such Offering.      (b) Notwithstanding the foregoing, the following Employees shall not be Eligible Employees or be granted Purchase Rights under an Offering:   --------------------------------------------------------------------------------             (i) part-time or seasonal Employees whose customary employment is less than twenty (20) hours per week or less than five (5) months per calendar year;           (ii) five percent (5%) stockholders (including ownership through unexercised and/or unvested stock options) as described in Section 6(c) of the Plan; or           (iii) Employees of the Company in jurisdictions outside of the United States if, as of the Offering Date of the Offering, the grant of such Purchase Rights would not be in compliance with the applicable laws of any jurisdiction in which the Employee resides or is employed. 3. Purchase Rights.      (a) Subject to the limitations herein and the Plan, unless a lower percentage has been set by the Board or a committee thereof prior to the commencement of the Offering, a Participant’s Purchase Right shall permit the purchase of the number of shares of Common Stock purchasable with up to ten percent (10%) of such Participant’s Earnings paid during the period of such Offering beginning immediately after such Participant first commences participation; provided, however, that no Participant may have more than ten percent (10%) of such Participant’s Earnings applied to purchase shares of Common Stock under all ongoing Offerings under the Plan and all other plans of the Company and Related Corporations that are intended to qualify as Employee Stock Purchase Plans.      (b) For Offerings hereunder, “Earnings” means the base compensation paid to an Eligible Employee, including all salary and wages (including amounts elected to be deferred by such Eligible Employee, that would otherwise have been paid, under any cash or deferred arrangement or other deferred compensation program established by the Company or a Related Corporation), but excluding overtime pay, commissions, sales incentive compensation, bonuses, and other remuneration paid directly to such Eligible Employee, profit sharing, the cost of employee benefits paid for by the Company or a Related Corporation, education or tuition reimbursements, imputed income arising under any Company or Related Corporation group insurance or benefit program, traveling expenses, business and moving expense reimbursements, income received in connection with stock options, contributions made by the Company or a Related Corporation under any employee benefit plan, and similar items of compensation.      (c) Notwithstanding the foregoing, the maximum number of shares of Common Stock that a Participant may purchase on any Purchase Date in an Offering shall be such number of shares as has a Fair Market Value (determined as of the Offering Date for such Offering) equal to (x) $25,000 multiplied by the number of calendar years in which the Purchase Right under such Offering has been outstanding at any time, minus (y) the Fair Market Value of any other shares of Common Stock (determined as of the relevant Offering Date with respect to such shares) that, for purposes of the limitation of Section 423(b)(8) of the Code, are attributed to any of such calendar years in which the Purchase Right is outstanding. The amount in clause (y) of the previous sentence shall be determined in accordance with regulations applicable under Section 423(b)(8) of the Code based on (i) the number of shares previously purchased with respect to such calendar years pursuant to such Offering or any other Offering 2 --------------------------------------------------------------------------------   under the Plan, or pursuant to any other Company or Related Corporation plans intended to qualify as Employee Stock Purchase Plans, and (ii) the number of shares subject to other Purchase Rights outstanding on the Offering Date for such Offering pursuant to the Plan or any other such Company or Related Corporation Employee Stock Purchase Plan.      (d) The maximum aggregate number of shares of Common Stock available to be purchased by all Participants under an Offering shall be the number of shares of Common Stock remaining available under the Plan on the Offering Date. If the aggregate purchase of shares of Common Stock upon exercise of Purchase Rights granted under the Offering would exceed the maximum aggregate number of shares available, the Board shall make a pro rata allocation of the shares available in a uniform and equitable manner. 4. Purchase Price.      The purchase price of shares of Common Stock under an Offering shall be the lesser of: (i) eighty-five percent (85%) of the Fair Market Value of such shares of Common Stock on the applicable Offering Date, or (ii) eighty-five percent (85%) of the Fair Market Value of such shares of Common Stock on the applicable Purchase Date, in each case rounded up to the nearest whole cent per share. 5. Participation.      (a) If an Eligible Employee intends to participate in an Offering, such Eligible Employee shall elect his or her payroll deduction percentage on such enrollment form as the Company provides. The completed enrollment form must be delivered to the Company prior to the Offering Date of the applicable Offering, unless a later time for filing the enrollment form is set by the Company for all Eligible Employees with respect to a given Offering. Payroll deduction percentages must be expressed in whole percentages of Earnings, with a minimum percentage of one percent (1%) and a maximum percentage of ten percent (10%). Except as provided in paragraph (e) below with respect to the Initial Offering, Contributions may be made only by way of payroll deductions.      (b) Except as provided in paragraph 5(c) below, a Participant may not increase or decrease his or her participation level during an Offering.      (c) A Participant may withdraw from an Offering and receive a refund of his or her Contributions without interest, at any time prior to the end of the Offering, excluding only the ten (10) day period immediately preceding such Offering’s Purchase Date (or such shorter period of time determined by the Company and communicated to Participants), by delivering a withdrawal notice to the Company or a designated Subsidiary in such form as the Company provides. A Participant who has withdrawn from an Offering shall not again participate in such Offering, but may participate in subsequent Offerings under the Plan in accordance with the terms of the Plan and the terms of such subsequent Offerings.      (d) Notwithstanding the foregoing or any other provision of this Offering document or of the Plan to the contrary, neither the enrollment of any Eligible Employee in the Plan nor any forms relating to participation in the Plan shall be given effect until such time as a registration statement covering the registration of the shares under the Plan that are subject to 3 --------------------------------------------------------------------------------   the Offering has been filed by the Company and has become effective. If the provisions of this Section 5(d) apply to prevent enrollment prior to the first day of an Offering, the Company shall establish such procedures as will enable the purposes of the Plan to be satisfied while complying with applicable securities laws. Such procedures may include, for example, allowing Participants to participate other than by means of payroll deduction and/or allowing Participants to increase their level of participation during an Offering.      (e) If an Eligible Employee elects not to authorize payroll deductions for the Initial Offering, then the Eligible Employee shall not purchase any shares of Common Stock during the Initial Offering. After the end of the Initial Offering, in order to participate in any subsequent Offerings, an Eligible Employee must enroll and authorize payroll deductions prior to the commencement of the Offering, in accordance with Section 5(a) above; provided, however, that once an Eligible Employee enrolls in an Offering and authorizes payroll deductions (including in connection with the Initial Offering), the Eligible Employee automatically shall be enrolled for all subsequent Offerings until he or she elects to withdraw from an Offering pursuant to paragraph (c) above or terminates his or her participation in the Plan. 6. Purchases.      Subject to the limitations contained herein, on each Purchase Date, each Participant’s Contributions (without any increase for interest) shall be applied to the purchase of whole shares, up to the maximum number of shares permitted under the Plan and the Offering. 7. Notices and Agreements.      Any notices or agreements provided for in an Offering or the Plan shall be given in writing, in a form provided by the Company, and unless specifically provided for in the Plan or this Offering, shall be deemed effectively given upon receipt or, in the case of notices and agreements delivered by the Company, five (5) days after deposit in the United States mail, postage prepaid. 8. Exercise Contingent on Stockholder Approval.      The Purchase Rights granted under an Offering are subject to the approval of the Plan by the stockholders of the Company as required for the Plan to obtain treatment as an Employee Stock Purchase Plan. 9. Offering Subject to Plan.      Each Offering is subject to all the provisions of the Plan, and the provisions of the Plan are hereby made a part of the Offering. The Offering is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of an Offering and those of the Plan (including interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan), the provisions of the Plan shall control. 4

  Exhibit 10.1 ASSIGNMENT AGREEMENT     between MKB Bank Rt. and Centrál Workout Pénzügyi Rt.   1.   The Parties are aware of a credit relationship between MKB and TOEMT I and TOEMT II.       The Parties are aware that TOEMT I-II is under liquidation as from 16 December 1998. The liquidator is Russell John Carman since 10 December 2002.       MKB reported its claim to the Liquidator within the required time and the Liquidator confirmed the claim in a document dated 18 October 2005 for an amount of USD 38,310,654.12. (hereinafter “the Claim”). The Parties record herein that before the signing of this Agreement MKB presented this confirmation letter to the representative of Centrál.       The Parties are aware of a claim by the Liquidator against MKB of an amount of USD 434,523.71 and accrued interest. Under a standstill agreement between the Liquidator and MKB, dated 29 September 2004, the Liquidator has not yet claimed this amount from MKB. Centrál by signing this Agreement hereby acknowledges and confirms receipt of the Reamended Ordinary Application dated 13 July 2004, and the standstill agreement   2.   The consideration for the assignment of the Claim defined in Point 1 above shall be USD 2,500,000.00 (the “Price”) subject to fulfilment of certain conditions as set out in Points 3 and 4 within a specified time limit. There is no VAT payable with respect to this assignment.   3.   Centrál shall pay the Price within 15 banking days by way of banking transfer to the account of MKB (as shown above) with JP Morgan Chase Bank, New York a/c no. 001 1 388279 in favour of MKB Bank Ltd. Payment shall be deemed made when the said amount shall have been credited to that account.   4.   In addition to the payment of the Price Centrál shall perform the following obligations within 15 banking days from the date of this Agreement:   a.   Centrál shall procure for and deliver an irrevocable and unconditional bank guarantee in Hungarian or in English in a form of a SWIFT 760 message issued by a bank and with a wording acceptable to MKB for USD 435,000 in favour of MKB. The purpose of such bank guarantee is exclusively to reimburse MKB for damages and costs (i) arising out of claims or counterclaims by TOEMT 1 and 2 E1 --------------------------------------------------------------------------------   Exhibit 10.1     against MKB in connection with the Claim hereunder, more specifically arising out of claims under the so called S127 Standstill Agreement between MKB and TOEMT. and (ii) any procedures that might be started by third parties in connection with the Claim if such procedures result in MKB having to pay any amount to such third party in connection with the Claim. Under the bank guarantee MKB shall have the right upon its first written demand claim that the bank pays any amount up to the amount of the guarantee without contesting such demand. The demand letter issued by MKB must have a reference to the fact that (i) MKB received a written demand for payment in connection with its relationship with TOEMT I-II and the Liquidator, or (ii) a statement that MKB has become aware from a credible source of the fact that the claim of TOEMT I-II, or the Liquidator against MKB has been assigned to a third party. The bank guarantee shall remain valid until 60 days after TOEMT I-II shall have been finally struck off from the company register. In such case this fact shall be properly proved to the issuing bank by the entity that gave instruction to the issue of the bank guarantee. The Parties agree that they shall finalize the detailed text of the bank guarantee with mutual effort.   b.   CRONOS CONTAINERS N.V. AND THE CRONOS GROUP Societe Anonyme Holding shall furnish MKB with a declaration containing the following:   i.   they shall not further assign the Claim to third party without the consent of MKB     ii.   they shall not raise any claim against MKB in connection with the liquidation (of TOEMT I-II)     iii.   they shall take every reasonable steps in order to prevent third parties from raising such claims, and     iv.   together with Centrál they undertake a joint and severable liability vis a vis MKB for damages incurred by MKB as a result of them breaching any of the obligations under i-iii above. 5.   The Parties agree that the payment of the Price and the conditions set out in Point 4 above shall be conjunctive conditions, therefore the Claim shall pass to Centrál upon payment of the Price and the fulfilment of the conditions (if the conditions are not met on one day, the fulfilment day shall be the date when the last condition is met). MKB shall hand over to Centrál a specific declaration. The text of this declaration is set out in Annex 2 of this Agreement. MKB undertakes to hand out this declaration in English language as well provided however that the governing version is the Hungarian one. E2 --------------------------------------------------------------------------------   Exhibit 10.3     MKB undertakes to hand over this declaration being annex 2 of this Agreement within 3 banking days after fulfilment of all conditions to the representative of Centrál or to mail it to Centrál. Centrál shall be entitled to prove the purchase of the Claim with this declaration. Without such a declaration this Agreement is not an evidence of the assignment of the Claim vis a vis third parties.   6.   MKB shall inform TOEMT I-II and the Liquidator about this assignment within 3 banking days from the date of such declaration. See annex 3 for the bilingual Hungarian-English text of such notice.   7.   The Parties agree that MKB transfers the Claim as an uncertain claim and so MKB shall not be liable in any respect to Centrál for TOEMT I-II performance. Centrál acknowledges and accepts such limitation of liability and waives its right hereby to raise any claim against MKB in connection with the assigned Claim. In case Centrál further transfers the Claim such transfer shall comply with requirements set out in Point 4 above and the transfer agreement shall specifically contain such limitation of liability.   8.   All fees, levies, stamp duty, cost (either in Hungary or outside) in connection with this Agreement shall be for Centrál to pay.   9.   The Parties shall treat all information obtained by them in connection with this Agreement and in the course of enforcing the Claim as business secret   10.   Centrál represents that it knows the content of the contracts, agreements and documents (received either from MKB or from other source) cited in this Agreement, that it has received answers to its questions addressed to MKB and that it used every other means in order to learn the content of the Claim, its likelihood of enforcement, the risks that attach to the purchase of the Claim. Centrál further represents that it finds the Price fair and equitable.       The Parties agree that in case Centrál would need further documents for the enforcement of the Claim, they shall discuss such request case by case.   11.   MKB represents that it is a regulated financial institution.   12.   This Agreement enters into force on the date of its execution.   13.   In case Centrál fails to pay the Price or meet the conditions as set out in Point 4 within the set time limit, MKB shall have the right to rescind this Agreement. E3 --------------------------------------------------------------------------------   Exhibit 10.1     In case Centrál fulfils all the conditions and pays the Price and MKB fails to comply with its obligations set out in Point 5 above, and such failure can be attributed to its wilful or negligent conduct, Centrál shall have the right to rescind this Agreement.       Rescission can be exercised in writing only. The notice of rescission shall be sent by registered mail to the other Party. Such notice shall be deemed validly given if it is mailed to the other Party.       In case of rescission MKB shall be under no obligation to pay any compensation.       The exercise of the right to rescind this Agreement shall terminate this Agreement.   14.   This Agreement is governed by Hungarian law. The Parties submit their disputes to the ordinary courts of Budapest.       This Agreement is signed by the Parties in four copies.       Budapest, March 10, 2006.       Annexes 1. Confirmation Letter of the Liquidator 2. Text of the Special Declaration of the transfer of the Claim 3. Text of the Notice of the Assignment of the Claim MKB Bank Rt. /s/ DR ANDRÁS PETE Name: Dr András Pete Director /s/ DR GYULA FONYO Name: Dr Gyula Fonyo Director Centrál Workout Pénzügyi Rt. /s/ ZOLTÁN VARGA Name: Zoltán Varga Chief Executive Officer E4 --------------------------------------------------------------------------------   Exhibit 10.1 Assignment Declaration We the undersigned as the duly authorized representatives of MKB Bank Rt. hereby make the following statement: This is to confirm that effective this date we have finally and without further conditions assigned the Assigned Assets ( as per definitions below) to Centrál Workout Pénzügyi Részvénytársaság. In addition the Bank appoints the Assignee to proceed as its legal successor and appointee should a need arise to prove that during the Liquidation Proceedings in connection with exercising creditors rights or in general before authorities and interested third parties. The Bank represents to whom it may concern that The Assigned Assets include all right, title, and. interest of the Bank and of any affiliate of the Bank in and to any and all claims for monies due the Bank by TOEMT for monies lent by the Bank or by any predecessor-in-interest to TOEMT, or for monies due to the Bank as guarantor or surety, including all principal, interest, penalties, default interest, charges, fees, and assessments whatsoever, whether now known or hereinafter discovered. “Assignee” refers to Centrál Workout Pénzügyi Rt., a company organized and existing under the laws of the Republic of Hungary, and its successors and assigns; “Assigned Assets” refers to all of the rights and benefits of the Bank under or in respect of the Credit Documentation and the TOEMT Claims including, without limitation:   (a)   all principal, interest, penalties, default interest, charges, fees, and assessments whatsoever due to the Bank by TOEMT 1 and TOEMT 2, whether now known or hereinafter discovered;     (b)   all rights and interests of the Bank in and in respect of the benefit of any security and in respect of amounts owing to the Bank by TOEMT 1 and TOEMT 2; and ,     (c)   all of the Bank’s right to prove in the Insolvency Proceedings of TOEMT 1 and TOEMT 2 with the exception of those rights that according to the law can be exercised only personally. E5 --------------------------------------------------------------------------------   Exhibit 10.1 “Bank” refers to MKB Bank Rt., a financial institution organized and existing under the laws of the Republic of Hungary, also known by its English name, the Hungarian Foreign Trade Bank; “Consolidation Agreement” refers to the agreement dated December 15, 1992 made by and among the Bank, TOEMT 1 and/or TOEMT 2, and Cronos Containers Limited; “Credit Documentation” includes, without limitation, that certain Loan Agreement, dated June 14, 1985, by and between TOEMT 1 and the Bank, the Consolidation Agreement, and each and every other loan agreement, security agreement, and guarantee agreement of every nature and description entered into by and between the Bank, any predecessor-in-interest, and TOEMT 1 and/or TOEMT 2, including all supporting documentation, such as promissory notes issued by TOEMT 1 and TOEMT 2, etc.; “Insolvency Officer” refers to any receiver, administrator, liquidator, provisional liquidator, administrative receiver, trustee, supervisor of a voluntary arrangement, similar officer appointed pursuant to a scheme of arrangement under Section 425 of the U.K. Companies Act 1985 (as amended or re-enacted from time to time) or similar officer Appointed under the U.K. Insolvency Act 1986 (as amended or re-enacted from time to time) or any other officer appointed under any other procedure under any law or any jurisdiction of, or having, similar or analogous powers over all or any of the assets of TOEMT 1 or TOEMT 2; “Insolvency Proceedings” refers to receivership, administration, liquidation (including the Liquidation Proceedings), appointment of a provisional liquidator, winding-up, dissolution, voluntary arrangement, scheme of arrangement under Section 425 of the U.K. Companies Act 1985 (as amended or re-enacted from time to time) or any insolvency procedure under the U.K. Insolvency Act 1986 (as amended or re-enacted from time to time) or any other procedure under any law of any jurisdiction of, or having, a similar or analogous nature of effect. “Liquidation Proceedings” refers to the TOEMT 1 liquidation Proceeding and the TOEMT 2 liquidation Proceeding; “TOEMT” refers to TOEMT 1 and TOEMT 2; “TOEMT 1” refers to Transocean Equipment Manufacturing and Trading Limited (in liquidation), a company organized under the laws of England and Wales with registered number 1611473; “TOEMT Claims” refers to the TOEMT 1 Claim, the TOEMT 1 Other Claims, and the TOEMT 2 Claims. “TOEMT 1 Claim” refers to the Bank’s claim, as stated in the Bank’s Proof of Debt on Form 4.25, dated December 18, 2003, in the amount of U.S. $32,593,762 of principal and U.S. $5,885,803.66 in interest, filed by the Bank in the TOEMT 1 Liquidation Proceeding, as supplemented or amended from time to time; E6 --------------------------------------------------------------------------------   Exhibit 10.1 “TOEMT 1 Liquidation Proceeding” refers to the liquidation proceedings of TOEMT 1 in the High Court of Justice, Chancery Division, London, England (No. 4731 of 2004); “TOEMT 1 Other Claims” refers to any and all claims, other than the TOEMT 1 Claim, that the Bank may have as creditor of TOEMT 1; “TOEMT 2” refers to Transocean Equipment Manufacturing and Trading Limited (in liquidation), a company organized under the laws of the Isle of Man with registered number 56415C; “TOEMT 2 Liquidation Proceeding” refers to the liquidation proceedings of TOEMT 2 in the High Court of Justice, Chancery Division, London, England (No. 4732 of 2004); “TOEMT 2 Claim” refers to any and all claims that the Bank may have as creditor of TOEMT 2. In order to enforce this Assignment the Bank irrevocably represents that the Assignee shall have full power, as the legal successor of the Bank with respect to the Assigned Assets , take all steps and actions, sign all agreements and certificates and other documents that are required to be signed in the course of transferring the Assigned Assets to the successors or agents of the Assignee. Budapest, 2006 MKB BANK Rt.                                                                                                                                                                                     CENTRÁL WORKOUT PÉNZÜGYI Rt.                                                                             E7 --------------------------------------------------------------------------------   Exhibit 10.1 ENDORSEMENT FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, CENTRÁL WORKOUT PÉNZÜGYI Rt. (“Assignor”) hereby assigns all of its right, title, and interest in and to the Assigned Assets and in and to each and every other right, power, and benefit granted to Assignor by this Assignment of Assets to                             , a company organized and existing under the laws of                             , such assignment to be effective this        day of       , 2006. CENTRÁL WORKOUT PÉNZÜGYI Rt. By:                                     Zoltán Varga Chief Executive Officer E8 --------------------------------------------------------------------------------   Exhibit 10.1 Form of Notice to Insolvency Officer 2006 To:   Russell John Carman From:   MKB Bank Rt. (the “Assignor”) and Centrál Workout Rt. (the “Assignee”) Dear Sir Transocean Equipment Manufacturing and Trading Limited (in liquidation), a company registered in England and Wales (“TOEMT 1”) Transocean Equipment Manufacturing and Trading Limited (in liquidation), a company registered in the Isle of Man (“TOEMT 2”) 1.   We hereby notify you that as of                    , 2006 the Assignor has assigned to the Assignee the following claims against TOEMT 1 and TOEMT 2 (the “Assigned Assets’’).       We hereby attach for your kind information a Declaration issued by us in connection with this assignment.   2.   Pursuant to Rule 11.11 of the Insolvency Rules, we hereby confirm that any dividends from the liquidation of TOEMT 1 and TOEMT 2 payable to the Assignor should be paid to the Assignee, or its successors and assigns, as directed.   3.   The administrative details of the Assignee are as follows:            Name:   Centrál Workout Rt.      Attention:   Zoltán Varga      Address:   1075 Budapest Madách tér 4     Hungary            Facsimile:   361.327.8434      Email:   vargaz@Centrálfaktor.hu 4.   Please acknowledge this notice by signing and returning to the Assignee the attached acknowledgement. This notice shall be governed by and construed in accordance with the laws of England. E9 --------------------------------------------------------------------------------   Exhibit 10.1 ASSIGNOR MKB BANK Rt. By: __________________ Name: __________________ Title: __________________ And: __________________ Name: __________________ Title: __________________ ASSIGNEE CENTRÁL WORKOUT Rt. By: __________________ Zoltán Varga Chief Executive Officer E10 --------------------------------------------------------------------------------   Exhibit 10.1 ACKNOWLEDGEMENT OF NOTICE TO INSOLVENCY OFFICER The undersigned hereby acknowledges receipt of the Notice to Insolvency Officer, dated                    , 2006, from MKB Bank Rt. (the “Bank”) and Centrál Workout Pénzügyi Rt. (“Assignee”), advising the undersigned of the assignment by the Bank to Assignee of the Assigned Assets. Russell John Carman Dated                     , 2006 E11

Exhibit 10.10   EMPLOYMENT AGREEMENT   This Employment Agreement (the “Agreement”), dated as of September 10, 2003, is entered into by and between H.B. Fuller Company, a Minnesota corporation (the “Company”), and Jose Miguel Fuster (the “Executive”).   WHEREAS, the Company believes employment of the Executive, on the terms and conditions hereinafter set forth, is important for the continued success of the Company; and   WHEREAS, the Executive has agreed to serve the Company on the terms and conditions hereinafter set forth;   NOW, THEREFORE, in consideration of the premises, and of the mutual covenants and agreements herein contained, the receipt and sufficiency of which is acknowledged, the parties hereby agree as follows:     1. Employment. The Company hereby agrees to employ Executive, and Executive agrees to be employed by the Company, upon the terms and conditions set forth below.     2. Position and Responsibilities. Executive shall serve as Group President, Latin America for the Company, and shall render services to the Company as shall from time to time be assigned to him by the Company. During the period of his employment with the Company, Executive shall devote substantially all of his business time, attention, skill and efforts to the faithful performance of his duties.     3. Term. The term of Executive’s employment under this Agreement shall commence on January 1, 2004 and shall continue, unless earlier terminated under Section 9 of this Agreement, for a period of two years ending December 31, 2005. The term of employment under this Agreement may be extended only by written agreement of both parties. Except as otherwise provided herein, this Agreement will terminate upon termination of Executive’s employment with the Company.     4. Compensation. For all services rendered by Executive in any capacity during his employment under this Agreement including, without limitation, services as an officer or member of any committee, the Company shall pay to Executive an annual base salary of $266,586.00, which shall be paid in equal semi-monthly installments. In addition, Executive shall be eligible for merit increases to base salary under the Company’s talent assessment process, and the Executive shall be provided annual incentive bonus opportunities based upon achieving certain performance targets as annually described and delivered by the Company. Any amounts to which Executive is entitled as compensation, bonus, or any other form of compensation, shall be subject to usual deduction for appropriate U.S. federal, state and local tax obligations of Executive. However, the Company agrees to reimburse Executive for any local payroll or social taxes that Executive incurs in order to be employed by the Company in Costa Rica.     5. Benefits. During the term of his employment under this Agreement, Executive shall be entitled to participate in all U.S. employee benefit and welfare programs for which Executive otherwise qualifies, and to receive fringe benefits that are available to the Company’s similarly situated executive personnel. Executive understands and agrees, however, that his eligibility for benefits under any Company benefit plan are governed and determined by the rules of said plans, as they may exist from time to time.     6. Confidential Information. Executive agrees that, from and after the date of this Agreement, all the information, facts, or occurrences relating to formulas, processes, customer lists, computer user identifiers and passwords, and all purchasing, engineering, accounting, marketing, and other information, not generally known and proprietary to the Company or its affiliated companies, relating to research, development, manufacturing, marketing or sale of products shall be and are hereby deemed to be confidential information (“Confidential Information”). Executive agrees, from --------------------------------------------------------------------------------   and after the date of this Agreement, not to use or disclose any Confidential Information at any time during or after Executive’s employment by Company, except in the performance of Executive’s duties on behalf of the Company, or by written consent of the Company or as may be required by law or court process. Upon termination of Executive’s employment, for any reason, Executive agrees that all Confidential Information, including all copies, excerpts and summaries in Executive’s possession or control, as well as all other Company property, shall be immediately returned to the Company.     7. Non-Competition. Executive agrees that during the term of his employment by the Company, and for a period of two years following termination of that Employment, for any reason, Executive will not serve, directly or indirectly (individually or as an officer, director, employee, consultant, partner or co-venturer, or as a stockholder or other proprietor owning a beneficial interest of more than five percent (5%)) in any enterprise which is competitive in any manner with any business at the time carried on by the Company or any of its affiliates companies, without the written consent of the Company. This means, by way of illustration but not limitation, that Executive will not sell or solicit orders for any “Conflicting Product” to or from any customer whose account Executive supervised or serviced for the Company or any of its affiliated companies, and that Executive will not serve any organization or person engaged in the development, production or sale of a “Conflicting Product.” For the purposes of this illustration, “Conflicting Product” means any product, process, equipment, concept or service (in existence or under development) of any person or organization which resembles or competes with a product, process, equipment, concept or service upon which Executive may have worked or concerning which Executive acquired Confidential Information at any time through Executive’s work with the Company or any of its affiliates companies.     8. Non-Solicitation. Executive agrees that during the term of his employment by the Company, and for a period of two years following termination of that Employment, for any reason, Executive will not induce, attempt to induce, or in any way assist or act in concert with any other person or organization in inducing or attempting to induce any employee or agent of the Company or any of the Company’s affiliated companies, to terminate such employee or agent’s relationship with the Company or the affiliated company, as the case may be. During such period of time, Executive agrees that he will not make any offers of employment or assist or act in concert with any other person or organization in making offers of employment to any person who, at the time of such offer, is currently in an employment or agency relationship with the Company or any of the Company’s affiliated companies.     9. Termination of Employment. Subject to the following conditions, Executive’s employment may be terminated at any time.     A. In the event Executive’s employment is terminated by any one of the following methods, Executive’s rights, if any, to continued compensation from the Company or any Company affiliate, shall cease as of the date of such termination:     i. Executive voluntarily resigns or retires.     ii. The Company terminates Executive’s employment for “Cause.” “Cause” shall mean gross violation of working rules or gross misconduct (which shall include, but not be limited to, a breach of Executive’s obligations under Section 2, 6, 7 or 8 of this Agreement).     iii. Executive’s death.     iv. A Change in Control as defined in any Change in Control Agreement between Executive and the Company.   Executive expressly agrees that termination of his employment by expiration of the term of this Agreement shall constitute, for all purposes, Executive’s voluntary resignation or retirement. --------------------------------------------------------------------------------   B. In the event Executive’s employment is terminated by the Company, prior to expiration of its term hereunder, for any reason other than for “Cause” as defined above, Executive shall be entitled to receive from the Company:     i. His salary, at the rate on the date of termination, for the remaining balance of the term of this Agreement as if it had not been terminated prior to normal expiration. This sum may, at the Company’s option, be paid in one lump sum; and     ii. Any bonuses earned and payable at the date of termination.   Eligibility for, and payment of, all long or short term incentives, including but not limited to, bonuses, stock options, performance units, restricted stock, and restricted stock units, will be in accordance with the terms and conditions of the applicable plan, award and/or plan design.     C. In the event Executive’s employment is terminated by one of the following methods, the Company will, upon request and in accordance with the Company’s then-current travel policy, pay the reasonable costs to transport the Executive, his immediate family, and his ordinary and customary household goods, from Costa Rica to the United States of America:     i. Expiration of the term of this Agreement.     ii. The Company terminates Executive’s employment, prior to expiration of its term hereunder, for any reason other than for “Cause” as defined above.     iii. Executive’s death.     10. Severance Pay. Executive acknowledges and agrees that the terms of this Agreement (including Executive’s rights to payment under Section 9(B) above) are sufficiently beneficial to Executive to replace any right or claim to any severance payment. Accordingly, Executive expressly waives, forfeits, releases and abandons any right or claim he may have, or hereafter obtain, for any severance payments from any source, including, but not limited to, any right or claim arising by operation of law, or pursuant to any plan or policy of the Company or any Company affiliate.     11. Continuing Obligations. Executive and the Company agree that the provisions of Sections 6, 7, 8, 9, 10, 12 and 13 shall survive termination of this Agreement.     12. Jurisdiction and Venue. This Agreement, as well as all issues arising out of Executive’s employment or the cessation thereof, shall be governed by the laws of the State of Minnesota and Executive hereby consents to the jurisdiction and venue of the courts of the State of Minnesota for the resolution of any disputes arising out of, or related to, this Agreement, his employment or the cessation thereof, including breach and formation (fraud), to the exclusion of any other courts.     13. Remedies. Executive acknowledges that the provisions of this Agreement are reasonable and necessary for the protection of the Company and that Executive’s violation of this Agreement will cause the Company irreparable harm for which it will be entitled to temporary and permanent injunctive relief, money damages insofar as they can be determined and all related costs and reasonable attorneys fees.     14. Assignment. The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company. This Agreement is a personal employment agreement, and the rights, obligations and interests of the Executive hereunder may not be sold, assigned or transferred by the Executive.     15. Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of the Agreement shall remain in full force and shall in no way be impaired.     16. Integration and Modification. This Agreement represents the entire agreement between Executive and anyone who has or obtains any legal rights or claims through the Executive, and the Company with respect to the subject matter covered herein. It replaces any other oral or written agreements, representations, promises or discussions between Executive and the Company with respect to the subject matter covered herein. This Agreement may not be --------------------------------------------------------------------------------   changed verbally. To be valid, any waiver or modification must be in writing and signed by both parties. This Agreement may be executed in any number of counterparts, which, taken together, shall constitute but one Agreement. A copy of this Agreement is as valid as the original. It is expressly understood and agreed, however, that nothing herein shall be construed to waive any rights or obligations set forth in any of the following Agreements between Executive and Company, or other agreements that the parties may enter into from time to time, which shall remain in full force and effect according to their respective terms:     (1) Any Award Agreement under any H.B. Fuller Company Performance Unit Plan;     (2) Any Restricted Stock or Stock Incentive Agreement;     (3) Any Non-Qualified Stock Option Agreement;     (4) Any Change in Control Agreement;     (5) Any Confidentiality, Non-Compete, Non-Disparagement and Non-Solicitation Agreement.   IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.   H.B. FULLER COMPANY         By:   /s/ Patricia L. Jones           /s/ Jose Miguel Fuster                 Jose Miguel Fuster Its:   Chief Administrative Officer               EMPLOYMENT AGREEMENT AMENDMENT   The Employment Agreement (the “Agreement”), dated as of September 10, 2003, by and between H.B. Fuller Company, a Minnesota corporation (the “Company”), and Jose Miguel Fuster (the “Executive”), is hereby amended as follows.   The term of Executive’s employment under this Agreement shall be extended from December 31, 2005 to January 3, 2006.   All other terms and conditions shall remain unchanged.   IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.   H.B. FULLER COMPANY         By:   /s/ Michele Volpi           /s/ Jose Miguel Fuster                 Jose Miguel Fuster Its:   Group President, Global Adhesives            

  Exhibit 10.10 AMENDMENT NUMBER 9 TO AMENDED AND RESTATED LOAN AGREEMENT           THIS AMENDMENT NUMBER 9, dated as of September 29, 2006 (this “Amendment”), to the Amended and Restated Loan Agreement, dated as of March 7, 2003 (as amended, modified, restated or supplemented from time to time as permitted thereby, the “Loan Agreement”), among CF LEASING LTD., a company organized and existing under the laws of the Islands of Bermuda (together with its successors and permitted assigns, the “Borrower”), FORTIS BANK (NEDERLAND) N.V., a Naamloze Vennootschap (“Fortis”), as agent on behalf of the Lenders (in such capacity, the “Agent”), BTMU CAPITAL CORPORATION (formerly BTM Capital Corporation) (“BTMCC”), a Delaware corporation, HSH NORDBANK AG, NEW YORK BRANCH (“HSH”), a banking institution duly organized and validly existing under the laws of Germany, WESTLB AG, a joint stock company duly organized and validly existing under the laws of Germany, acting through its NEW YORK BRANCH (“WestLB”), NIBC BANK N.V. (f/k/a NIB Capital Bank N.V.), a Naamloze Vennootschap (“NIBC”) and the other financial institutions from time to time party hereto (each, including Fortis, BTMCC, HSH, WestLB and NIBC, a “Lender” or “Co-Purchaser” and collectively, the “Lenders” or the “Co-Purchasers”) and West LB, as documentation agent (together with its successors and assigns in such capacity, the “Documentation Agent”). W I T N E S S E T H:           WHEREAS, the Borrower, Fortis, HSH and BTMCC have previously entered into the Loan Agreement, dated as of September 18, 2002 (the “Loan Agreement”), as amended and restated as of March 7, 2003, and subsequently amended by Amendment Number 1 thereto, dated as of October 15, 2003, Amendment Number 2 thereto, dated as of March 4, 2004, Amendment Number 3 thereto, dated as of April 30, 2004, Amendment Number 4 thereto, dated as of May 31, 2004, Amendment Number 5 thereto, dated as of June 15, 2004, Amendment Number 6 thereto, dated as of June 15, 2005, Amendment Number 7 thereto, dated as of January 17, 2006, and Amendment Number 8 thereto, dated as of June 14, 2006;           WHEREAS, the parties desire to further amend the Loan Agreement in order to extend the Conversion Date from September 30, 2006 to October 31, 2006, upon the terms, and subject to the conditions, hereinafter set forth, and in reliance on the representations and warranties of Borrower set forth herein;           NOW THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto agree as follows:           SECTION 1. Defined Terms. Capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings assigned in the Loan Agreement.           SECTION 2. Full Force and Effect. Other than as specifically modified hereby, the Loan Agreement shall remain in full force and effect in accordance with the terms and provisions thereof and is hereby ratified and confirmed by the parties hereto.   --------------------------------------------------------------------------------   Exhibit 10.10           SECTION 3. Amendment to the Loan Agreement. Effective upon the date hereof, following the execution and delivery hereof, Section 101 of the Loan Agreement is hereby amended by amending and restating the following defined term in its entirety:      “Conversion Date: With respect to the Commitment of any Lender, the earlier to occur of (i) October 31, 2006 (as such date may be extended in accordance with Section 201(f)), and (ii) the date on which an Early Amortization Event initially occurs.”           SECTION 4. Representations, Warranties and Covenants.           The Borrower hereby confirms that each of the representations, warranties and covenants set forth in Articles V and VI of the Loan Agreement are true and correct as of the date first written above with the same effect as though each had been made as of such date, except to the extent that any of such representations and warranties expressly relate to earlier dates.           SECTION 5. Effectiveness of Amendment; Terms of this Amendment.           (a) This Amendment shall become effective as of the date first written above.           (b) This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.           (c) On and after the execution and delivery hereof, (i) this Amendment shall be a part of the Loan Agreement, and (ii) each reference in the Loan Agreement to “this Agreement” or “hereof”, “hereunder” or words of like import, and each reference in any other document to the Loan Agreement shall mean and be a reference to the Loan Agreement as amended or modified hereby.           (d) Except as expressly amended or modified hereby, the Loan Agreement shall remain in full force and effect and is hereby ratified and confirmed by the parties hereto.           SECTION 6. Execution in Counterparts. This Amendment may be executed by the parties hereto in separate counterparts (including by facsimile and/or email), each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.           SECTION 7. Governing Law. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO CONFLICT OF LAW PRINCIPLES; PROVIDED THAT SECTION 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.           SECTION 8. Consent to Jurisdiction. ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST THE AGENT ARISING OUT OF OR RELATING TO THIS AMENDMENT, OR ANY TRANSACTION CONTEMPLATED HEREBY, MAY BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY AND COUNTY OF   --------------------------------------------------------------------------------   Exhibit 10.10 NEW YORK, STATE OF NEW YORK AND THE AGENT AND THE BORROWER EACH HEREBY WAIVE ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND, SOLELY FOR THE PURPOSES OF ENFORCING THIS AMENDMENT, THE AGENT, EACH LENDER AND THE BORROWER EACH HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING. THE AGENT AND THE BORROWER HEREBY EACH IRREVOCABLY APPOINTS AND DESIGNATES CT CORPORATION SYSTEM, HAVING AN ADDRESS AT 111 EIGHTH AVENUE, NEW YORK, NEW YORK, 10011, ITS TRUE AND DULY AUTHORIZED AGENT FOR THE LIMITED PURPOSE OF RECEIVING AND FORWARDING LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND THE AGENT AND THE BORROWER EACH AGREE THAT SERVICE OF PROCESS UPON SUCH PARTY SHALL CONSTITUTE PERSONAL SERVICE OF SUCH PROCESS ON SUCH PERSON. PURSUANT TO NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402, THE AGENT AND THE BORROWER SHALL EACH MAINTAIN THE DESIGNATION AND APPOINTMENT OF SUCH AUTHORIZED AGENT UNTIL ALL AMOUNTS PAYABLE UNDER THE LOAN AGREEMENT SHALL HAVE BEEN PAID IN FULL. IF SUCH AGENT SHALL CEASE TO SO ACT, THE AGENT OR THE BORROWER, AS THE CASE MAY BE, SHALL IMMEDIATELY DESIGNATE AND APPOINT ANOTHER SUCH AGENT SATISFACTORY TO THE AGENT AND SHALL PROMPTLY DELIVER TO THE AGENT EVIDENCE IN WRITING OF SUCH OTHER AGENT’S ACCEPTANCE OF SUCH APPOINTMENT.           SECTION 9. No Novation. Notwithstanding that the Loan Agreement is hereby amended by this Amendment as of the date hereof, nothing contained herein shall be deemed to cause a novation or discharge of any existing indebtedness of the Borrower under the Loan Agreement, or the security interest in the Collateral created thereby. [Signature pages follow]   --------------------------------------------------------------------------------   Exhibit 10.10           IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment on the date first above written.                   CF LEASING LTD.                       By:   /s/ DENNIS J. TIETZ                       Name: Dennis J. Tietz         Title: Director     Amendment No. 9 to A&R Loan Agt.   --------------------------------------------------------------------------------   Exhibit 10.10                   FORTIS BANK (NEDERLAND) N.V.,         as Agent and a Lender                       By:   /s/ E. VAN LOOPIK                       Name: E. van Loopik         Title: Senior Manager                       By:   /s/ J. F. G. M. WOLFHAGEN                       Name: J. F. G. M. Wolfhagen         Title: Director of Risk Management                       By:   /s/ MARTIJN P. NIJS                       Name: Martijn P. Nijs         Title: Senior Manager     Amendment No. 9 to A&R Loan Agt.   --------------------------------------------------------------------------------   Exhibit 10.10                   BTMU CAPITAL CORPORATION, as a Lender                       By:   /s/ CHERYL A. BEHAN                       Name: Cheryl A. Behan         Title: Senior Vice President     Amendment No. 9 to A&R Loan Agt.   --------------------------------------------------------------------------------   Exhibit 10.10                   HSH NORDBANK AG, NEW YORK BRANCH,         as a Lender                       By:   /s/ ANGELA BEHREND GORNEMANN                       Name: Angela Behrend Gornemann         Title: Deputy Global Head of Transportation                       By:   /s/ LINH DUONG                       Name: Linh Duong         Title: Vice President     Amendment No. 9 to A&R Loan Agt.   --------------------------------------------------------------------------------   Exhibit 10.10                   WESTLB AG, NEW YORK BRANCH, as a Lender                       By:   /s/ SALVATORE BATTINELLI                       Name: Salvatore Battinelli         Title: Managing Director                       By:   /s/ AMIR OREN                       Name: Amir Oren         Title: Manager     Amendment No. 9 to A&R Loan Agt.   --------------------------------------------------------------------------------   Exhibit 10.10                   NIBC BANK N.V., as a Lender                       By:   /s/ MAURICE L. WIJMANS                       Name: Maurice L. Wijmans         Title: Associate Director                       By:   /s/ AAT A. VAN RHIJN                       Name: Aat A. van Rhijn         Title: Managing Director     Amendment No. 9 to A&R Loan Agt.  

Exhibit 10.10 [Jamba Juice Letterhead] May 25, 2006 Paul Coletta 17029 Castello Circle San Diego, CA 92127 Dear Paul: I am thrilled to confirm our offer as Vice President, Marketing with Jamba Juice effective June 19,2006. Since your background check has been satisfied, this offer is conditional on proof of your legal right to work in the United States. You will be based in our Bay Area support center. In this capacity as top marketing executive for Jamba Juice, you will report directly to me. Your annual base salary will be $285,000, payable bi-weekly with your next merit review scheduled for October 2007. We are also pleased to provide you with a sign-on bonus of $50,000, less applicable taxes, which will be paid to you on the first payroll cycle after your start date. Should your employment terminate within 18 months for any reason other than involuntary termination without cause, or constructive termination as defined below, you will be required to reimburse the Company for all or part of your sign-on bonus per the agreement provided. This agreement must be signed and returned prior to you receiving your sign-on bonus. You will also be eligible for an annual target bonus of 40% of your base salary earnings for the year. You will be eligible for bonus after the beginning of our fiscal year on June 28, 2006 when it is anticipated that the bonus target will increase to 50%. Your bonus award will be based on the Company’s performance against its Net Income Goal (50%), System Comparable Sales (25%) and your Personal Performance (25%). A bonus plan summary for 2006 has already been provided to you for your information. I am also pleased to provide you with 150,000 Incentive Stock Options. These will be granted after the close of the merger with SVI. The price of your options will be the current price on the day the stock is granted. Your stock grant will be fully vested at the end of 4 years. Details of the Incentive Stock Option Plan will be forwarded to you after your shares have been granted. Medical and dental insurance programs are available and will become effective on the first of the month after one month of employment. You will accrue vacation at the rate of three weeks per year pursuant to our time off policy. The details of these and other programs will be explained to you during your orientation. A summary of benefits has already been provided to you for your information. You will also be eligible for the following relocation benefits for your move from San Diego to the Bay Area.     •   Reimbursement for mileage from San Diego to the Bay Area when relocating --------------------------------------------------------------------------------   •   A furnished, one bedroom apartment to serve as temporary living in the Bay Area for up to one year     •   Reimbursement of airfare for return trips to San Diego or for your spouse to visit you in the Bay Area if you have not relocated for up to six months     •   Reimbursement for two house hunting trips including your spouse     •   Movement of household goods (includes packing and unpacking)     •   Reimbursement of closing costs on the sale of your home in San Diego not to exceed 6% real estate commission to be completed within the first year of employment     •   Reimbursement of reasonable and customary closing costs for purchase of a home in the Bay Area, not to include loan points, to be completed within the first year of employment     •   End of year gross up of taxable relocation benefits     •   Miscellaneous expense payment of $2,500 gross Should your employment terminate within 18 months for any reason other than involuntary termination without cause, or constructive termination as defined below, you will be required to reimburse the Company for all or part of your relocation costs per the agreement provided. This agreement must be signed and returned prior to beginning your relocation. In exchange for a signed release of claims, should your employment involuntarily terminates for reasons other than cause or if you are constructively discharged, you will be eligible for continuation pay in the amount of one year of your base salary payable bi-weekly less required withholdings. During the first six months of your employment the constructive discharge provision will only be considered if there is a change of control or change in CEO of the Company. Constructive discharge is defined as a significant diminution in the nature of scope of your authority, title or function; a 15% or more reduction in salary; or a move of your office location that results in a 50 mile or longer additional commute and requires relocation. The relationship that exists between you and the company is for an unspecified term and considered employment at will. The relationship can be terminated by you or the company “at will” at any time either with or without cause or advance notice. This “at will” agreement constitutes the entire agreement between the employee and the company on the subject of termination, and supersedes all prior agreements and cannot be changed by future events, even though other policies and procedures may change from time to time. No one has the authority to modify this relationship except for the Chief Executive Officer or Vice President of Human Resources in writing and signed by you and the Chief Executive Officer or Vice President of Human Resources. Paul, we are looking forward to the contributions you will make to the company. Please acknowledge the terms of this letter by returning one signed copy to Russ Testa in the envelope that was provided. If you have any additional questions, please give Russ or me a call.   Sincerely,           /s/ Paul Clayton       Acknowledged and Agreed:   /s/ Paul Coletta       6/8/06 President and CEO       Paul Coletta     Date

      Exhibit 10.2   SECOND AMENDMENT TO THE LOAN AGREEMENT   SECOND AMENDMENT TO THE LOAN AGREEMENT (this “Amendment”) dated as of April 19, 2006, between AMERICAN MORTGAGE ACCEPTANCE COMPANY (the “Borrower”) and CHARTERMAC (the “Lender”).   WHEREAS, the Borrower and the Lender are parties to a Loan Agreement dated as of June 30, 2004, as amended by the First Amendment to the Loan Agreement dated as of June 30, 2005 (as amended, modified, restated and/or supplemented from time to time, the “Loan Agreement”) (capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Loan Agreement); and   WHEREAS, the Borrower has requested, and the Lender has agreed to, the amendments provided herein on the terms and conditions set forth herein;   NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties agree that effective as of the date hereof, the Loan Agreement is hereby amended as follows:   Section 7. Amendments. 7.1          The first recital of the Loan Agreement is hereby amended and restated in its entirety as follows: “By means of a loan facility to be established under and subject to this Agreement (the “Line of Credit”), Borrower desires to secure from the Lender up to $50,000,000 for use by Borrower to originate bridge loans, mortgage loans, mezzanine loans and other mortgage investments and Lender has agreed to provide such financing.” 7.2          The definition of the term “Loan Amount” in Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety as follows: “Loan Amount means the principal amount of FIFTY MILLION AND NO/100 DOLLARS ($50,000,000.00), or such lesser amount as may from time to time be in effect following exercise of the reduction procedure set forth in Section 2.3.” 7.3          Section 2.4 of the Loan Agreement is hereby amended by deleting the text “June 30, 2006” therein and inserting the text “June 30, 2007” in lieu thereof.   Section 8. Representations and Warranties.     --------------------------------------------------------------------------------       The Borrower hereby represents and warrants to the Lender that: 8.1          Authorization. The Borrower is duly authorized to execute and deliver this Amendment and is and will continue to be duly authorized to perform its obligations under the Loan Agreement, as amended hereby. 8.2          No Conflicts. The execution and delivery of this Amendment and the performance by the Borrower of its obligations under the Loan Agreement, as amended hereby, do not and will not (i) require any consent or authorization of, filing with, notice to or other act by or in respect of, any governmental authority or any other Person or (ii) violate any law, rule or regulation or any material agreement or contract to which the Borrower is a party or is otherwise bound and will not result in, or require, the creation or imposition of any lien or encumbrance on any of its properties or revenues pursuant to any law, rule or regulation or any such material agreement or contract. 8.3          Validity and Binding Effect. The Loan Agreement, as amended hereby, constitutes a legal, valid and binding obligation of the Borrower, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). 8.4          Loan Agreement Representations and Warranties. The representations and warranties set forth in Section 4 of the Loan Agreement are true and correct, in all material respects, with the same effect as if such representations and warranties had been made on the date hereof (except to the extent such representations and warranties are made as of some other date(s), in which case such representations and warranties shall be true and correct in all material respects as of such other date(s)). 8.5          No Event of Default. As of the date hereof, no Default or Event of Default has occurred or is continuing. Section 9. Effectiveness of Amendment. Except as specifically amended hereby, the Loan Agreement is and shall remain in full force and effect. This Amendment shall become effective upon the first date on which the Borrower and the Lender shall have signed a counterpart hereof (whether the same or different counterparts) and shall have delivered (including by way of facsimile transmission) the same to the other party. Section 10. No Further Amendments. Except for the amendments set forth herein, the text of the Loan Agreement and all other Loan Documents shall remain unchanged and in full force and effect. No waiver by the Lenders under the Loan Agreement or any other Loan Document is granted or intended except as expressly set forth herein, and the Lenders expressly reserve the right to require strict compliance with the terms of each of the Loan Agreement, as amended hereby, and the other Loan Documents in all respects. The waivers, extensions, consents and amendments agreed to herein shall not constitute a modification of, or a course of   --------------------------------------------------------------------------------   dealing at variance with, the Loan Agreement, as amended hereby, such as to require further notice by the Lender to require strict compliance with the terms of the Loan Agreement, as amended hereby, and the other Loan Documents in the future. Section 11. Legal Fees. The Borrower shall pay all reasonable expenses incurred by the Lender in the drafting, negotiation and closing of the documents and transactions contemplated hereby, including the reasonable fees and disbursements of the Lender’s special counsel. Section 12. Miscellaneous. 12.1       Governing Law. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 12.2       Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. 12.3       Headings. Section and subsection headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose or be given any substantive effect. 12.4       Severability. In case any provision in or obligation under this Amendment shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. *       *       *     --------------------------------------------------------------------------------     IN WITNESS WHEREOF, the parties have executed and delivered this Amendment as of the date first written above.   THE BORROWER:   AMERICAN MORTGAGE ACCEPTANCE COMPANY     By: /s/ Marc D. Schnitzer   Marc D. Schnitzer     President     THE LENDER: CHARTERMAC   By:          CharterMac Capital LLC, f/k/a Related Capital Company LLC, its manager     By: /s/ Marc D. Schnitzer     Marc D. Schnitzer     Chief Executive Officer       --------------------------------------------------------------------------------

Exhibit 10.10 RADIOSHACK CORPORATION AMENDED AND RESTATED TERMINATION PROTECTION PLAN “LEVEL I” WHEREAS, the “Board” of the “Company” (as those terms are hereinafter defined) recognizes that the possibility of a future “Change in Control” (as hereinafter defined) exists and that the threat or occurrence of a Change in Control could result in significant distractions to its officers because of the uncertainties inherent in such a situation; and WHEREAS, the Board has determined that it is essential and in the best interest of the Company, its stockholders and the Employer to retain the services of its officers in the event of a threat or the occurrence of a Change in Control of the Company and to ensure their continued dedication and efforts in such event without undue concern for their employment and personal financial security. NOW, THEREFORE, in order to fulfill these purposes, the following is hereby adopted. ARTICLE I ESTABLISHMENT OF PLAN 1.1 As of the Effective Date, the Company hereby amends and restates the RadioShack Corporation Termination Protection Plan Level I in its entirety as set forth in this document. ARTICLE II DEFINITIONS As used herein the following words and phrases shall have the following respective meanings for purposes of the Plan unless the context clearly indicates otherwise. 2.1 Accrued Compensation. “Accrued Compensation” shall mean an amount which shall include all amounts earned or accrued through the “Termination Date” (as hereinafter defined) but not paid as of the Termination Date including (i) base salary, (ii) reimbursement for reasonable and necessary expenses incurred by the “Participant” (as hereinafter defined) on behalf of the Employer during the period ending on the Termination Date in accordance with the Employer’s business expense reimbursement policies, (iii) vacation pay as required by law, and (iv) bonuses and incentive compensation (other than the “Pro Rata Bonus” (as hereinafter defined)). 2.2 Base Amount. “Base Amount” shall mean the greater of the Participant’s annual base salary (a) at the rate in effect on the Termination Date or (b) at the highest rate in effect at any time during the ninety (90) day period prior to the Change in Control, and shall include all -------------------------------------------------------------------------------- amounts of the Participant’s base salary that are deferred under the Employer’s qualified and non-qualified employee benefit plans. 2.3 Benefits Amount. “Benefits Amount” shall mean an amount equal to thirty percent (30%) of the Participant’s Base Amount. 2.4 Board. “Board” shall mean the Board of Directors of the Company. 2.5 Bonus Amount. “Bonus Amount” shall mean the highest annual bonus paid or payable to the Participant for any fiscal year in respect of the three (3) full fiscal years ended prior to the Change in Control. 2.6 Business Day. “Business Day” shall mean a day, other than Saturday, Sunday or other day on which commercial banks in Fort Worth, Texas are authorized or required by applicable law to close. 2.7 Cause. The Participant’s Employer may terminate the Participant’s employment for “Cause” if the Participant (a) has been convicted of a felony, (b) failed substantially to perform his or her reasonably assigned duties with his or her Employer (other than a failure resulting from his or her incapacity due to physical or mental illness), or (c) has intentionally engaged in conduct which is demonstrably and materially injurious to the Company and/or Employer. No act, or failure to act, on the Participant’s part, shall be considered “intentional” unless the Participant has acted, or failed to act, with a lack of good faith and with a lack of reasonable belief that the Participant’s action or failure to act was in the best interest of the Company and/or Employer. 2.8 Change in Control. “Change in Control” shall mean the occurrence during the “Term” (as hereinafter defined) of any of the following events: (a) An acquisition (other than directly from the Company) of any voting securities of the Company (the “Voting Securities”) by any “Person” (as the term person is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”)) immediately after which such Person has “Beneficial Ownership” (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifteen percent (15%) or more of the combined voting power of the Company’s then outstanding Voting Securities; provided, however, in determining whether a Change in Control has occurred, Voting Securities which are acquired in a Non-Control Acquisition (as hereinafter defined) shall not constitute an acquisition which would cause a Change in Control. A “Non-Control Acquisition” shall mean an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) maintained by (A) the Company or (B) any corporation or other Person of which a majority of its voting power or its voting equity securities or equity interest is owned, directly or indirectly, by the Company (for purposes of this definition, a “Subsidiary”), (ii) the Company or its Subsidiaries, or (iii) any Person in connection with a Non-Control Transaction (as hereinafter defined); (b) The individuals who, as of the Effective Date, are members of the Board (the “Incumbent Board”), cease for any reason to constitute at least two-thirds of the Board;   2 -------------------------------------------------------------------------------- provided, however, that if the election, or nomination for election by the Company’s stockholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of this Plan, be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened “Election Contest” (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board (a “Proxy Contest”) including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or (c) The consummation of: (1) A merger, consolidation, reorganization or other business combination with or into the Company or in which securities of the Company are issued, unless (i) the stockholders of the Company, immediately before such merger, consolidation, reorganization or other business combination, own directly or indirectly immediately following such merger, consolidation, reorganization or other business combination, at least sixty percent (60%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger or consolidation, reorganization or other business combination (the “Surviving Corporation”) in substantially the same proportion as their ownership of the Voting Securities immediately before such merger, consolidation, reorganization or other business combination, (ii) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation, reorganization or other business combination constitute at least two-thirds of the members of the board of directors of the Surviving Corporation, or a corporation beneficially directly or indirectly owning a majority of the combined voting power of the outstanding voting securities of the Surviving Corporation, or (iii) no Person other than (i) the Company, (ii) any Subsidiary, (iii) any employee benefit plan (or any trust forming a part thereof) that, immediately prior to such merger, consolidation, reorganization or other business combination was maintained by the Company, the Surviving Corporation, or any Subsidiary, or (iv) any Person who, immediately prior to such merger, consolidation, reorganization or other business combination had Beneficial Ownership of fifteen percent (15%) or more of the then outstanding Voting Securities, has Beneficial Ownership of fifteen percent (15%) or more of the combined voting power of the Surviving Corporation’s then outstanding voting securities, and (iv) A transaction described in clauses (i) through (iii) shall herein be referred to as a “Non-Control Transaction.”   3 -------------------------------------------------------------------------------- (2) A complete liquidation or dissolution of the Company; or (3) The sale or other disposition of all or substantially all of the assets of the Company to any Person (other than (i) any such sale or disposition that results in at least fifty percent (50%) of the Company’s assets being owned by one or more subsidiaries or (ii) a distribution to the Company’s stockholders of the stock of a subsidiary or any other assets). Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the “Subject Person”) acquired Beneficial Ownership of more than the permitted amount of the then outstanding Voting Securities (X) as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person, provided that if a Change in Control would occur (but for the operation of this subsection (X)) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur, or (Y) and such Subject Person (1) within fourteen (14) Business Days (or such greater period of time as may be determined by action of the Board) after such Subject Person would otherwise have caused a Change in Control (but for the operation of this clause (Y)), such Subject Person notifies the Board that such Subject Person did so inadvertently, and (2) within seven (7) Business Days after such notification (or such greater period of time as may be determined by action of the Board), such Subject Person divests itself of a sufficient number of Voting Securities so that such Subject Person is no longer the Beneficial Owner of more than the permitted amount of the outstanding Voting Securities. (d) Notwithstanding anything contained in the Plan to the contrary, if the Participant’s employment is terminated during the Term but within one (1) year prior to a Change in Control and the Participant reasonably demonstrates that such termination (i) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a Change in Control and who effectuates a Change in Control (a “Third Party”) or (ii) otherwise occurred in connection with, or in anticipation of, a Change in Control which actually occurs, then for all purposes of the Plan, the date of a Change in Control with respect to the Participant shall mean the date immediately prior to the date of such termination of the Participant’s employment. 2.9 “Code” means the Internal Revenue Code of 1986, as amended. 2.10 Company. “Company” shall mean RadioShack Corporation and shall include its “Successors and Assigns” (as hereinafter defined). 2.11 Disability. “Disability” shall mean a physical or mental infirmity which impairs the Participant’s ability to substantially perform his or her duties with his or her Employer for a period of one hundred eighty (180) consecutive days and the Participant has not returned to his   4 -------------------------------------------------------------------------------- or her full time employment prior to the Termination Date as stated in the “Notice of Termination” (as hereinafter defined). 2.12 Effective Date. “Effective Date” shall be May 18, 2006. 2.13 Eligible Emp1oyee. “Eligible Employee” shall mean any officer of the Company on the day on which the Change in Control of the Company occurs, other than those officers who are parties to a Termination Protection Agreement with the Company or any Subsidiary. 2.14 Employer. “Employer” shall mean the Company or its divisions or its “Subsidiaries” (as hereinafter defined) with whom the Eligible Employee is employed. 2.15 Good Reason. “Good Reason” shall mean the occurrence after a Change in Control of any of the events or conditions described in Subsections (i) and (ii) hereof: (i) the failure by the Employer to (A) comply with the provisions of Section 4.2(a) or (B) pay or provide compensation or benefits pursuant to the terms of Section 4.3, in either case, within fifteen (15) days of the date notice of such failure is given to the Employer; and (ii) the failure of the Company and/or the Employer to obtain an agreement from any Successor or Assign of the Company, to assume and agree to perform the Plan, as contemplated in Section 9.1 hereof, within thirty (30) days after the Change in Control. Any event or condition described in this Section 2.15(i) and (ii) which occurs during the Term but within one (1) year prior to a Change in Control but which the Participant reasonably demonstrates (A) was at the request of a Third Party or (B) otherwise arose in connection with or in anticipation of a Change in Control which actually occurs, shall constitute Good Reason for purposes of the Plan notwithstanding that it occurred prior to the Change in Control. 2.16 Notice of Termination. Following a Change in Control, “Notice of Termination” shall mean a notice of termination of the Participant’s employment from the Employer which indicates the specific termination provision in the Plan relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Participant’s employment under the provision so indicated. 2.17 Participant. “Participant” shall mean an Eligible Employee who satisfies the requirements of Section 3.1 and who has not ceased to be a Participant pursuant to Section 3.2. 2.18 Payroll Date. “Payroll Date” shall mean each regularly scheduled date during Participant’s employment on which base salary payments are made and after a Termination Date, each regularly scheduled date on which such payments would be made if employment continued. 2.19 Plan. “Plan” shall mean the RadioShack Corporation Amended and Restated Termination Protection Plan Level I.   5 -------------------------------------------------------------------------------- 2.20 Pro-Rata Bonus. “Pro-Rata Bonus” shall mean the Bonus Amount multiplied by a fraction, the numerator of which is the number of days in the Company’s fiscal year through and including the Participant’s Termination Date and the denominator of which is 365. 2.21 Subsidiary or Subsidiaries. “Subsidiary” or “Subsidiaries” shall mean any corporation in which the Company owns, directly or indirectly, 50% or more of the total voting power of the corporation’s outstanding voting securities and any other corporation designated by the Board as a Subsidiary. 2.22 Successors and Assigns. “Successors and Assigns” as used herein shall mean a corporation or other entity acquiring all or substantially all the assets and business of the Company (including the Plan) whether by operation of law or otherwise. 2.23 Term. “Term” shall mean the period of time the Plan remains effective as provided in Section 10.1. 2.24 Termination Date. “Termination Date” shall mean in the case of the Participant’s death, his or her date of death, in the case of Good Reason, his or her last day of employment and in all other cases, the date specified in the Notice of Termination; provided, however, if the Participant’s employment is terminated by the Employer for Cause or due to Disability, the date specified in the Notice of Termination shall be at least 30 days from the date the Notice of Termination is given to the Participant; provided, further, however, that in the case of Disability the Participant shall not have returned to the full-time performance of his or her duties during such period of at least 30 days. 2.25 Vested Benefits. “Vested Benefits” shall mean any base salary or prior year’s bonus or incentive compensation earned but unpaid prior to the Termination Date (other than as a result of deferral made at the Participant’s election) and any amounts which are or become vested or which the Participant is otherwise entitled to under the terms of any plan, policy, practice or program of, or any contract or agreement with, the Company or any Subsidiary, at or subsequent to the Termination Date without regard to the performance of further services by the Participant or the resolution of a contingency; provided that the Plan shall in no event be deemed to modify, alter or amend the terms of any such plan, policy, practice or program of, or any contract or agreement with, the Company or any Subsidiary. ARTICLE III ELIGIBILITY 3.1 Participation. Each employee shall become a Participant in the Plan immediately upon becoming an Eligible Employee. 3.2 Duration of Participation. A Participant shall cease to be a Participant in the Plan if he or she ceases to be an Eligible Employee of the Employer at any time prior to a Change in Control. A Participant entitled to receive any amounts set forth in this Plan shall remain a Participant in the Plan until all amounts he or she is entitled to have been paid to him or her.   6 -------------------------------------------------------------------------------- ARTICLE IV TERMS OF EMPLOYMENT 4.1 Employment Period. The Employer agrees to continue the Participant in its employ, subject to the terms and conditions of this Plan, for the period commencing on the first date on which a Change in Control occurs during the Term (the “Change in Control Date”) and ending on the second anniversary of such date (the “Employment Period”). 4.2 Position and Duties. (a) During the Employment Period, (A) the Participant’s position (including status, offices, titles and reporting requirements), authority, duties and responsibilities shall be commensurate in all material respects with those held, exercised and assigned immediately preceding the Change in Control Date (or, if changed at the request of the third party initiating the Change in Control, then the position, authority, duties and responsibilities in effect immediately prior to such change) and (B) the Participant’s services shall be performed at the location where the Participant was employed preceding the Change in Control Date or any office or location within a twenty mile radius of such location, except for reasonably required travel on the Employer’s business which is not materially greater than such travel requirements prior to the Change in Control. (b) During the Employment Period, and excluding any periods of vacation and sick leave to which the Participant is entitled, the Participant shall devote reasonable attention and time during normal business hours to the business and affairs of the Employer and to discharge the responsibilities assigned to the Participant. During the Employment Period, Participant may (A) serve on civic or charitable boards or committees of not-for-profit or similar organizations, (B) teach, and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Participant’s responsibilities as an employee of the Employer. To the extent that any such activities have been conducted by the Participant prior to the Change in Control Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Change in Control Date shall not thereafter be deemed to interfere with the performance of the Participant’s responsibilities to the Employer. 4.3 Compensation. (a) Base Salary. During the Employment Period, the Participant shall receive an annual base salary (“Annual Base Salary”), which shall be paid at a monthly rate, at least equal to twelve times the highest monthly base salary paid or payable, including any base salary which has been earned but deferred, to the Participant by the Employer and its affiliated companies in respect of the ninety (90) day period immediately preceding the Change in Control Date. During the Employment Period, the Annual Base Salary shall be reviewed no more than twelve months after the last salary increase awarded to the Participant prior to the Change in Control Date and thereafter at least annually. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Participant under the Plan. Annual Base Salary shall not be reduced after any such increase and the term Annual Base Salary as utilized in the   7 -------------------------------------------------------------------------------- Plan shall refer to Annual Base Salary as so increased. As used in this Plan, the term “affiliated companies” shall include any company controlled by, controlling or under common control with the Employer. (b) Annual Bonus. In addition to Annual Base Salary, the Participant shall be entitled to participate, with respect to each fiscal year ending during the Employment Period, in the Employer’s annual bonus plan, under terms (including measures of performance, targets and payout potential) at least as favorable as the terms under such bonus plan as in effect immediately prior to the Change in Control Date (or, if changed at the request of the third party initiating the Change in Control, then the annual bonus plan in effect immediately prior to such change) (the “Annual Bonus”). Each such Annual Bonus shall be paid within forty-five (45) days following the end of the fiscal year for which the Annual Bonus is awarded, unless the Participant shall elect to defer the receipt of such Annual Bonus. (c) Incentive, Savings and Retirement Plans. During the Employment Period, the Participant shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to other peer executives of the Employer and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Participant with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities or retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Employer and its affiliated companies for the Participant under such plans, practices, policies and programs as in effect on the Change in Control Date (or, if changed at the request of the third party initiating the Change in Control, then such plans, practices, policies and programs as in effect immediately prior to such change) or if more favorable to the Participant, those provided generally during the two year Employment Period following the Change in Control Date to other peer executives of the Company and its affiliated companies. (d) Stock Options and Other Equity Grants. During each year of the Employment Period, the Participant shall receive either (A) stock option grants pursuant to the Company’s 1997 Incentive Stock Plan, the 1999 Incentive Stock Plan or the 2001 Incentive Stock Plan (or any successor or new plan) for each fiscal year ending during the Employment Period equal to the highest number and value to those granted to Participant for the year in which the Change in Control occurs (the “Stock Option Valuation”), or (B) if such Plan or Plans do not exist, then an amount in cash equal to the Stock Option Valuation amount, which amount shall be subject to any vesting schedule and other terms and conditions applicable to such grants in the year in which the Change in Control occurred. In addition, during the Employment Period, the Participant shall receive restricted stock grants pursuant to the Company’s 1997 Incentive Stock Plan or any successor or new plan for each fiscal year during the Employment Period equal to the highest number and value to those granted to Participant for the year in which the Change in Control occurs (the “RSO Valuation”), or (B) if such Plan or Plans do not exist, then an amount in cash equal to the RSO Valuation amount, which amount shall be subject to any vesting schedule and other terms and conditions applicable to such grants in the year in which the Change in Control occurred.   8 -------------------------------------------------------------------------------- (e) Welfare Benefit Plans. During the Employment Period, the Participant and/or the Participant’s family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Employer and its affiliated companies (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer executives of the Employer and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Participant with benefits which are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for the Participant on the Change in Control Date (or, if changed at the request of the third party initiating the Change in Control, then such plans, practices, policies and programs as in effect immediately prior to such change) or, if more favorable to the Participant, those provided generally at any time after the Change in Control Date to other peer executives of the Company and its affiliated companies. (f) Expenses. During the Employment Period, the Participant shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Participant in accordance with the most favorable policies, practices and procedures of the Employer and its affiliated companies in effect for the Participant on the Change in Control Date (or, if changed at the request of the third party initiating the Change in Control, then such policies, practices and procedures as in effect immediately prior to such change) or, if more favorable to the Participant, as in effect generally at any time thereafter with respect to other peer executives of the Company and its affiliated companies. (g) Fringe Benefits. During the Employment Period, the Participant shall be entitled to fringe benefits, or cash payments in lieu of such fringe benefits, in accordance with the most favorable plans, practices, programs and policies of the Employer and its affiliated companies in effect for the Participant on the Change in Control Date (or, if changed at the request of the third party initiating the Change in Control, then such plans, practices, programs and policies as in effect immediately prior to such change) or, if more favorable to the Participant, as in effect generally at any time thereafter with respect to other peer executives of the Employer and its affiliated companies. (h) Office and Support Staff. During the Employment Period, the Participant shall be entitled to an office or offices of a size and with furnishings and other appointments, and to personal secretarial and other assistance, at least equal to the most favorable of the foregoing provided to the Participant by the Employer and its affiliated companies on the Change in Control Date (or, if changed at the request of the third party initiating the Change in Control, then such office(s), furnishing, other appointments and assistance as in effect immediately prior to such change) or, if more favorable to the Participant, as provided generally at any time thereafter with respect to other peer executives of the Employer and its affiliated companies. (i) Vacation. During the Employment Period, the Participant shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Employer and its affiliated companies as in effect for the Participant on the Change in Control Date (or, if changed at the request of the third party initiating the Change in Control, then such plans, practices, programs and policies as in effect immediately prior to such change)   9 -------------------------------------------------------------------------------- or, if more favorable to the Participant, as in effect generally at any time thereafter with respect to other peer executives of the Employer and its affiliated companies. (j) Indemnification. The Employer shall indemnify the Participant and hold the Participant harmless to the fullest extent permitted by applicable law and under the by-laws of the Employer against and in respect to any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including reasonable attorneys’ fees), losses, and damages resulting from the Participant’s good faith performance of the Participant’s duties and obligations with the Employer. This provision is in addition to any other rights of indemnification the Participant may have pursuant to any indemnification agreement or other agreement, if any, between the Participant and the Employer. ARTICLE V TERMINATION BENEFITS 5.1 Payment of Accrued Compensation. In the event that a Participant’s employment with his or her Employer is terminated following a Change in Control during the Term (a) by reason of the Participant’s death, (b) by his or her Employer for Cause or Disability, or (c) by the Participant without Good Reason, the Participant shall be entitled to receive and the Company shall pay, his or her Accrued Compensation and, if such termination is other than by his or her Employer for Cause, a Pro Rata Bonus. 5.2 Payment in Event of Certain Terminations of Employment. In the event that a Participant’s employment with his or her Employer is terminated following a Change in Control during the Term by the Participant or by his or her Employer for any reason other than as specified in Section 5.1, the Participant shall be entitled to receive under the Plan, a cash payment equal to the sum of: (a) his or her Accrued Compensation and Pro Rata Bonus, (b) his or her Base Amount, (c) his or her Bonus Amount, and (d) his or her Benefits Amount. The amounts provided for in this Sections 5.2 shall be paid in a single lump sum cash payment within five (5) days after the Participant’s Termination Date (or earlier, if required by applicable law or later if required by Code Section 409A or Section 5.7 hereof). 5.3 Mitigation. The Participant shall not be required to mitigate the amount of any payment provided for in the Plan by seeking other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation or benefits provided to the Participant in any subsequent employment. 10 -------------------------------------------------------------------------------- 5.4 Termination Pay. The payments and benefits provided for in Section 5.2(a), (b), (c) and (d) shall reduce the amount of any cash severance or termination pay payable to the Participant under any other Employer severance or termination plan, program, policy or practice. 5.5 Vested Benefits. In the event that a Participant’s employment with his or her Employer is terminated following a Change in Control during the Term by the Participant or by his or her Employer, the Employer shall pay all Vested Benefits to a Participant no later than the second Payroll Date following the Termination Date (or such later date as may be required under Code Section 409A); provided that any Vested Benefits attributable to a plan, policy practice, program, contract or agreement shall be payable in accordance with the terms thereof under which the amounts have accrued. 5.6 Insurance. The Employer shall cover the Participant under directors and officers liability insurance both during and, while potential liability exists, after the Termination Date in the same amount and to the same extent as the Employer covers its other officers or employees. 5.7 Conditions to Payments. Any payments or benefits made or provided pursuant to this Article V (other than Accrued Compensation) are subject to the Participant’s: (a) compliance with the provisions of Article VIII hereof; (b) delivery to the Company of an executed Confidentiality, Nonsolicitation and General Release Agreement (the “General Release”), which shall be substantially in the form attached hereto as Exhibit A (with such changes therein or additions thereto as needed under then applicable law to give effect to its intent and purpose) within twenty-one (21) days of presentation thereof by the Company to the Participant; and (c) delivery to the Company of a resignation from all offices, directorships and fiduciary positions with the Company, its affiliates and employee benefit plans. Notwithstanding the due date of any post-employment payments, any amounts due following a termination under this Plan (other than Accrued Compensation) shall not be due until after the expiration of any revocation period applicable to the General Release without the Participant having revoked such General Release, and any such amounts shall be paid to the Participant within thirty (30) days of the expiration of such revocation period without the occurrence of a revocation by the Participant (or such later date as may be required under Section 409A of the Code). Nevertheless (and regardless of whether the General Release has been executed by the Participant), upon any termination of Participant’s employment, Participant shall be entitled to receive any Accrued Compensation, payable within thirty (30) days after the date of termination or in accordance with the applicable plan, program or policy. In the event that the Participant dies before all payments pursuant to this Article V have been paid, all remaining payments shall be made to the beneficiary specifically designated by the Participant in writing prior to his death, or, if no such beneficiary was designated (or the Employer is unable in good faith to determine the beneficiary designated), to his or her personal representative or estate.   11 -------------------------------------------------------------------------------- ARTICLE VI TERMINATION OF EMPLOYMENT 6.1 Notice of Termination Required. Following a Change in Control, any purported termination of the Participant’s employment by the Employer shall be communicated by Notice of Termination to the Participant. For purposes of the Plan, no such purported termination shall be effective without such Notice of Termination. ARTICLE VII LIMITATION ON PAYMENTS BY THE COMPANY 7.1 Excise Tax Limitation. (a) Notwithstanding anything contained in the Plan to the contrary, to the extent that the payments and benefits provided under the Plan and benefits provided to, or for the benefit of, the Participant under any other Employer plan or agreement (such payments or benefits are collectively referred to as the “Payments”) would be subject to the excise tax (the “Excise Tax”) imposed under Section 4999 of the Code, the Payments shall be reduced (but not below zero) if and to the extent that a reduction in the Payments would result in the Participant retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if the Participant received all of the Payments (such reduced amount is hereinafter referred to as the “Limited Payment Amount”). Unless the Participant shall have given prior written notice specifying a different order to the Company to effectuate the Limited Payment Amount, the Company shall reduce or eliminate the Payments, by first reducing or eliminating those payments or benefits which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the “Determination” (as hereinafter defined). Any notice given by the Participant pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing the Participant’s rights and entitlements to any benefits or compensation. (b) An initial determination as to whether the Payments shall be reduced to the Limited Payment Amount pursuant to the Plan and the amount of such Limited Payment Amount shall be made by an accounting firm at the Company’s expense selected by the Company which is designated as one of the five (5) largest accounting firms in the United States (the “Accounting Firm”). The Accounting Firm shall provide its determination (the “Determination”), together with detailed supporting calculations and documentation to the Company and the Participant within five (5) days of the Termination Date if applicable, or such other time as requested by the Company or by the Participant (provided the Participant reasonably believes that any of the Payments may be subject to the Excise Tax) and if the Accounting Firm determines that no Excise Tax is payable by the Participant with respect to a Payment or Payments, it shall furnish the Participant with an opinion reasonably acceptable to the Participant that no Excise Tax will be imposed with respect to any such Payment or Payments. Within ten (10) days of the delivery of the Determination to the Participant, the Participant shall have the right to dispute the Determination (the “Dispute”). If there is no   12 -------------------------------------------------------------------------------- Dispute, the Determination shall be binding, final and conclusive upon the Company and the Participant subject to the application of Paragraph 7.1(c) below. (c) As a result of the uncertainty in the application of Sections 4999 and 280G of the Code, it is possible that the Payments to be made to, or provided for the benefit of, the Participant either have been made or will not be made by the Company which, in either case, will be inconsistent with the limitations provided in Section 7.1(a) (hereinafter referred to as an “Excess Payment” or “Underpayment”, respectively). If it is established pursuant to a final determination of a court or an Internal Revenue Service (the “IRS”) proceeding which has been finally and conclusively resolved, that an Excess Payment has been made, such Excess Payment shall be deemed for all purposes to be a loan to the Participant made on the date the Participant received the Excess Payment and the Participant shall repay the Excess Payment to the Company on demand (but not less than ten (10) days after written notice is received by the Participant) together with interest on the Excess Payment at the “Applicable Federal Rate” (as defined in Section 1274(d) of the Code) from the date of the Participant’s receipt of such Excess Payment until the date of such repayment. In the event that it is determined by (i) the Accounting Firm, the Company (which shall include the position taken by the Company, or together with its consolidated group, on its federal income tax return) or the IRS, (ii) pursuant to a determination by a court, or (iii) upon the resolution to the Participant’s satisfaction of the Dispute, that an Underpayment has occurred, the Company shall pay an amount equal to the Underpayment to the Participant within ten (10) days of such determination or resolution together with interest on such amount at the Applicable Federal Rate from the date such amount would have been paid to the Participant until the date of payment. ARTICLE VIII PARTICIPANT COVENANTS 8.1 Confidentiality and Nonsolicitation Agreement. As a condition to receiving the right to receive any benefits under the Plan, each Participant shall enter into and comply with a Confidentiality, Nonsolicitation and General Release Agreement with the Company, substantially in the form of Exhibit A hereto. ARTICLE IX SUCCESSORS AND ASSIGNS 9.1 Successors and Assigns. (a) The Plan shall be binding upon and shall inure to the benefit of the Company and the Employer. The Company and the Employer shall require any Successor or Assign to expressly assume and agree to perform the Plan in the same manner and to the same extent that the Company and/or the Employer would be required to perform it if no such succession or assignment had taken place.   13 -------------------------------------------------------------------------------- (b) Neither the Plan nor any right or interest hereunder shall be assignable or transferable by the Participant, his or her beneficiaries or legal representatives, except by will or by the laws of descent and distribution; provided, however, that the Plan shall inure to the benefit of and be enforceable by the Participant’s legal personal representative. 9.2 Sale of Business or Assets. Notwithstanding anything contained in the Plan to the contrary, if a Participant’s employment with his or her Employer is terminated in connection with the sale, divestiture or other disposition of any Subsidiary or division of the Company (or part thereof) such termination shall not be a termination of employment of the Participant for purposes of the Plan and the Participant shall not be entitled to benefits from the Company under the Plan as a result of such sale, divestiture, or other disposition, or as a result of any subsequent termination of employment, provided that (a) the Participant is offered employment by the purchaser or acquiror of such Subsidiary or division (or part thereof) and (b) the Company obtains an agreement from such purchaser or acquiror to perform the Company’s and/or Employer’s obligations under the Plan, in the same manner, and to the same extent that the Company and/or the Employer would be required to perform if no such purchase or acquisition had taken place. In such circumstances, the purchaser or acquiror shall be solely responsible for providing any benefits payable under the Plan to any such Participant. ARTICLE X TERM, AMENDMENT AND PLAN TERMINATION 10.1 Term. The Plan shall continue in effect for a period of two (2) years commencing on the Effective Date and shall be automatically extended for one (1) year on the first anniversary of the Effective Date and on each anniversary of the Effective Date thereafter unless the Company shall have delivered a written notice to each Participant at least ninety (90) days prior to any extension that the Plan shall not be so extended; provided, however, that if a Change in Control occurs while the Plan is in effect, the Plan shall not end prior to the expiration of two (2) years following the Change in Control. 10.2 Amendment and Termination. Subject to Section 10.1, the Plan may be terminated or amended in any respect by resolution adopted by two-thirds (2/3) of the members of the Incumbent Board; provided, however, that no such amendment or termination of the Plan during the Term may be made (a) at the request of a Third Party, or (b) otherwise in connection with, or in anticipation of, a Change in Control; and provided, further, however, that the Plan no longer shall be subject to amendment, change, substitution, deletion, revocation or termination in any respect whatsoever following a Change in Control. 10.3 Form of Amendment. The form of any amendment or termination of the Plan shall be a written instrument signed by a duly authorized officer or officers of the Company, certifying that the amendment or termination has been approved by the Board in accordance with Section 10.2.   14 -------------------------------------------------------------------------------- ARTICLE XI MISCELLANEOUS 11.1 Contractual Right. Upon and after a Change in Control, each Participant shall have a fully vested, non-forfeitable contractual right, enforceable against the Company, to the benefits provided for under Sections 5.1, 5.2, 5.6 and 5.7 of the Plan upon satisfaction of the applicable conditions specified in those Sections. 11.2 Employment Status. Prior to a Change in Control, each Eligible Employee shall continue in his or her status as an employee-at-will and the Plan does not constitute a contract of employment or impose on the Employer any obligation to (a) retain the Participant, (b) make any payments upon termination of employment, (c) change the status of the Participant’s employment or (d) change any employment policies of the Employer. 11.3 Notice. For the purposes of the Plan, notices and all other communications provided for in the Plan (including the Notice of Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by a nationally recognized overnight delivery service or by certified mail, return receipt requested, postage prepaid, addressed to the respective addresses last given by each party to the other, provided that all notices to the Company and/or the Employer shall be directed to the attention of the Board with a copy to the Secretary of the Company. All notices and communications shall be deemed to have been received on the date of delivery thereof or on the third business day after the sending thereof, except that notice of change of address shall be effective only upon receipt. 11.4 Non-exclusivity of Rights. Except as provided in Section 5.4, nothing in the Plan shall prevent or limit the Participant’s continuing or future participation in any benefit, bonus, incentive or other plan or program provided by the Company and/or the Employer for which the Participant may qualify, nor shall anything herein limit or reduce such rights as the Participant may have under any other agreements with the Company and/or the Employer. Amounts which are Vested Benefits or which the Participant is otherwise entitled to receive under any plan or program of the Company and/or the Employer shall be payable in accordance with such plan or program, except as explicitly modified by the Plan. No additional compensation provided under any benefit or compensation plans to the Participant shall be deemed to modify or otherwise affect the terms of the Plan or any of the Participant’s entitlements hereunder. 11.5 Settlement of Claims. The Company’s obligation to make the payments provided for in the Plan and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company and/or Employer may have against the Participant or others. 11.6 Trust. All benefits under the Plan shall be paid by the Company. The Plan shall be unfunded and the benefits hereunder shall be paid only from the general assets of the Company; provided, however, notwithstanding anything contained in the Plan to the contrary, nothing herein shall prevent or prohibit the Company from establishing a trust or other arrangement for the purpose of providing for the payment of the benefits payable under the Plan.   15 -------------------------------------------------------------------------------- 11.7 Waiver or Discharge. No provision of the Plan may be waived or discharged unless such waiver or discharge is agreed to in writing and signed by the Participant, the Employer and the Company. No waiver by either the Company, the Employer or any Participant at any time of any breach by either the Company, the Employer or any Participant of, or compliance with, any condition or provision of the Plan to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. 11.8 Governing Law. THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THE PLAN SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF; PROVIDED, HOWEVER, THAT IN ANY ACTION INVOLVING A PARTICIPANT, THE COMPANY AND/OR THE EMPLOYER WITH RESPECT TO ANY CLAIM OR ASSERTION THAT THE PARTICIPANT’S EMPLOYMENT WAS PROPERLY TERMINATED FOR CAUSE, THE COMPANY AND/OR THE EMPLOYER HAS THE BURDEN OF PROVING THAT THE PARTICIPANT’S EMPLOYMENT WAS PROPERLY TERMINATED FOR CAUSE. 11.9 Validity and Severability. The invalidity or unenforceability of any provision of the Plan shall not affect the validity or enforceability of any other provision of the Plan, which shall remain in full force and effect, and any prohibition or unenforceability in any jurisdiction, shall not invalidate or render unenforceable such provision in any other jurisdiction. 11.10 Legal Fees. Following a Change in Control, the Company shall pay all legal fees and related expenses (including the costs of experts, evidence and counsel) incurred by the Participant as they become due as a result of (a) the Participant’s termination of employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment), or (b) the Participant’s seeking to obtain or enforce any right or benefit provided by the Plan (including any such fees and expenses incurred in connection with the Dispute) or by any other plan or arrangement maintained by the Company and/or Employer under which the Participant is or may be entitled to receive benefits; provided however, that the circumstances set forth in clauses (a) and (b) (other than as a result of the Participant’s termination of employment under circumstances described in Section 2.8(d)) occurred on or after a Change in Control. 11.11 Forum. Any suit brought under the Plan shall be brought in the appropriate state or federal court for Tarrant County, Texas. 11.12 Withholding. The Company may withhold from any amounts payable under the Plan such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation. 11.13 Code Section 409A. It is intended that the Plan and the Board’s exercise of authority or discretion hereunder shall comply with the provisions of Code Section 409A and the treasury regulations relating thereto so as not to subject a Participant to the payment of interest and tax penalty which may be imposed under Code Section 409A. In furtherance of this interest,   16 -------------------------------------------------------------------------------- to the extent that any regulations or other guidance issued under Code Section 409A after the Effective Date would result in a Participant being subject to payment of interest and tax penalty under Code Section 409A, the Board may amend the Plan, including with respect to the timing of payment of benefits, in order to avoid the application of Code Section 409A.   17 -------------------------------------------------------------------------------- EXHIBIT A FORM OF CONFIDENTIALITY, NONSOLICITATION AND GENERAL RELEASE AGREEMENT This Confidentiality, Nonsolicitation and General Release Agreement (this “Agreement”), dated             , 200     is between RadioShack Corporation, a Delaware corporation (the “Company”), and                                      (the “Participant”) (collectively the “Parties”). NOW THEREFORE, for valuable consideration, the adequacy which is hereby acknowledged, the Parties agree as follows: 1. Separation of Employment with the Company. a. Effective             , 200     (the “Termination Date”), Participant is terminated and separated from his/her position as                                  of the Company, and Participant thereby relinquishes and resigns from all officer and director positions, all other titles, and all authorities with respect to the Company or any affiliated entity of the Company and shall be deemed terminated and separated from employment with the Company for all purposes. b. As consideration to Participant for this Agreement, the Company agrees to pay Participant his/her Accrued Compensation and Pro Rata Bonus, Base Amount, Bonus Amount and Benefits Amount in accordance with the Company’s Amended and Restated Termination Protection Plan Level 1 (the “Plan”); provided, however, Participant does not exercise his/her right of revocation under Section 6. hereof. c. This Agreement shall be construed in accordance and consistent with, and subject to, the provisions of the Plan (the provisions of which are incorporated herein by reference) and, except as otherwise expressly set forth herein, the capitalized terms used in this Agreement shall have the same definitions as set forth in the Plan. 2. Covenants Not to Solicit or Interfere. a. During the period of time equal to twelve (12) months after the Termination Date, Participant shall not, either directly or indirectly, within the United States of America or any country of the world in which the Company sells, imports, exports, assembles, packages or furnishes its products, articles, parts, supplies, accessories or services or is causing them to be sold, imported, exported, assembled, packaged or furnished through related entities, representatives, agents, or otherwise:   A-1 -------------------------------------------------------------------------------- i. solicit or induce, or attempt to solicit or induce, any employee of the Company, current or future, to leave or cease their relationship with the Company, for any reason whatsoever, or hire any current or future employee of the Company; or ii. solicit or attempt to solicit the Company’s existing or prospective customers to purchase services or products that are competitive with those manufactured, designed, programmed, serviced, repaired, rented, marketed, offered for sale and/or under any stage of development by the Company as of the date of Participant’s separation from the Company. For purposes of this Agreement, existing customers shall mean those persons or firms that the Company has made a sale to in the twelve (12) months preceding Participant’s separation from employment; and prospective customers shall mean those persons or firms whom the Company has solicited and/or negotiated to sell the Company’s products, articles, parts, supplies, accessories or services to within the twelve (12) months preceding Participant’s separation from the Company. b. Participant acknowledges that the Company conducts its business on an international level and has customers throughout the United States and many other countries, and that the geographic restriction on solicitation is therefore fair and reasonable. 3. Confidential Information. a. For purposes of this Agreement, “Confidential Information” includes any and all information and trade secrets, whether written or otherwise, relating to the Company’s business, property, products, services, operations, sales, prospects, research, customers, business relationships, business plans and finances. b. Participant acknowledges that while employed at the Company, Participant has had access to Confidential Information. Participant further acknowledges that the Confidential Information is of great value to the Company and that its improper disclosure will cause the Company to suffer damages, including loss of profits. c. Participant shall not at any time or in any manner use, copy, disclose, divulge, transmit, convey, transfer or otherwise communicate any Confidential Information to any person or entity, either directly or indirectly, without the Company’s prior written consent. d. Participant acknowledges that all of the information described in subsection (a) above is “Confidential Information,” which is the sole and exclusive property of the Company. Participant acknowledges that all Confidential Information was revealed to Participant in trust, based solely upon the confidential employment relationship then existing between the Company and Participant. Participant agrees: (1) that all writings or other records concerning Confidential Information are the sole and exclusive property of the Company; (2) that all manuals, forms, and supplies furnished to or used by Participant and all data or information placed thereon by Participant or any other person are the Company’s sole and exclusive property; (3) that, upon execution of this Agreement, or upon request of the Company at any time, Participant shall deliver to the Company all such writings, records, forms, manuals, and supplies and all copies of such; (4) that Participant will not make or retain any copies of such for his/her own or personal use, or take the originals or copies of such from the offices of the Company; and (5) that   A-2 -------------------------------------------------------------------------------- Participant will not, at any time, publish, distribute, or deliver any such writing or records to any other person or entity, or disclose to any person or entity the contents of such records or writings or any of the Confidential Information. e. Participant acknowledges that he/she has not disclosed in the past, and agrees not to disclose in the future, to the Company any confidential information or trade secrets of former employers or other entities Participant has been associated with. 4. Non-Disparagement. Each of Participant and the Company (for purposes hereof, “the Company” shall mean only (i) the Company by press release or other formally released announcement and (ii) the executive officers and directors thereof and not any other employees) agrees not to make any public statements that disparage the other party, or in the case of the Company, its respective affiliates, employees, officers, directors, products, articles, parts, supplies, accessories or services. Notwithstanding the foregoing, statements made in the course of sworn testimony in administrative, judicial or arbitral proceedings (including, without limitation, depositions in connection with such proceedings) shall not be subject to this Section 3. 5. Injunctive Relief; Damages. Participant acknowledges that any breach of this Agreement will cause irreparable injury to the Company and that money damages alone would be inadequate to compensate it. Upon a breach or threatened breach by Participant of any of this Agreement, the Company shall be entitled to a temporary restraining order, preliminary injunction, permanent injunction or other relief restraining Participant from such breach without posting a bond. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies for such breach or threatened breach, including recovery of damages from Participant. 6. General Release a. The Participant, for himself/herself, his/her spouse, heirs, administrators, children, representatives, executors, successors, assigns, and all other persons claiming through Participant, if any (collectively, “Releasers”), knowingly and voluntarily releases and forever discharges the Company, its affiliates, subsidiaries, divisions, successors and assigns and the current, future and former employees, officers, directors, trustees and agents thereof, from any and all claims, causes of action, demands, fees and liabilities of any kind whatsoever, whether known and unknown, against the Company, that Participant has, has ever had or may have as of the date of execution of this Agreement, including, but not limited to, any alleged violation of:     •   The National Labor Relations Act, as amended;     •   Title VII of the Civil Rights Act of 1964, as amended;     •   The Civil Rights Act of 1991;     •   Sections 1981 through 1988 of Title 42 of the United States Code, as amended;     •   The Employee Retirement Income Security Act of 1974, as amended;   A-3 --------------------------------------------------------------------------------   •   The Immigration Reform and Control Act, as amended;     •   The Americans with Disabilities Act of 1990, as amended;     •   The Age Discrimination in Employment Act of 1967, as amended;     •   The Older Workers Benefit Protection Act of 1990;     •   The Worker Adjustment and Retraining Notification Act, as amended;     •   The Occupational Safety and Health Act, as amended;     •   The Family and Medical Leave Act of 1993;     •   The Equal Pay Act;     •   The Texas Labor Code;     •   The Texas Commission on Human Rights Act;     •   The Texas Pay Day Act;     •   Chapter 38 of the Texas Civil Practices and Remedies Code;     •   Any other federal, state or local civil or human rights law or any other local, state or federal law, regulation or ordinance;     •   Any provisions of the State of Texas or Federal Constitutions; or     •   Any public policy, contract, tort, or common law. Notwithstanding anything herein to the contrary, this Agreement shall not apply to: (i) Participant’s rights of indemnification and directors’ and officers’ liability insurance coverage to which he/she was entitled immediately prior to the Termination Date hereof with regard to his/her service as an officer of the Company; (ii) Participant’s rights under any tax-qualified pension, claims for accrued vested benefits under any other employee benefit plan, policy or arrangement maintained by the Company or under COBRA, and benefits which must be provided to Participant pursuant to the terms of any employee benefit plan of the Company; (iii) Participant’s rights under the provisions of the Plan which are intended to survive termination of employment; or (iv) Participant’s rights as a stockholder. Excluded from this Agreement are any claims which cannot be waived by law. b. Participant acknowledges and recites that: (i) Participant has executed this Agreement knowingly and voluntarily; (ii) Participant has read and understands this Agreement in its entirety, including the waiver of rights under the Age Discrimination in Employment Act;   A-4 -------------------------------------------------------------------------------- (iii) Participant has been advised and directed orally and in writing (and this subparagraph (b) constitutes such written direction) to seek legal counsel and any other advice he/she wishes with respect to the terms of this Agreement before executing it; (iv) Participant has sought such counsel, or freely and voluntarily waives the right to consult with counsel, and Participant has had an opportunity, if he/she so desires, to discuss with counsel the terms of this Agreement and their meaning; (v) Participant enters into this Agreement knowingly and voluntarily, without duress or reservation of any kind, and after having given the matter full and careful consideration; and (vi) Participant has been offered 21 calendar days after receipt of this Agreement to consider its terms before executing it. If Participant has not executed this Agreement within 21 days after receipt, this Agreement shall be unenforceable and null and void. c. Participant shall have 7 days from the date hereof to revoke this Agreement by providing written notice of the revocation as set forth in Section 5, below, in which event this Agreement shall be unenforceable and null and void. d. 21 DAYS TO SIGN; 7-DAY REVOCATION PERIOD. PARTICIPANT UNDERSTANDS THAT HE/SHE MAY TAKE UP TO 21 CALENDAR DAYS FROM THE DATE OF RECEIPT OF THIS AGREEMENT TO CONSIDER THIS AGREEMENT BEFORE SIGNING IT. FULLY UNDERSTANDING PARTICIPANT’S RIGHT TO TAKE 21 DAYS TO CONSIDER SIGNING THIS AGREEMENT, AND AFTER HAVING SUFFICIENT TIME TO CONSIDER PARTICIPANT’S OPTIONS, PARTICIPANT HEREBY WAIVES HIS/HER RIGHT TO TAKE THE FULL 21 DAY PERIOD. PARTICIPANT FURTHER UNDERSTANDS THAT HE/SHE MAY REVOKE THIS AGREEMENT AT ANY TIME DURING THE SEVEN (7) CALENDAR DAYS AFTER SIGNING IT, AND THAT THIS AGREEMENT SHALL NOT BECOME BINDING UNTIL THE SEVEN (7) DAY REVOCATION PERIOD HAS PASSED. e. To revoke this Agreement, Participant must send a written statement of revocation to:   the Company Corporation MS CF5-121 300 RadioShack Circle Fort Worth, TX 76102 Attn: Vice President-Compensation and Benefits The revocation must be received no later than 5:00 p.m. on the seventh day following Participant’s execution of this Agreement. 7. Cooperation. Participant agrees to cooperate with the Company, and its financial and legal advisors, and/or government officials, in any claims, investigations, administrative proceedings, lawsuits, and other legal, internal or business matters, as reasonably requested by the Company. Also, to the extent Participant incurs travel or other expenses with respect to such   A-5 -------------------------------------------------------------------------------- activities, the Company will reimburse his/her for such reasonable expenses documented and approved in accordance with the Company’s then current travel policy. 8. No Admission. This Agreement shall not in any way be construed as an admission by the Company of any act of discrimination or other unlawful act whatsoever against Participant or any other person, and the Company specifically disclaims any liability to or discrimination against Participant or any other person on the part of itself, its employees, or its agents. 9. Severability. It is the desire and intent of the Parties that the provisions of this Agreement shall be enforced to the fullest extent permissible. Accordingly, if any provision of this Agreement shall prove to be invalid or unenforceable, the remainder of this Agreement shall not be affected, and in lieu, a provision as similar in terms as possible shall be added. 10. Entire Agreement. This Agreement, together with the documents incorporated herein by reference, represents the entire agreement between the parties with respect to the subject matter hereof and this Agreement may not be modified by any oral or written agreement unless same is in writing and signed by both parties. 11. Governing Law. This Agreement shall be governed by the internal laws (and not the choice of law principles) of the State of Texas, except for the application of pre-emptive federal law. 12. Survival. Participant’s obligations under this Agreement shall survive the termination of Participant’s employment and shall thereafter be enforceable whether or not such termination is later claimed or found to be wrongful or to constitute or result in a breach of any contract or of any other duty owed to Participant. 13. Amendments; Waiver. This Agreement may not be altered or amended, and no right hereunder may be waived, except by an instrument executed by each of the Parties. IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first above written.   THE COMPANY: RadioShack Corporation, for itself and its subsidiaries By:     Its:     PARTICIPANT: Name:       A-6

  Exhibit 10.1 EXECUTION COPY   LOAN AGREEMENT Dated as of September 1, 2006 and Amended and Restated as of December 20, 2006 among DUQUESNE LIGHT HOLDINGS, INC. as Borrower, BARCLAYS BANK PLC as Facility Agent, DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES as Syndication Agent, MIZUHO CORPORATE BANK, LTD. and THE BANK OF NOVA SCOTIA as Documentation Agents, and THE LENDERS PARTY HERETO   BARCLAYS CAPITAL and DRESDNER KLEINWORT WASSERSTEIN SECURITIES as Joint Mandated Lead Arrangers and Joint Bookrunners     --------------------------------------------------------------------------------   TABLE OF CONTENTS               Page ARTICLE I Definitions and Accounting Terms     1             SECTION 1.01. Defined Terms     1   SECTION 1.02. Other Interpretive Provisions     14   SECTION 1.03. Accounting Terms     14   SECTION 1.04. Rounding     14   SECTION 1.05. References to Agreements, Laws, Etc     14   SECTION 1.06. Times of Day     15   SECTION 1.07. Timing of Payment of Performance     15             ARTICLE II The Commitments and Loan     15             SECTION 2.01. The Loan     15   SECTION 2.02. Borrowing     15   SECTION 2.03. Prepayments     16   SECTION 2.04 Repayment of Loans     17   SECTION 2.05. Interest     17   SECTION 2.06. Fees     17   SECTION 2.07. Computation of Interest and Fees     17   SECTION 2.08. Evidence of Debt     18   SECTION 2.09. Payments Generally     18   SECTION 2.10. Sharing of Payments     20             ARTICLE III Taxes, Increased Costs Protection and Illegality     20             SECTION 3.01. Taxes     20   SECTION 3.02. Illegality     22   SECTION 3.03. Inability to Determine Rates     23   SECTION 3.04. Increased Cost and Reduced Return; Capital Adequacy; Reserves on LIBO Rate Loans     23   SECTION 3.05. Matters Applicable to All Requests for Compensation     24   SECTION 3.06. Replacement of Lenders under Certain Circumstances     24   SECTION 3.07. Survival     25             ARTICLE IV Conditions Precedent     25             ARTICLE V Representations and Warranties     28             ARTICLE VI Covenants     31             SECTION 6.01. Affirmative Covenants     31   SECTION 6.02. Negative Covenants     34             ARTICLE VII DEFAULTS     34             SECTION 7.01. Events of Default     34   SECTION 7.02. Remedies     36   i --------------------------------------------------------------------------------                 Page ARTICLE VIII Facility Agent     37             SECTION 8.01. Appointment and Authorization of Facility Agent     37   SECTION 8.02. Delegation of Duties     37   SECTION 8.03. Liability of Facility Agent     37   SECTION 8.04. Reliance by Facility Agent     38   SECTION 8.05. Notice of Default     38   SECTION 8.06. Credit Decision; Disclosure of Information by the Facility Agent     38   SECTION 8.07. Indemnification of the Facility Agent     39   SECTION 8.08. Facility Agent in its Individual Capacity     39   SECTION 8.09. Successor Agent     39   SECTION 8.10. Facility Agent May File Proofs of Claim     40   SECTION 8.11. Other Agents; Arrangers and Managers     41             ARTICLE IX Miscellaneous     41             SECTION 9.01. Amendments, Etc.     41   SECTION 9.02. Notices and Other Communications; Facsimile Copies     42   SECTION 9.03. No Waiver; Cumulative Remedies     42   SECTION 9.04. Attorney Costs and Expenses     43   SECTION 9.05. Indemnification by the Borrower     43   SECTION 9.06. Payments Set Aside     45   SECTION 9.07. Successors and Assigns     45   SECTION 9.08. Confidentiality     47   SECTION 9.09. Setoff     48   SECTION 9.10. Counterparts     48   SECTION 9.11. Integration     49   SECTION 9.12. Survival of Representations and Warranties     49   SECTION 9.13. Severability     49   SECTION 9.14. GOVERNING LAW     49   SECTION 9.15. WAIVER OF RIGHT TO TRIAL BY JURY     50   SECTION 9.16. Binding Effect     50   SECTION 9.17. Lender Action     50   SECTION 9.18. USA PATRIOT Act     50   SECTION 9.19. Amendment and Restatement on Merger Completion Date     50             SCHEDULES                   2.01         Loans as of the Restatement Effective Date         4(e)         Regulatory Approvals         5(g)         Existing Litigation         9.02         Facility Agent’s Office, Certain Addresses for Notices         ii --------------------------------------------------------------------------------   EXHIBITS       A   Form of Borrowing Request B   Form of Note C   Form of Assignment and Assumption D-1   Form of Opinion of Counsel to Borrower D-2   Form of Opinion of Special New York Counsel to the Facility Agent E   Form of DLH Credit Agreement iii --------------------------------------------------------------------------------   LOAN AGREEMENT      This LOAN AGREEMENT (“Agreement”) is entered into as of September 1, 2006 as amended and restated as of December 20, 2006, among DUQUESNE LIGHT HOLDINGS, INC. (the “Borrower”), a Pennsylvania corporation, BARCLAYS BANK PLC, as Facility Agent and each lender from time to time party hereto (collectively, the “Lenders” and individually, a “Lender”). RECITALS           The Borrower, certain of the Lenders and the Facility Agent are parties to the Loan Agreement dated as of September 1, 2006 (as in effect immediately prior to the effectiveness of the amendment and restatement to be effected hereby, the “Existing Loan Agreement”), providing, subject to the terms and conditions thereof, for a loan to be made by the lenders thereunder to the Borrower in an aggregate principal amount not exceeding $200,000,000 (the “Loan”) for (i) the purpose of financing the acquisition by the Borrower from Atlantic City Electric Company of certain minority interests in the Keystone and Conemaugh coal-fired power plants (the “Keystone/Conemaugh Acquisition”) and fees and expenses related thereto and (ii) general corporate purposes. Each of the institutions listed on Schedule 2.01 hereto other than Barclays Bank PLC and Dresdner Bank AG, New York and Grand Cayman Branches (each, a “New Lender”) wishes to become party to the Existing Loan Agreement as a “Lender”, and the Borrower, the Lenders and the Facility Agent wish to amend the Existing Loan Agreement in certain respects and to restate the Existing Loan Agreement in its entirety as so amended.           Accordingly, the parties hereto agree that on the Restatement Effective Date (as defined below) the Existing Loan Agreement shall be amended and restated to read as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS      SECTION 1.01. Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:           “Acceleration Date” has the meaning specified in Section 2.03(b)(i)(A).           “Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.           “Agent-Related Persons” means the Facility Agent, together with its Affiliates, and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates.           “Agreement” means this Loan Agreement.           “Alternate Base Rate” means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day, and (b) the Federal Funds Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Rate, respectively.   --------------------------------------------------------------------------------             “Alternate Base Rate Loan” means any Loan which bears interest at the Alternate Base Rate.           “Applicable Margin” means a percentage per annum determined as follows based upon the lower of the senior unsecured long-term public debt ratings of the Borrower from Moody’s and S&P:                                 Applicable Margin   Applicable Margin for     for LIBO Rate   Alternate Base Rate Rating   Loans (% per annum)   Loans (% per annum) BBB+/Baa1 or higher     0.625 %     0 % BBB/Baa2     0.70 %     0 % BBB-/Baa3     0.80 %     0 % BB+/Ba1     1.25 %     0.25 % Below BB+/Ba1 or unrated by either Moody’s or S&P     1.75 %     0.75 % provided that the Applicable Margin shall increase (i) on the Acceleration Date, by 0.20% per annum, (ii) on the date ninety (90) days following the Acceleration Date, by an additional 0.25% per annum (iii) on the date one hundred and eighty (180) days following the Acceleration Date, by an additional 0.25% per annum and (iv) on the date two hundred and seventy (270) days following the Acceleration Date, by an additional 0.25% per annum.           “Approved Fund” means any Fund that is administered, advised or managed by a Lender or an Affiliate of a Lender.           “Assignees” has the meaning specified in Section 9.07(b).           “Assignment and Assumption” means an Assignment and Assumption substantially in the form of Exhibit C.           “Attorney Costs” means and includes all reasonable and documented fees, expenses and disbursements of any law firm or other external legal counsel.           “Authorized Officer” means the chief executive officer, president, vice president, chief financial officer, chief accounting officer, treasurer or assistant treasurer or other similar officer of the Borrower and, as to any document delivered on the Closing Date, any secretary or assistant secretary of the Borrower. Any document delivered hereunder that is signed by an Authorized Officer of the Borrower shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of the Borrower and such Authorized Officer shall be conclusively presumed to have acted on behalf of the Borrower. 2 --------------------------------------------------------------------------------             “Board” means the Board of Governors of the Federal Reserve System of the United States of America.           “Borrower” has the meaning specified in the recitals to this Agreement.           “Borrowing” means the borrowing consisting of simultaneous Loans made by each of the Lenders pursuant to Section 2.01.           “Borrowing Request” means the loan request and certificate duly executed by an Authorized Officer of the Borrower, substantially in the form of Exhibit A.           “Business Day” means:      (a) any day which is neither a Saturday or Sunday nor a legal holiday on which banks are authorized or required to be closed in New York, New York or Pittsburgh, Pennsylvania; and      (b) relative to the making, continuing, prepaying or repaying of any LIBO Rate Loans, any day on which dealings in Dollars are carried on in the London interbank market.           “Calculation Date” means March 31, June 30, September 30 and December 31 of each year.           “Change in Law” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement, or (c) the adoption or making of any interpretation, request, guideline or directive applying to any Lender (or, for purposes of Section 3.04 of this Agreement, by any Lending Office of such Lender or by such Lender’s holding company, if any) (whether or not having the force of law) by any Governmental Authority made or issued after the date of this Agreement.           “Change of Control” means any Person (in combination with its Affiliates) other than Macquarie shall own and control, directly or indirectly, in the aggregate more than 50.0% of the issued and outstanding common stock in the Borrower without the consent of the Majority Lenders.           “Claim” has the meaning specified in Section 9.05(b).           “Closing Date” means the first date (which shall be a Business Day not later than October 2, 2006) all the conditions precedent in Article IV are satisfied or waived in accordance with the terms of this Agreement and the Loan is made.           “Code” means the U.S. Internal Revenue Code of 1986, as amended, and rules and regulations related thereto.           “Commitment” means, as to each Lender, its obligation to make a Loan to the Borrower pursuant to Section 2.01 in an aggregate amount not to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 under the caption “Commitment” or in the Assignment and Assumption pursuant to which such Lender becomes a party hereto. The aggregate amount of the Commitments is $200,000,000. 3 --------------------------------------------------------------------------------             “Compensation Period” has the meaning specified in Section 2.09(b)(ii).           “Consolidated Capital” means, at any date of determination, the sum of (i) Consolidated Debt, (ii) consolidated equity of the common stockholders of the Borrower and its Consolidated Subsidiaries, (iii) trust-originated or partnership-originated preferred securities of the Borrower and its Consolidated Subsidiaries, (iv) consolidated equity of the preference stockholders of the Borrower and its Consolidated Subsidiaries, and (v) consolidated equity of the preferred stockholders of the Borrower and its Consolidated Subsidiaries, in the case of clauses (ii) through (v) above, determined at such date in accordance with GAAP.           “Consolidated Debt” means, at any date of determination, without duplication, the aggregate Debt of the Borrower and its Consolidated Subsidiaries; provided, however, that Consolidated Debt shall not include (i) any Debt of the type referred to in clause (viii) of the definition thereof contained in this Section 1.01 if such Debt is not reasonably quantifiable as of the date of determination and (ii) subordinated debentures issued by Duquesne Light or the Borrower in connection with the issuance of (A) monthly-income preferred securities by Duquesne Capital, L.P. and (B) other similar partnership-originated or trust-originated preferred securities by any Subsidiary or other Affiliate of Duquesne Light or the Borrower; provided that (1) the issuer of such preferred securities lends substantially all of the proceeds from such issuance to Duquesne Light, the Borrower or any other Affiliate of the Borrower, as the case may be, in exchange for such subordinated debentures and (2) substantially all of the assets of such issuer consist solely of such subordinated debentures and payments made from time to time in respect thereof.           “Consolidated Subsidiary” means, with respect to any Person, any Subsidiary of such Person whose accounts are or are required to be consolidated with the accounts of such Person in accordance with GAAP.           “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.           “Coverage Ratio” means, with respect to each twelve-month period ending on the last day of each fiscal quarter of the Borrower, the ratio of (a) the sum of (i) consolidated net income of the Borrower and its Consolidated Subsidiaries for such period plus (or minus) (ii) all extraordinary items deducted (or added) in determining said net income plus (iii) all income taxes deducted in determining said net income plus (iv) total interest charges of the Borrower and its Consolidated Subsidiaries deducted in determining said net income, excluding (A) allowance for borrowed funds used during construction and (B) any payments made with respect to the subordinated debentures issued by Duquesne Light in connection with the issuance of monthly-income preferred securities by Duquesne Capital, L.P. (such interest charges with such exclusions being referred to as “Actual Interest Expense”) plus (v) depreciation expense deducted in determining said net income minus (vi) allowance for equity and borrowed funds used during construction and other noncash items described in Financial Accounting Standards Board Statement No. 90 to (b) Actual Interest Expense for such period.           “Debt” means, for any Person, at any date of determination, without duplication, all (i) secured or unsecured indebtedness of such Person for borrowed money or for the deferred purchase price of property or services or evidenced by notes, bonds, debentures or other 4 --------------------------------------------------------------------------------   instruments, (ii) obligations of such Person as lessee under leases that have been or should be, in accordance with GAAP, recorded as capital leases, (iii) obligations secured by any Lien existing on any property owned or held by such Person, whether or not such Person has assumed or become liable for the obligations secured thereby, (iv) obligations of such Person in respect of letters of credit, bankers’ acceptances and similar extensions of credit (other than (A) any such obligation in support of other Debt already included in this definition and (B) obligations of such Person in respect of surety bonds or performance bonds or other similar obligations), (v) without duplication of the foregoing clause (iv), reimbursement obligations of such Person in respect of drawings or other payments made under letters of credit, bankers’ acceptances, surety bonds, performance bonds, and other similar extensions of credit and obligations, (vi) obligations of such Person under any Hedging Agreements (the amount of any such obligation to be the amount that is or would be payable upon settlement, liquidation, termination or acceleration thereof), (vii) obligations of such Person in respect of Unfunded Vested Liabilities, and (viii) obligations of such Person under guaranties or support agreements in respect of, and obligations of such Person (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (i) through (vii) above.           “Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.           “Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.           “Default Rate” means (a) in the case of past due principal of any Loan, the interest rate otherwise applicable to such Loan hereunder plus 2.0% per annum or (b) in the case of any other past due amount, the Alternate Base Rate plus the Applicable Margin plus 2.0% per annum.           “Defaulting Lender” means any Lender that (a) has failed to fund any portion of the Loans required to be funded by it hereunder on the date required to be funded by it hereunder, unless the subject of a good faith dispute or subsequently cured, (b) has otherwise failed to pay over to the Facility Agent or any other Lender any other amount required to be paid by it hereunder on the date when due, unless the subject of a good faith dispute or subsequently cured, or (c) has been deemed insolvent or become the subject of a bankruptcy or insolvency proceeding.           “DLH Credit Agreement” has the meaning specified in Section 9.19.           “Dollar” and “$” mean lawful money of the United States.           “Duquesne Light” means Duquesne Light Company, a Pennsylvania corporation.           “Eligible Assignee” means (i) a Lender, (ii) an Affiliate of a Lender, (iii) a commercial bank organized under the laws of the United States, or any State thereof, and having total assets in excess of $250,000,000, (iv) a savings and loan association or savings bank organized under the laws of the United States, or any State thereof, and having deposits in excess 5 --------------------------------------------------------------------------------   of $250,000,000, (v) a commercial bank organized under the laws of any other country that is a member of the OECD or has concluded special lending arrangements with the International Monetary Fund associated with its General Arrangements to Borrow or a political subdivision of any such country, and having total assets in excess of $250,000,000, (vi) the central bank of any country that is a member of the OECD, and (vii) a finance company, insurance company or other financial institution or fund (whether a corporation, partnership, trust or other entity) that is engaged in making, purchasing or otherwise investing in commercial loans in the ordinary course of its business and having total assets in excess of $250,000,000; provided that neither the Borrower nor any Affiliate of the Borrower shall qualify as an Eligible Assignee.           “Environmental Laws” means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any governmental agency or authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Substance or to health and safety matters.           “Environmental Liability” means, with respect to any Person, any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of such Person or any of its Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Substances, (c) exposure to any Hazardous Substances, (d) the release or threatened release of any Hazardous Substances into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.           “Equity Contribution” means receipt by the Borrower of at least $141,000,000 in net proceeds from the issuance of the Borrower’s common stock in a private placement offering to certain shareholders of DQE Holdings, LLC.           “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.           “ERISA Affiliate” means, with respect to any Person, (i) any corporation that is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Internal Revenue Code) as such Person; (ii) a partnership or other trade or business (whether or not incorporated) that is under common control (within the meaning of Section 414(c) of the Internal Revenue Code) with such Person; and (iii) a member of the same affiliated service group (within the meaning of Section 414(m) of the Internal Revenue Code) as such Person, any corporation described in clause (i) above, or any partnership or trade or business described in clause (ii) above.           “ERISA Event” means (i) the occurrence of a reportable event, within the meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day notice requirement with respect thereto has been waived by the PBGC; (ii) the provision by the administrator of any Plan of notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA); (iii) the cessation of operations at a facility of the Borrower or any of its ERISA Affiliates in the circumstances described in Section 4062(e) of ERISA; (iv) the withdrawal by the Borrower or an ERISA Affiliate of the Borrower from a Multiple Employer Plan during a plan year for which it was a “substantial employer”, as defined in Section 6 --------------------------------------------------------------------------------   4001(a)(2) of ERISA; (v) the failure by the Borrower or an ERISA Affiliate of the Borrower to make a required payment to a Plan; (vi) the adoption of an amendment to a Plan requiring the provision of security to such Plan, pursuant to Section 307 of ERISA; (vii) the institution by the PBGC of proceedings to terminate a Plan, pursuant to Section 4042 of ERISA, or the occurrence of any event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, a Plan; (viii) the complete or partial withdrawal of the Borrower or any ERISA Affiliate of the Borrower from any Multiemployer Plan or the insolvency of any Multiemployer Plan; (ix) the Borrower or any ERISA Affiliate of the Borrower shall request a minimum funding waiver from the Internal Revenue Service with respect to any Plan; or (x) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA.           “Event of Default” has the meaning specified in Section 7.01.           “Exchange Act” means the Securities Exchange Act of 1934.           “Excluded Taxes” means, with respect to the Facility Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower under any Financing Document, (a) income, franchise or similar taxes imposed on (or measured in whole or in part by reference to) its net or overall gross income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located, or a jurisdiction in which such Facility Agent or Lender and the jurisdiction is engaged in business, other than a business deemed to arise solely from such recipient having entered into, received a payment under or enforced any Financing Document and activities incidental thereto, or any taxes attributable to a Lender’s failure to comply with Section 3.01(f) of this Agreement, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the applicable Lender is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 3.06(b) of this Agreement), any Tax that is imposed on amounts payable to such Foreign Lender that is attributable to such Foreign Lenders’ failure to comply with Section 3.01(e) of this Agreement, except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from the Borrower with respect to such Tax pursuant to Section 3.01(a) of this Agreement.           “Facility” means the facility provided in Article II for the making of the Loan.           “Facility Agent” means Barclays Bank PLC, acting in its capacity as Facility Agent for the Lenders hereunder, or any successor Facility Agent.           “Facility Agent’s Office” means the Facility Agent’s address as set forth on Schedule 9.02 or such other address as the Facility Agent may from time to time notify the Borrower and the Lenders.           “Federal Funds Rate” means, for any day, the rate per annum (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal 7 --------------------------------------------------------------------------------   Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to the Facility Agent on such day on such transactions as determined by the Facility Agent.           “Final Maturity Date” means the fifth (5th) anniversary of the Closing Date.           “Financial Projections” means (a) any forward-looking statement (within the meaning of the Securities Act of 1933 and the rules and regulations thereunder) and (b) any “prospective financial statement, financial forecast or financial projection” (as defined in guidelines published by the American Institute of Certified Public Accountants).           “Financing Documents” means, collectively, (i) this Agreement and (ii) the Notes.           “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than the United States of America, any State thereof or the District of Columbia.           “Fund” means any Person (other than a natural person) that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of business and having total assets in excess of $10,000,000.           “GAAP” means generally accepted accounting principles in the United States of America, as in effect from time to time, consistently applied.           “Governmental Approval” means any authorization, consent, approval, certificate, exemption of, or filing or registration with, any Governmental Authority required in connection with the execution and delivery of any Financing Document by the Borrower and the incurrence by the Borrower of any Obligations hereunder.           “Governmental Authority” means any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, administrative tribunal, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.           “Hazardous Substance” means any waste, substance, or material identified as hazardous, dangerous or toxic by any office, agency, department, commission, board, bureau, or instrumentality of the United States or of the State or locality in which the same is located having or exercising jurisdiction over such waste, substance or material.           “Hedging Agreements” means interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts and other similar agreements designed to protect against fluctuations in currency exchange or interest rates.           “Indemnified Liabilities” has the meaning set forth in Section 9.05(a).           “Indemnitees” has the meaning set forth in Section 9.05(a). 8 --------------------------------------------------------------------------------             “Information” has the meaning specified in Section 9.08.           “Information Memorandum” means the Confidential Information Memorandum, dated September 2006, regarding the Borrower and the transactions contemplated hereby, as provided to the Lenders.           “Interest Payment Date” means, (a) as to any Loan other than an Alternate Base Rate Loan, the last day of each Interest Period applicable to such Loan and the Final Maturity Date of the Facility under which such Loan was made; provided that if any Interest Period exceeds three (3) months, the respective dates that fall every three (3) months after the beginning of such Interest Period shall also be Interest Payment Dates, and (b) as to any Alternate Base Rate Loan, each Calculation Date and the Final Maturity Date.           “Interest Period” means, the period beginning on (and including) the date on which the Loan is made and shall end on (but exclude) the day which numerically corresponds to such date one, two, three or six months thereafter or such other periods as may be agreed by the Facility Agent and the Borrower if available to all Lenders (or, if such month has no numerically corresponding day, on the last Business Day of such month), in either case as the Borrower may select in its relevant notice pursuant to Section 2.05(d); provided, however, that (a) the initial Interest Period shall be one (1) month, (b) if such Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next succeeding Business Day (or, if such next succeeding Business Day falls on the next succeeding calendar month, on the next preceding Business Day) and (c) no Interest Period may end later than the Final Maturity Date.           “Interest Rate” means, for any Interest Period, (i) the LIBO Rate for such Interest Period plus the Applicable Margin or (ii) in the event that (a) the LIBO Rate is unavailable as a result of the occurrence of the events described in Section 2.03 and Section 3.03 or (b) such Interest Period would have a duration of less than one month, the Alternate Base Rate plus the Applicable Margin, as the context may require.           “Investment Company Act” means the Investment Company Act of 1940, as amended from time to time, and the rules and regulations promulgated thereunder.           “Joint Mandated Lead Arrangers” means Barclays Capital and Dresdner Kleinwort Wasserstein Securities, each in its capacity as a Mandated Lead Arranger.           “Keystone/Conemaugh Acquisition” has the meaning specified in the recitals to this Agreement.           “Keystone/Conemaugh Acquisition Agreement” means the Purchase and Sale Agreement dated as of November 14, 2005 between the Borrower and Atlantic City Electric Company.           “Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law. 9 --------------------------------------------------------------------------------             “Lender” has the meaning specified in the introductory paragraph to this Agreement and includes each Person that shall became a Lender hereunder pursuant to Section 9.07 for so long as such Lender or Person, as the case may be, shall be a party to this Agreement.           “Lending Office” means, as to any Lender, the office or offices of such Lender (or of an Affiliate of such Lender) designated for such Lender’s Loan, or such other office or offices as a Lender may from time to time notify the Borrower and the Facility Agent.           “Lien” means any lien (statutory or other), security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale or other title retention agreement).           “LIBO Rate” shall mean, with respect to any Loan for any Interest Period, the rate appearing on Page 3750 of the Dow Jones Markets (Telerate) Service (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Facility Agent from time to time for purposes of providing quotations of interest rates applicable to Dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, on the day that is two (2) Business Days prior to the commencement of such Interest Period, as the rate for the offering of Dollar deposits with a maturity comparable to such Interest Period; provided that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, the Facility Agent will request the Reference Banks to provide the Facility Agent with their offer quotations for deposits in Dollars for such Interest Period to prime banks in the London interbank market at approximately 11:00 a.m. (London time) on such second Business Day in a representative amount and for a period approximately equal to such Interest Period and the Facility Agent shall calculate the LIBO Rate using the average of such quotations. Each determination of the LIBO Rate by the Facility Agent pursuant to this definition shall be conclusive absent manifest error.           “LIBO Rate Loan” means any Loan which bears interest at a rate determined by reference to the LIBO Rate.           “Loan” has the meaning specified in the recitals to this Agreement.           “Macquarie” means Macquarie Bank Limited or any of its Affiliates, and any investment funds managed by Macquarie Bank Limited or any of its Affiliates.           “Majority Lenders” means, as of any date of determination, Lenders having more than 50% of the sum of the (a) Total Outstandings and (b) aggregate unused Commitments.           “Material Adverse Effect” means a material adverse effect on (i) the business, operations, property or condition (financial or otherwise) of the Borrower and its Subsidiaries, taken as a whole, (ii) the ability of the Borrower to perform its obligations under any of the Financing Documents, or (iii) the validity or enforceability of any of the Financing Documents or the material rights and remedies of any Lender or Agent-Related Person under any of the Financing Documents. 10 --------------------------------------------------------------------------------             “Material Plan” means, collectively, a Plan or Plans having aggregate Unfunded Vested Liabilities in excess of $20,000,000.           “Merger” means the merger of Merger Sub with and into the Borrower pursuant to the terms of the Merger Agreement.           “Merger Agreement” means the Agreement and Plan of Merger dated as of July 5, 2006, by and among the Borrower, DQE Holdings, LLC and Merger Sub.           “Merger Completion Date” means the date of consummation of the Merger in accordance with the terms of the Merger Agreement.           “Merger Sub” means Castor Merger Sub Inc., a Pennsylvania corporation.           “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.           “Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, that is subject to Title IV of ERISA and to which the Borrower or any ERISA Affiliate of the Borrower is making or accruing an obligation to make contributions, or has within any of the preceding six (6) plan years made or accrued an obligation to make contributions, such plan being maintained pursuant to one or more collective bargaining agreements.           “Multiple Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, that is subject to Title IV of ERISA and that (i) is maintained for employees or former employees of the Borrower or an ERISA Affiliate of the Borrower and at least one Person other than the Borrower and its ERISA Affiliates, or (ii) was so maintained and in respect of which the Borrower or an ERISA Affiliate of the Borrower could have liability under Section 4064 or 4069 of ERISA in the event such plan has been or were to be terminated.           “Note” means a promissory note of the Borrower payable to any Lender or its registered assigns, in substantially the form of Exhibit B hereto, evidencing the aggregate Debt of the Borrower to such Lender resulting from the Loan made by such Lender.           “Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, the Borrower arising under any Financing Document or otherwise with respect to any Loan, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against the Borrower, of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding. Without limiting the generality of the foregoing, the Obligations of the Borrower under the Financing Documents include (x) the obligation to pay principal, interest, charges, expenses, fees, Attorney Costs, indemnities and other amounts payable by the Borrower under any Financing Document and (y) the obligation of the Borrower to reimburse any amount in respect of any of the foregoing that any Lender, in its sole discretion, may elect to pay or advance on behalf of the Borrower.           “OECD” means the Organization for Economic Cooperation and Development.           “Other Taxes” has the meaning specified in Section 3.01(b). 11 --------------------------------------------------------------------------------             “Outstanding Amount” means with respect to the Loans on any date, the Dollar amount thereof after giving effect to any borrowing and prepayments or repayments of the Loans occurring on such date.           “Overnight Rate” means, for any day, the Federal Funds Rate.           “Participant” has the meaning specified in Section 9.07(e).           “PBGC” means the Pension Benefit Guaranty Corporation.           “Permitted Liens” means each of the following:      (i) Liens for taxes, assessments or governmental charges or levies to the extent not delinquent or that are diligently being contested in good faith by appropriate proceedings and for which the Borrower has set aside reserves to the extent required by and in accordance with GAAP;      (ii) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s, repairmen’s, warehousemen’s and carriers’ Liens, Liens or privileges of any employees for salary or wages earned, and other similar Liens arising in the ordinary course of business securing obligations that are not delinquent and are being diligently contested in good faith by appropriate proceedings;      (iii) Liens in respect of judgments or awards with respect to which the Borrower shall (A) in good faith be prosecuting an appeal or other proceeding for review and with respect to which the Borrower shall have secured a stay of execution pending such appeal or other proceeding and for which the Borrower has set aside adequate reserves in accordance with GAAP, or (B) have the right to prosecute an appeal or other proceeding for review and for which the Borrower has set aside adequate reserves in accordance with GAAP;      (iv) Liens securing amounts in dispute by the Borrower or any of its Subsidiaries; provided that such Liens are bonded in full or secured by other security arrangements satisfactory to the Majority Lenders; and      (v) other nonconsensual Liens not described in clauses (i) through (iv) above; provided that (A) such Liens do not secure Debt and (B) the obligations secured by such Liens shall not exceed, in the aggregate, $25,000,000 at any one time outstanding.           “Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.           “Plan” means, with respect to any Person, an employee benefit plan (other than a Multiemployer Plan) maintained for employees or former employees of such Person or any ERISA Affiliate of such Person and covered by Title IV of ERISA or Section 412 of the Internal Revenue Code, including a Single Employer Plan and a Multiple Employer Plan.           “Prime Rate” means the rate of interest per annum publicly announced from time to time by Barclays Bank PLC as its prime rate in effect at its principal office in New York City; 12 --------------------------------------------------------------------------------   each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.           “Reference Banks” means, collectively, Barclays Bank PLC and Dresdner Bank AG, New York and Grand Cayman Branches.           “Register” has the meaning specified in Section 9.07(d).           “Restatement Effective Date” means the date on which the conditions specified in Article IV-A are satisfied in accordance with the terms of this Agreement.           “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor thereto.           “Significant Subsidiary” means Duquesne Light and any other Subsidiary of the Borrower that, on a consolidated basis with any of its Subsidiaries as of any date of determination, accounts for more than 10% of the consolidated assets of the Borrower and its Consolidated Subsidiaries.           “Single Employer Plan” means a single employer plan, as defined in Section 4001(a)(15) of ERISA, which is subject to Title IV of ERISA and which (i) is maintained for employees or former employees of the Borrower or an ERISA Affiliate of the Borrower and no Person other than the Borrower and its ERISA Affiliates, or (ii) was so maintained and in respect of which the Borrower or an ERISA Affiliate of the Borrower could have liability under Section 4069 of ERISA in the event such plan has been or were to be terminated.           “Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower.           “Taxes” has the meaning specified in Section 3.01(a).           “Total Outstandings” means the aggregate Outstanding Amount of all Loans.           “Unfunded Vested Liabilities” means, with respect to any Plan at any time, the amount (if any) by which (i) the present value of all nonforfeitable accrued benefits under such Plan exceeds (ii) the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of the Borrower or any of its ERISA Affiliates to the PBGC or such Plan under Title IV of ERISA.           “United States” and “U.S.” mean the United States of America.           “USA Patriot Act” means the USA Patriot Act, Title III of Pub. L. 107-56, signed into law October 26, 2001. 13 --------------------------------------------------------------------------------        SECTION 1.02. Other Interpretive Provisions. With reference to this Agreement and each other Financing Document, unless otherwise specified herein or in such other Financing Document:      (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.      (b) The words “herein,” “hereto,” “hereof” and “hereunder” and words of similar import when used in any Financing Document shall refer to such Financing Document as a whole and not to any particular provision thereof.      (i) Article, Section, Exhibit and Schedule references are to the Financing Document in which such reference appears.      (ii) The term “including” is by way of example and not limitation.      (iii) The term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form.      (c) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”      (d) Section headings herein and in the other Financing Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Financing Document.      SECTION 1.03. Accounting Terms. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP, applied in a manner consistent with that used in preparing the audited financial statements of the Borrower and its Subsidiaries referred to in Section 4(j), except as otherwise specifically prescribed herein.      SECTION 1.04. Rounding. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement (or required to be satisfied in order for a specific action to be permitted under this Agreement) shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).      SECTION 1.05. References to Agreements, Laws, Etc. Unless otherwise expressly provided herein, (a) references to agreements (including the Financing Documents) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, extensions, supplements and other modifications are permitted by any Financing Document; and (b) references to any Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Law. 14 --------------------------------------------------------------------------------        SECTION 1.06. Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).      SECTION 1.07. Timing of Payment of Performance. When the payment of any obligation or the performance of any covenant, duty or obligation is stated to be due or performance required on a day which is not a Business Day, the date of such payment (other than as described in the definition of Interest Period) or performance shall extend to the immediately succeeding Business Day. ARTICLE II THE COMMITMENTS AND LOAN      SECTION 2.01. The Loan.      (a) Subject to the terms and conditions set forth herein, each Lender severally agrees to make to the Borrower a single Loan on the Closing Date in a principal amount up to but not exceeding such Lender’s Commitment. Amounts borrowed under this Section 2.01 and repaid or prepaid may not be reborrowed. Any amounts that shall remain undrawn under the Commitments after the Closing Date shall be cancelled.      (b) Simultaneously with the effectiveness of the amendment and restatement of the Existing Loan Agreement on the Restatement Effective Date, the Borrower shall borrow from each New Lender, and each New Lender shall make a loan to the Borrower, and (notwithstanding anything to the contrary in this Agreement requiring that prepayments be made ratably among the Lenders, compliance with which is hereby waived for purposes of such prepayments) the Borrower shall prepay Loans made by each Lender that is not a New Lender in such amounts as shall be necessary, together with accrued interest, so that after giving effect to such borrowing and prepayments, the principal amount of the Loans outstanding shall be held by the Lenders in accordance with Schedule 2.01 hereto). No amounts shall be payable under Section 2.07(b) in connection with such prepayment      SECTION 2.02. Borrowing.      (a) The Loan shall be made upon the delivery by the Borrower of an irrevocable Borrowing Request to the Facility Agent (which shall give to each Lender prompt notice thereof by facsimile transmission), given no later than 12:00 Noon, New York City time, at least three (3) but in any event not more than seven (7) Business Days prior to the requested date of such Borrowing. The Borrowing Request shall specify (i) the requested date of the Borrowing (which shall be a Business Day) and (ii) the aggregate principal amount of Loans to be borrowed (and, subject to the terms and conditions set forth herein, the principal amount to be borrowed from each Lender shall be its ratable share of such aggregate principal amount, based upon the respective Commitments of each of the Lenders at such time).      (b) The Loan shall be borrowed in a single Borrowing having an initial Interest Period of one (1) month and be in a minimum amount of $1,000,000 and increments of $500,000. There shall be no more than three (3) different Interest Periods at any one time for the Loan.      (c) Each Lender shall make the amount of the Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds not later than 11:00 a.m., New York City time, to the account of the Facility Agent most recently designated by it for such 15 --------------------------------------------------------------------------------   purpose by notice to the Lenders. Upon satisfaction of the applicable conditions set forth in Article IV, the Facility Agent shall make all funds so received available not later than 1:00 p.m., New York City time, by wire transfer of such funds, in each case in accordance with instructions provided to (and reasonably acceptable to) the Facility Agent by the Borrower.      (d) The failure of any Lender to make the Loan to be made by it shall not relieve any other Lender of its obligation, if any, hereunder to make its Loan on the date of the Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Loan to be made by such other Lender on the date of the Borrowing.      SECTION 2.03. Prepayments.      (a) Optional. The Borrower may, upon notice to the Facility Agent, at any time or from time to time voluntarily prepay the Loans in whole or in part without premium or penalty subject however to any breakage costs due in accordance with Section 2.07(b); provided, that (i) such notice must be received by the Facility Agent not later than 11:00 a.m. five (5) Business Days prior to any date of prepayment or termination and (ii) any partial prepayment of the Loans shall be in an aggregate minimum amount of $500,000 and in integral multiples of $500,000 in excess thereof, or if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment and the type(s) of Loans to be prepaid. The Facility Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s ratable share of such prepayment or termination. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Each prepayment of the Loans pursuant to this Section 2.03(a) shall be paid to the Lenders in accordance with their respective ratable share.      (b) Mandatory. (i) Unless otherwise agreed by the Lenders (with respect to clauses (A) and (C) below) or the Majority Lenders (with respect to clause (B) below) the Borrower shall be required to prepay the Loans and cancel the Facility:      (A) in full, if the Merger is not consummated by the Acceleration Date referred to below, or if the Merger is consummated but not with the proceeds of Loans under the DLH Credit Agreement, such prepayment to be made on the one-year anniversary of the date (the “Acceleration Date”) that is earliest to occur of (a) January 5, 2008, (b) the date of termination of the Merger Agreement and (c) the date of consummation of the Merger other than with the proceeds of Loans under the DLH Credit Agreement; and      (B) in full, if a Change of Control occurs after the Closing Date.                (ii) The Borrower shall notify the Facility Agent in writing of any mandatory prepayment of the Facility required to be made pursuant to Section 2.03(b)(A) or (B) at least three (3) Business Days prior to the date of such prepayment. Each such notice shall specify the date of such prepayment. The Facility Agent will promptly notify each Lender of the contents of the Borrower’s prepayment notice and of such Lender’s ratable share of the prepayment.      (c) Accrued Interest; Funding Losses, Etc. All prepayments under this Section 2.03 shall be made together with all accrued and unpaid interest on the amount to be prepaid and, in the event that any such prepayment is made on a date other than the last day of an Interest Period therefor, any amounts owing in respect of such Loan pursuant to Section 2.07(b). 16 --------------------------------------------------------------------------------        SECTION 2.04 Repayment of Loans. The Borrower shall repay to the Facility Agent for the ratable account of the Lenders on the Final Maturity Date, the aggregate principal amount of the Loans outstanding on such date.      SECTION 2.05. Interest.      (a) Subject to the provisions of Section 2.05(b) the Borrower hereby agrees to pay to the Facility Agent for the account of each Lender interest on the unpaid principal amount of the Loan made by such Lender for the period from and including the date of such Loan to but excluding the date such Loan shall be paid in full at the rate equal to the Interest Rate.      (b) Notwithstanding the provisions of Section 2.05(a) to the contrary, the Borrower hereby agrees that all past due amounts hereunder shall bear interest at a rate per annum equal to the Default Rate for the period from and including the date such past due amount was due to but excluding the date such amount is paid in full. Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand (or, if no demand is made during any month, on the last day of such month).      (c) Interest on each Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein;      (d) Notices by the Borrower to the Facility Agent of a change in the duration of Interest Periods shall be irrevocable and shall be effective only if received by the Facility Agent not later than 1:00 p.m., New York City time, three (3) Business Days prior to the first day of each subsequent Interest Period. Each such notice shall specify the Loans to which such Interest Period is to relate. The Facility Agent shall promptly notify the Lenders of the contents of each such notice.      SECTION 2.06. Fees. The Borrower shall pay such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified.      SECTION 2.07. Computation of Interest and Fees.      (a) All computations of interest and fees shall be made on the basis of a three hundred and sixty (360) day year and actual days elapsed, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). Interest shall accrue on each Loan for the day on which the Loan is made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such portion is paid; provided that any Loan that is repaid on the same day on which it is made shall, subject to Section 2.09(a), bear interest for one (1) day. Each determination by the Facility Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.      (b) In the event of (i) the payment of any principal of any Loan other than on the last day of the Interest Period for that Loan (including under Section 2.03 or as a result of an Event of Default or otherwise), (ii) the failure to borrow on the date specified in the Borrowing Request or failure to repay or prepay any Loan on any scheduled repayment or prepayment date or (iii) the assignment of any Loan other than on the last day of its Interest Period as a result of a request by the Borrower pursuant to Section 3.06, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to any such event. Such loss, cost or 17 --------------------------------------------------------------------------------   expense to any Lender shall be deemed to include an amount reasonably determined by such Lender to be the excess, if any, of (x) the amount of interest that would have accrued on the principal amount of such Loan had such event not occurred for the period from the date of such event to the last day of the then current Interest Period for such Loan (or, in the case of a failure to borrow, for the period that would have been the Interest Period for such Loan) over (y) the amount of interest that would accrue on such principal amount for that period at the interest rate that such Lender would bid were it to bid, at the commencement of that period, for Dollar deposits of a comparable amount and period from other banks in the eurodollar market. The Borrower shall, upon demand of any Lender (with a copy to the Facility Agent) promptly pay such Lender the amounts due and payable hereunder.      SECTION 2.08. Evidence of Debt.      (a) The Borrowings provided by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and evidenced by one or more entries in the Register maintained by the Facility Agent, in each case in the ordinary course of business. The accounts or records maintained by the Facility Agent and each Lender shall be prima facie evidence absent manifest error of the amount of the Borrowings provided by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Facility Agent in respect of such matters, the accounts and records of the Facility Agent shall control in the absence of manifest error. Upon the request of any Lender made through the Facility Agent, the Borrower shall execute and deliver to such Lender (through the Facility Agent) a Note payable to such Lender, which shall evidence such Lender’s Loan in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, amount and maturity of its Loans and payments with respect thereto.      (b) Entries made in good faith by the Facility Agent in the Register pursuant to Section 2.08(a), and by each Lender in its account or accounts pursuant to Section 2.08(a), shall be prima facie evidence of the amount of principal and interest due and payable or to become due and payable from the Borrower to, in the case of the Register, each Lender and, in the case of such account or accounts, such Lender, under this Agreement and the other Financing Documents, absent manifest error; provided, that the failure of the Facility Agent or such Lender to make an entry, or any finding that an entry is incorrect, in the Register or such account or accounts shall not limit or otherwise affect the obligations of the Borrower under this Agreement and the other Financing Documents.      SECTION 2.09. Payments Generally.      (a) All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. All payments by the Borrower hereunder shall be made by wire transfer in immediately available funds to the Facility Agent, for the account of the respective Lenders to which such payment is owed, not later than 2:00 p.m. on the date specified herein. The Facility Agent will promptly distribute to each Lender its ratable share (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s Lending Office. All payments received by the Facility Agent after 2:00 p.m. shall in each case be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. 18 --------------------------------------------------------------------------------        (b) Unless the Borrower or any Lender has notified the Facility Agent, prior to the date any payment is required to be made by it to the Facility Agent hereunder, that the Borrower or such Lender, as the case may be, will not make such payment, the Facility Agent may assume that the Borrower or such Lender, as the case may be, has timely made such payment and may (but shall not be so required to), in reliance thereon, make available a corresponding amount to the Person entitled thereto. If and to the extent that such payment was not in fact made to the Facility Agent in immediately available funds, then:      (i) if the Borrower failed to make such payment, each Lender shall forthwith on demand repay to the Facility Agent the portion of such assumed payment that was made available to such Lender in immediately available funds, together with interest thereon in respect of each day from and including the date such amount was made available by the Facility Agent to such Lender to the date such amount is repaid to the Facility Agent in immediately available funds at the Federal Funds Rate from time to time in effect; and      (ii) if any Lender failed to make such payment, such Lender shall forthwith on demand pay to the Facility Agent the amount thereof in immediately available funds, together with interest thereon for the period from the date such amount was made available by the Facility Agent to the Borrower to the date such amount is recovered by the Facility Agent (the “Compensation Period”) at a rate per annum equal to the Federal Funds Rate from time to time in effect. When such Lender makes payment to the Facility Agent (together with all accrued interest thereon), then such payment amount (excluding the amount of any interest which may have accrued and been paid in respect of such late payment) shall constitute such Lender’s Loan included in the applicable Borrowing. If such Lender does not pay such amount forthwith upon the Facility Agent’s demand therefor, the Facility Agent may make a demand therefor upon the Borrower, and the Borrower shall pay such amount to the Facility Agent, together with interest thereon for the Compensation Period at a rate per annum equal to the rate of interest applicable to the applicable Borrowing. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Commitment or to prejudice any rights which the Facility Agent or the Borrower may have against any Lender as a result of any default by such Lender hereunder.      A notice of the Facility Agent to any Lender or the Borrower with respect to any amount owing under this Section 2.09(b) shall be conclusive, absent manifest error.      (c) If any Lender makes available to the Facility Agent funds for any Loan to be made by such Lender as provided in the foregoing provisions of this Article II, and such funds are not made available to the Borrower by the Facility Agent because the conditions to the applicable Borrowing set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Facility Agent shall return such funds to such Lender, without interest.      (d) The obligations of the Lenders hereunder to make Loans are several and not joint. The failure of any Lender to make any Loan on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Loan.      (e) Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan in any particular place or manner. 19 --------------------------------------------------------------------------------        (f) Whenever any payment received by the Facility Agent under this Agreement or any of the other Financing Documents is insufficient to pay in full all amounts due and payable to the Facility Agent and the Lenders under or in respect of this Agreement and the other Financing Documents on any date, such payment shall be distributed by the Facility Agent. If the Facility Agent receives funds for application to the Obligations of the Borrower under or in respect of the Financing Documents under circumstances for which the Financing Documents do not specify the manner in which such funds are to be applied, the Facility Agent may, but at the direction of Majority Lenders shall, elect to distribute such funds to each of the Lenders in accordance with such Lender’s ratable share of the sum of the Outstanding Amount of all Loans and other Obligations outstanding at such time in repayment or prepayment of such of the outstanding Loans or other Obligations then owing to such Lender.      SECTION 2.10. Sharing of Payments. If, other than as expressly provided elsewhere herein, any Lender shall obtain on account of the Loans made by it, any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) in excess of its ratable share (or other share contemplated hereunder) thereof, such Lender shall immediately (a) notify the Facility Agent of such fact, and (b) purchase from the other Lenders such participations in the Loans made by them as shall be necessary to cause such purchasing Lender to share the excess payment in respect of such Loans, pro rata with each of them; provided, that if all or any portion of such excess payment is thereafter recovered from the purchasing Lender under any of the circumstances described in Section 9.06 (including pursuant to any settlement entered into by the purchasing Lender in its discretion), such purchase shall to that extent be rescinded and each other Lender shall repay to the purchasing Lender the purchase price paid therefor, together with an amount equal to such paying Lender’s ratable share (according to the proportion of (i) the amount of such paying Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered, without further interest thereon. The Borrower agrees that any Lender so purchasing a participation from another Lender may, to the fullest extent permitted by applicable Law, exercise all its rights of payment (including the right of setoff, but subject to Section 9.09) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. The Facility Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased under this Section 2.10 and will in each case notify the Lenders following any such purchases or repayments. Each Lender that purchases a participation pursuant to this Section 2.10 shall from and after such purchase have the right to give all notices, requests, demands, directions and other communications under this Agreement with respect to the portion of the Obligations purchased to the same extent as though the purchasing Lender were the original owner of the Obligations purchased. ARTICLE III TAXES, INCREASED COSTS PROTECTION AND ILLEGALITY      SECTION 3.01. Taxes.      (a) Except as provided in this Section 3.01, any and all payments by or on behalf of the Borrower to or for the account of the Facility Agent, or any Lender under any Financing Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and all liabilities (including additions to tax, penalties and interest) with respect thereto, excluding in 20 --------------------------------------------------------------------------------   the case of the Facility Agent and each Lender, Excluded Taxes. All taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and liabilities described in the immediately preceding sentence other than Excluded Taxes are hereinafter referred to as “Taxes”. If the Borrower shall be required by any Laws to deduct any Taxes or Other Taxes from or in respect of any sum payable under any Financing Document to the Facility Agent or any Lender, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.01), each of the Facility Agent and such Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Laws, and (iv) within sixty (60) days after the date of such payment (or, if receipts or evidence are not available within sixty (60) days, as soon as possible thereafter), the Borrower shall furnish to the Facility Agent or such Lender (as the case may be) the original or a certified copy of a receipt evidencing payment thereof to the extent such a receipt is issued therefor, or other written proof of payment thereof that is reasonably satisfactory to the Facility Agent. If the Borrower fails to pay any Taxes or Other Taxes when due to the appropriate taxing authority or fails to remit to the Facility Agent or any Lender the required receipts or other required documentary evidence, the Borrower shall indemnify the Facility Agent and such Lender for any incremental taxes, interest or penalties that may become payable by the Facility Agent or such Lender arising out of such failure.      (b) In addition, the Borrower agrees to pay any and all present or future stamp, court or documentary taxes and any other excise, property, intangible or mortgage recording taxes or similar charges or levies which arise from any payment made under any Financing Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Financing Document (hereinafter referred to as “Other Taxes”).      (c) The Borrower agrees to indemnify the Facility Agent and each Lender for (i) the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section 3.01) paid by the Facility Agent and such Lender and (ii) any liability (including additions to tax, penalties, interest and expenses) arising therefrom or with respect thereto (other than those resulting from such Person’s gross negligence or willful misconduct), in each case whether or not such Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority; provided, the Facility Agent or Lender, as the case may be, provides the Borrower with a written statement thereof setting forth in reasonable detail the basis and calculation of such amounts. Payment under this Section 3.01(c) shall be made within thirty (30) days after the date such Lender or the Facility Agent provides such written statement.      (d) Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 3.01(a), (b) or (c) with respect to such Lender it will use its commercially reasonable efforts to minimize any increased cost or other compensation payable by the Borrower including, if requested by the Borrower, designating (subject to such Lender’s overall internal policies of general application and legal and regulatory restrictions) another Lending Office for any Loan affected by such event; provided, that such efforts are made on terms that, in the judgment of such Lender exercised in good faith, cause such Lender and its Lending Office(s) to suffer no material economic, tax, legal or regulatory disadvantage, and provided, further, that nothing in this Section 3.01(d) shall affect or postpone any of the Obligations of the Borrower or the rights of such Lender pursuant to Section 3.01(a), (b) or (c). Nothing herein contained shall interfere with the right of a Lender or the Facility Agent to arrange its tax affairs in whatever manner it 21 --------------------------------------------------------------------------------   thinks fit nor oblige any Lender or the Facility Agent to make available its tax returns or disclose any information relating to its tax affairs or any computations in respect thereof or require any Lender or the Facility Agent to do anything that would prejudice its ability to benefit from any other refunds, credits, reliefs, remissions or repayments to which it may be entitled.      (e) The Facility Agent and each Foreign Lender, if it is legally able to do so, shall deliver to the Borrower (with a copy to the Facility Agent), prior to receipt of any payment subject to withholding under the Code (or upon accepting an assignment of an interest herein or upon designation of a new Lending Office), two duly signed and properly completed copies of either IRS Form W-8BEN or any successor thereto (relating to such Facility Agent or Foreign Lender and entitling it to an exemption from, or reduction of, withholding tax on all payments to be made to such Facility Agent or Foreign Lender by the Borrower pursuant to the Financing Documents) or IRS Form W-8ECI or any successor thereto (relating to all payments to be made to such Facility Agent or Foreign Lender by the Borrower pursuant to the Financing Documents) or such other evidence satisfactory to the Borrower and the Facility Agent that such Foreign Lender is entitled to an exemption from, or reduction of, Taxes, including any exemption pursuant to Section 881(c) of the Code. Thereafter and from time to time, the Facility Agent and each such Foreign Lender shall, if it is legally able to do so, (A) promptly submit to the Borrower (with a copy to the Facility Agent) such additional properly completed and duly signed copies of one of such forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may then be required under then current laws and regulations to avoid, or such evidence as is satisfactory to the Borrower and the Facility Agent of any available exemption from or reduction of, Taxes in respect of all payments to be made to such Facility Agent or Foreign Lender by the Borrower pursuant to the Financing Documents, and (B) promptly notify the Borrower and the Facility Agent of any change in circumstances which would modify or render invalid any claimed exemption or reduction.      (f) If a Lender or successor Facility Agent is a United States person under Section 7701(a)(30) of the Code, such person shall, at the request of the Borrower or the Facility Agent, provide two duly signed and properly completed copies of IRS Form W-9 (or any successor form thereto) to the Borrower (with a copy to the Facility Agent), certifying that such person is entitled to a complete exemption from United States backup withholding tax on payments pursuant to the Financing Documents. Any person supplying forms pursuant to this Section 3.01(f) shall deliver to the Borrower and the Facility Agent additional copies of the relevant forms on or before the date that such form expires, and shall promptly notify the Borrower and Facility Agent of any change in circumstances that would modify or render invalid any forms previously provided.      (g) If the Facility Agent or any Lender determines in its reasonable discretion that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts, in either case pursuant to this Section 3.01, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all reasonable out-of-pocket expenses of the Facility Agent or any such Lender, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund).      SECTION 3.02. Illegality. If any Lender shall reasonably determine in good faith (which determination shall, upon notice thereof to the Borrower and the Facility Agent, be conclusive and binding on the Borrower absent manifest error) that a Change in Law makes it 22 --------------------------------------------------------------------------------   unlawful, or any central bank or other Governmental Authority or comparable agency asserts that it is unlawful, for such Lender to make, continue or maintain any Loan or participation therein, as a LIBO Rate Loan, the obligations of such Lender to make, continue or maintain any such Loans shall, upon such determination, forthwith be suspended until such Lender shall notify the Facility Agent that the circumstances causing such suspension no longer exist. Upon receipt of notice of such determination, the Borrower shall upon demand from such Lender (with a copy to the Facility Agent), prepay or convert such LIBO Rate Loans to Alternate Base Rate Loans, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such LIBO Rate Loans to such day, or promptly, if such Lender may not lawfully continue to maintain such LIBO Rate Loans. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted and all amounts due, if any, in connection with such prepayment or conversion under Section 2.07(b). Each Lender agrees to designate a different Lending Office if such designation will avoid the need for such notice and will not, in the good faith judgment of such Lender, otherwise be materially disadvantageous to such Lender.      SECTION 3.03. Inability to Determine Rates. If prior to the commencement of any Interest Period the Facility Agent shall have determined that by reason of circumstances affecting the Facility Agent’s relevant market, adequate means do not exist for ascertaining the LIBO Rate, or if the Majority Lenders determine that the LIBO Rate for any requested Interest Period with respect to a proposed Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, or that Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and the Interest Period of such Loan, the Facility Agent will promptly so notify the Borrower. Thereafter, the obligation of the Lenders under this Agreement to make or continue any Loans as LIBO Rate Loans shall forthwith be suspended until the Facility Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist. Upon receipt of notice of such determination, the Borrower shall (a) upon demand by the Facility Agent (with a copy to the Lenders), prepay or convert such LIBO Rate Loans to Alternate Base Rate Loans on the last day of the Interest Period therefor and (b) the Borrower may revoke any pending request for a Borrowing or, failing that, will be deemed to have converted such request into a request for a Borrowing of Alternate Base Rate Loans in the amount specified therein.      SECTION 3.04. Increased Cost and Reduced Return; Capital Adequacy; Reserves on LIBO Rate Loans.      (a) If any Lender reasonably determines in good faith that as a result of any Change in Law, or such Lender’s compliance therewith, there shall be any increase in the cost to such Lender of agreeing to make or making, funding or maintaining the Loans, or a reduction in the amount received or receivable by such Lender in connection with the foregoing (excluding for purposes of this Section 3.04(a) any such increased costs or reduction in amount resulting from (i) Taxes or Other Taxes (as to which Section 3.01 shall govern), (ii) Excluded Taxes and (iii) reserve requirements contemplated by Section 3.04(c) then from time to time within fifteen (15) days after demand by such Lender setting forth in reasonable detail such increased costs (with a copy of such demand to the Facility Agent given in accordance with Section 2.07(b)), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such increased cost or reduction.      (b) If any Lender reasonably determines in good faith that a Change in Law regarding capital adequacy or any change therein or in the interpretation thereof, or compliance by such Lender (or its Lending Office) therewith, has the effect of reducing the rate of return on the 23 --------------------------------------------------------------------------------   capital of such Lender or any corporation controlling such Lender as a consequence of such Lender’s obligations hereunder (taking into consideration its policies with respect to capital adequacy and such Lender’s desired return on capital), then from time to time upon demand of such Lender setting forth in reasonable detail the charge and the calculation of such reduced rate of return (with a copy of such demand to the Facility Agent given in accordance with Section 2.07(b)), the Borrower shall pay to such Lender such additional amounts as will compensate such Lender for such reduction (and without duplication of amounts otherwise payable pursuant to this Section 3.04) within fifteen (15) days after receipt of such demand.      (c) The Borrower shall pay to each Lender, as long as such Lender shall be required to comply with any reserve ratio requirement or analogous requirement of any central banking or financial regulatory authority imposed in respect of the Loans, such additional costs (expressed as a percentage per annum and rounded upwards, if necessary, to the nearest five decimal places) equal to the actual costs allocated to such Loan by such Lender (as reasonably determined by such Lender in good faith) which in each case shall be due and payable on each date on which interest is payable on such Loan; provided the Borrower shall have received at least fifteen (15) days’ prior notice (with a copy to the Facility Agent) of such additional interest or cost from such Lender. If a Lender fails to give notice fifteen (15) days prior to the relevant payment date, such additional interest or cost shall be due and payable fifteen (15) days from receipt of such notice.      (d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section 3.04 shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to Section 3.04 for any such increased cost or reduction incurred more than one hundred eighty (180) days prior to the date that such Lender demands, or notifies the Borrower of its intention to demand, compensation therefor; provided further that, if the circumstance giving rise to such increased cost or reduction is retroactive, then such 180-day period referred to above shall be extended to include the period of retroactive effect thereof.      (e) If any Lender requests compensation under this Section 3.04, then such Lender will use its commercially reasonable efforts to minimize any increased cost or other compensation payable by the Borrower including, if requested by the Borrower, designating another Lending Office for any Loan affected by such event; provided, that such efforts are made on terms that, in the reasonable judgment of such Lender, cause such Lender and its Lending Office(s) to suffer no material economic, legal or regulatory disadvantage, and; provided, further, that nothing in this Section 3.04(e) shall affect or postpone any of the Obligations of the Borrower or the rights of such Lender pursuant to Section 3.04(a), (b) or (d).      SECTION 3.05. Matters Applicable to All Requests for Compensation. The Facility Agent or any Lender claiming compensation under this Article III shall deliver a certificate to the Borrower setting forth the additional amount or amounts to be paid to it hereunder which shall be conclusive in the absence of manifest error. In determining such amount, the Facility Agent or such Lender may use any reasonable averaging and attribution methods.      SECTION 3.06. Replacement of Lenders under Certain Circumstances.      (a) If at any time (i) the Borrower becomes obligated to pay additional amounts or indemnity payments described in Section 3.01 or Section 3.04 as a result of any condition described in such Sections or any Lender ceases to make LIBO Rate Loans as a result of any condition described in Section 3.02 or Section 3.04, (ii) any Lender becomes a Defaulting Lender 24 --------------------------------------------------------------------------------   or (iii) any Lender becomes a “Non-Consenting Lender” (as defined below in this Section 3.06), then the Borrower may, on ten (10) Business Days’ prior written notice to the Facility Agent and such Lender, replace such Lender by causing such Lender to (and such Lender shall be obligated to) assign pursuant to Section 9.07(b) (with the assignment fee to be paid by the Borrower in such instance) all of its rights and obligations under this Agreement to one or more Eligible Assignees; provided, that neither the Facility Agent nor any Lender shall have any obligation to the Borrower to find a replacement Lender or other such Person and; provided, further, that in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01, such assignment would reasonably be expected to result in a reduction in such compensation or payments.      (b) Any Lender being replaced pursuant to Section 3.06(a) above shall (i) execute and deliver an Assignment and Assumption with respect to such Lender’s outstanding Loans and participations and (ii) deliver any Notes evidencing such Loans to the Borrower or Facility Agent. Pursuant to such Assignment and Assumption, (A) the Assignee Lender shall acquire all or a portion, as the case may be, of the assigning Lender’s outstanding Loans and participations, (B) all obligations of the Borrower owing to the assigning Lender relating to the Loans and participations so assigned shall be paid in full by the Assignee Lender to such assigning Lender concurrently with such Assignment and Assumption and (C) upon such payment and, if so requested by the Assignee Lender, delivery to the Assignee Lender of the appropriate Note or Notes executed by the Borrower, the Assignee Lender shall become a Lender hereunder and the assigning Lender shall cease to constitute a Lender hereunder with respect to such assigned Loans and participations, except with respect to indemnification provisions under this Agreement, which shall survive as to such assigning Lender.           (c) In the event that (i) the Borrower or the Facility Agent has requested the Lenders to consent to a waiver of the obligation of the Borrower to prepay the Loans and cancel the Facility pursuant to Section 2.03(b)(i)(A) or (B) and (ii) the Majority Lenders have agreed to such, waiver, then any Lender who does not agree to such waiver shall be deemed a “Non-Consenting Lender”.      SECTION 3.07. Survival. All of the Borrowers’ obligations under this Article III shall survive repayment of all Obligations hereunder. ARTICLE IV CONDITIONS PRECEDENT TO CLOSING DATE           The occurrence of the Closing Date and the obligations of each Lender to make Loans on the Closing Date are subject to the receipt by the Facility Agent of each of the agreements and other documents, and the conditions precedent set forth below, each of which shall be (x) in form and substance reasonably satisfactory to the Facility Agent and the Lenders and (y) if applicable, in full force and effect (unless, in each case, waived by each Lender):           (a) the Existing Loan Agreement duly executed and delivered by the parties hereto; 25 --------------------------------------------------------------------------------        (b) the following documents, each certified as indicated below:      (A) a copy of the articles of incorporation of the Borrower, together with any amendments thereto, certified by the Secretary of State of the Borrower’s state of organization dated as of a recent date;      (B) a copy of a certificate as to the good standing of, and payment of franchise taxes by, the Borrower from the Secretary of State of the Borrower’s state of organization dated as of a recent date; and      (C) a certificate of the Borrower, executed by an Authorized Officer certifying: (i) that attached to such certificate is a true and complete copy of the articles of incorporation and by-laws of the Borrower, in each case as amended and in effect on the date of such certificate, (ii) that attached to such certificate is a true and complete copy of resolutions duly adopted by the authorized governing body of the Borrower, authorizing the execution, delivery and performance of the Financing Documents and that such resolutions have not been modified, rescinded or amended and are in full force and effect and (iii) as to the incumbency and specimen signature of each officer, member or partner (as applicable) of the Borrower executing the Financing Documents (and the Facility Agent and each Lender may conclusively rely on such incumbency certification until it receives notice in writing from the Borrower);      (c) delivery of executed opinions from (x) Dewey Ballantine LLP, New York counsel to the Borrower, and Martin L. Ryan, Pennsylvania counsel to the Borrower, substantially in the form of Exhibit D-1, and (y) Milbank, Tweed, Hadley & McCloy LLP, special New York counsel to the Facility Agent, substantially in the form of Exhibit D-2;      (d) a certificate of an Authorized Officer of the Borrower, certifying that the Borrower is not and will not be, after giving effect to the Borrowing Request made on or as of the Closing Date, in breach of the covenants described in Section 6.01(j);      (e) copies of the regulatory approvals, authorizations and consents listed in Schedule 4(e) required in respect of the Keystone/Conemaugh Acquisition, certified to be true and correct copies by an officer of the Borrower;      (f) a written instruction executed by an Authorized Officer of the Borrower directing the Facility Agent to pay from the utilization of the Facility all fees, costs and expenses due and payable by the Borrower under the Financing Documents and any other fees and expenses as the Borrower shall have agreed or shall otherwise be required to pay to any Lender or the Facility Agent in connection herewith on or prior to the utilization of the Facility, including, without limitation, the fees and expenses of special New York counsel to the Facility Agent and the Joint Mandated Lead Arrangers, in connection with the negotiation, preparation, execution and delivery of this Agreement and the other Financing Documents; 26 --------------------------------------------------------------------------------        (g) evidence that the Equity Contribution in a minimum amount of not less than $141,000,000 shall have been funded in full in cash;      (h) certification from an Authorized Officer of the Borrower that the Keystone/ Conemaugh Acquisition has been or will be simultaneously completed;      (i) documentation and other information required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the USA Patriot Act, shall have been received by the Facility Agent and shall include, without limitation, evidence consisting of the following information (i) the Borrower’s full legal name, (ii) the Borrower’s address and mailing address, (iii) the Borrower’s W-9 forms including its tax identification number, (iv) the Borrower’s articles of incorporation, (v) a list of directors of the Borrower or list of such persons controlling the Borrower and (vi) an executed resolution or other such documentation stating who is authorized to open an account for the Borrower, in each case in form and substance reasonably satisfactory to the Facility Agent, and such other similar information relating to the Borrower and its Subsidiaries as may reasonably be requested by the Facility Agent;      (j) delivery of (i) the consolidated audited statements of income, stockholder’s equity and cash flows of the Borrower and its Subsidiaries for the most recent fiscal year of the Borrower; and (ii) unaudited consolidated balance sheets and related statements of income, stockholders’ equity and cash flows of the Borrower and its Subsidiaries for the for each fiscal quarter and portion of the fiscal year ended after the delivery of the financial statements delivered pursuant to clause (i) above, which financial statements shall be prepared in accordance with GAAP;      (k) payment of all fees due as of the Closing Date as the Borrower shall have agreed to pay to any Lender or the Facility Agent in connection herewith, including the fees and expenses of New York counsel to the Facility Agent, in connection with the negotiation, preparation, execution and delivery of this Agreement, the other Financing Documents and the transactions contemplated hereby and thereby;      (l) no Default or Event of Default has occurred and is continuing, or would result from the proposed Borrowing or from the application of the proceeds therefrom;      (m) the representations and warranties of the Borrower contained in Article V shall be true and correct in all material respects on and as of the date of the Closing Date (or to the extent that such representations and warranties specifically refer to an earlier date, as of such earlier date); and      (n) the Facility Agent shall have received a Borrowing Request in accordance with the requirements of Section 2.02. ARTICLE IV-A CONDITIONS PRECEDENT TO RESTATEMENT EFFECTIVE DATE           The amendment and restatement of the Agreement provided for hereby and the obligations of each Lender to make Loans on the Restatement Effective Date are subject to the 27 --------------------------------------------------------------------------------   receipt by the Facility Agent of counterparts of this Agreement signed on behalf of the Borrower, the Lenders and the Facility Agent. ARTICLE V REPRESENTATIONS AND WARRANTIES      The Borrower represents and warrants to the Facility Agent and the Lenders, as of the Closing Date and as of the Restatement Effective Date, as follows:      (a) The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania and is duly qualified to do business in all other jurisdictions where the nature of its business or the nature of property owned or used by it makes such qualification necessary (except where the failure to so qualify would not reasonably be expected to have a material adverse effect on the business, financial condition, operations or results of operations of the Borrower and its Subsidiaries, taken as a whole).      (b) The execution, delivery and performance by the Borrower of this Agreement and the other Financing Documents and the Keystone/Conemaugh Acquisition Agreement and the consummation of the Keystone/Conemaugh Acquisition are within the Borrower’s corporate powers, have been duly authorized by all necessary corporate action, and do not and will not contravene (i) the Borrower’s certificate of incorporation or by-laws, (ii) law, or (iii) any legal or contractual restriction binding on or affecting the Borrower; and such execution, delivery and performance do not and will not result in or require the creation of any Lien (other than pursuant to the Financing Documents) upon or with respect to any of its properties.      (c) No Governmental Approval is required, and except for consents, approvals, filings and notices set forth on Schedule 4(e) which have been obtained or made, no consent or approval of, filing with, or notice to, any Governmental Authority is necessary for the consummation of the Keystone/Conemaugh Acquisition as contemplated by the Keystone/Conemaugh Acquisition Agreement, other than such consents, approvals, filings or notices, which, if not obtained or made, would not have a Material Adverse Effect.      (d) This Agreement is, and each other Financing Document to which the Borrower will be a party when executed and delivered hereunder will be, the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in accordance with their respective terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).      (e) None of (i) the written financial or other information relating to the Borrower or any of its Subsidiaries and provided by the Borrower to the Facility Agent and/or the Lenders or (ii) the Information Memorandum, to the extent reflecting (x) information referred to in the foregoing clause (i) and/or (y) information contained in filings made by the Borrower or any of its Subsidiaries with any Governmental Authority (including the Securities and Exchange Commission, the Pennsylvania Public Utility Commission and the Federal Energy Regulatory Commission) or that has been made publicly available by the Borrower or any of its Subsidiaries (including information contained on the website of the Company or any of its Subsidiaries) or 28 --------------------------------------------------------------------------------   that is included in investor or management presentations prepared by the Borrower or any of its Subsidiaries contains any material misstatement of fact or omits to state any material fact necessary to make the statements contained therein not misleading in light of the circumstances under which they were made; provided, however, that the Borrower makes no representation or warranty as to any Financial Projections or other projections or forward-looking information.      (f) (i) The consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as at December 31, 2005, and the related statements of consolidated income, consolidated cash flows and consolidated retained earnings of the Borrower and its Consolidated Subsidiaries for the fiscal year then ended, together with the report thereon of Deloitte & Touche LLP, all as set forth in the Borrower’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and the unaudited consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as at the fiscal quarter then ended and the related unaudited statements of consolidated income, consolidated cash flows and consolidated retained earnings for the interim period then ended, all as set forth in the most recent Borrower’s Quarterly Report on Form 10-Q for the quarter then ended (the “Form 10-Q”), copies of each of which have been furnished to each Lender, fairly present (subject, in the case of such balance sheet and statement of income for the interim period then ended, to year-end adjustments) the consolidated financial condition of the Borrower and its Consolidated Subsidiaries as at such dates and the results of operations of the Borrower and its Consolidated Subsidiaries for the periods ended on such dates, all in accordance with GAAP; and (ii) except as disclosed in the Borrower’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 or the Form 10-Q, since December 31, 2005, there has been no material adverse change in the business, financial condition, operations, or results of operations of the Borrower and its Subsidiaries, taken as a whole, or in the Borrower’s ability to perform its obligations under this Agreement or any other Financing Document to which it is or will be a party.      (g) Except as disclosed in Schedule 5(g) attached hereto, in the Borrower’s most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2005 in the Form 10-Q, in the Borrower’s subsequently filed Quarterly Reports on Form 10-Q, or Current Reports on Form 8-K filed with the Securities and Exchange Commission, all of which have been heretofore provided by the Borrower to the Facility Agent and the Lenders, there is no pending or, to the Borrower’s knowledge, threatened action, suit, investigation, litigation or proceeding against or, to the Borrower’s knowledge, affecting the Borrower or any of its Subsidiaries or any of their respective properties before any court, governmental agency or arbitrator, that would reasonably be expected to materially adversely affect (i) the business, financial condition, operations or results of operations of the Borrower and its Subsidiaries, taken as a whole, or (ii) the legality, validity, or enforceability of, or the ability of the Borrower to perform its obligations under, this Agreement or any other Financing Document to which the Borrower is or is to be a party.      (h) No ERISA Event has occurred or is reasonably expected to occur with respect to any Plan of the Borrower or any of its ERISA Affiliates which would result in a material liability to the Borrower or any of its ERISA Affiliates. Schedule B (Actuarial Information) to the most recent annual report (Form 5500 Series) for each Plan of the Borrower or any of its ERISA Affiliates, copies of which have been filed with the Internal Revenue Service, is complete and accurate and fairly presents the funding status of such Plan in all material respects as of the date of such Schedule B. Since the date of such Schedule B there has been no material adverse change in such funding status and no “prohibited transaction” has occurred with respect thereto which is reasonably expected to result in a material liability to the Borrower or any of its ERISA Affiliates. Neither the Borrower nor any of its ERISA Affiliates has been notified by the sponsor 29 --------------------------------------------------------------------------------   of a Multiemployer Plan that such Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV of ERISA. Except as set forth in the financial statements referred to in paragraph (f) above, the Borrower and its Subsidiaries have no material liability with respect to “expected post retirement benefit obligations” within the meaning of Statement of Financial Accounting Standards No. 106. Each Plan and any related trust intended to qualify under Internal Revenue Code Section 401 or 501 are so qualified (except where the failure to so qualify would not reasonably be expected to have a Material Adverse Effect). There are no pending or threatened claims, actions or proceedings (other than claims for benefits in the normal course) relating to any Plan other than those that in the aggregate, if adversely determined, would not reasonably be expected to have a Material Adverse Effect.      (i) The Borrower has filed all tax returns (Federal, state and local) required to be filed and paid all taxes shown thereon to be due, including interest and penalties, or, to the extent the Borrower is contesting in good faith an assertion of liability based on such returns, has provided adequate reserves for payment thereof in accordance with GAAP.      (j) All of the outstanding common stock of Duquesne Light Company is owned by the Borrower.      (k) The operations and properties of the Borrower comply in all respects with all applicable laws (including ERISA and Environmental Laws), rules, regulations and orders of any governmental authority, the noncompliance with which would reasonably be expected to have a Material Adverse Effect, except to the extent that the Borrower is contesting the same in good faith and by appropriate proceedings.      (l) The Borrower is, and upon the consummation of the transactions contemplated under this Agreement will be, solvent, and has, and upon the consummation of such transactions will have, assets having a fair value in excess of the amount required to pay its probable liabilities on its existing Debt as they become absolute and matured, and does not have, and will not have, upon the consummation of such transactions, an unreasonably small capital for the conduct of its business as it is now being conducted.      (m) Following application of the proceeds of each Loan, not more than 25 percent of the value of the assets of the Borrower and its Subsidiaries on a consolidated basis will be margin stock (within the meaning of Regulation U issued by the Board).      (n) The Borrower is not engaged in the business of extending credit for the purpose of buying or carrying margin stock (within the meaning of Regulation U issued by the Board), and no proceeds of any Loan will be used to buy or carry any margin stock or to extend credit to others for the purpose of buying or carrying any margin stock.      (o) Neither the Borrower nor any of its Subsidiaries is, or after the making of any Loan or the application of the proceeds or repayment thereof, or the consummation of any of the other transactions contemplated hereby, will be, an “investment company” or a company “controlled” by an “investment company” (within the meaning of the Investment Company Act).      (p) No proceeds of any Loan will be used to acquire any equity security of a class that is registered pursuant to Section 12 of the Exchange Act, other than strictly for investment purposes. 30 --------------------------------------------------------------------------------   ARTICLE VI COVENANTS      SECTION 6.01. Affirmative Covenants . For so long as any Lender shall have any Commitment hereunder or any Loan or other Obligation hereunder or under any other Financing Document which is accrued and payable shall remain unpaid or unsatisfied, the Borrower shall:      (a) Payment of Taxes, Etc. Pay and discharge, before the same shall become delinquent, all taxes, assessments and governmental charges imposed upon it or upon its properties, except to the extent the Borrower is contesting the same in good faith and by appropriate proceedings and has set aside adequate reserves for the payment thereof in accordance with GAAP.      (b) Maintenance of Insurance. Maintain, or cause to be maintained, with responsible and reputable insurance companies and associations or through its own program of self-insurance, insurance covering the Borrower and its properties to such extent, and against such hazards and liabilities, as is customarily maintained by similar companies similarly situated.      (c) Preservation of Existence, Etc. Subject to Section 6.02(a), preserve and maintain its corporate existence, material rights (statutory and otherwise) and franchises, and take such other action as may be necessary or advisable to preserve and maintain its right to conduct its business in the states where it shall be conducting its business; provided, however, that the Borrower shall not be required to preserve and maintain any such right or franchise, or its right to conduct business in any such state, unless the failure to do so would reasonably be expected to have a Material Adverse Effect.      (d) Compliance with Laws, Etc. Comply in all respects with the requirements of all applicable laws (including ERISA and Environmental Laws), rules, regulations and orders of any governmental authority, except to the extent that (i) the Borrower is contesting the same in good faith by appropriate proceedings or (ii) any such non-compliance would not reasonably be expected to have a Material Adverse Effect.      (e) Inspection Rights. At any reasonable time and from time to time upon reasonable notice, permit or arrange for the Facility Agent, each of the Lenders, and their respective agents and representatives to examine and make copies of and abstracts from the records and books of account of, and the properties of, the Borrower and each of its Subsidiaries, and to discuss the affairs, finances and accounts of the Borrower and its Subsidiaries with the Borrower and its Subsidiaries and their respective officers, directors and accountants.      (f) Keeping of Books. Keep, and cause each of its Subsidiaries to keep, proper records and books of account, in which full and correct entries shall be made of all financial transactions of the Borrower and its Subsidiaries and the assets and business of the Borrower and its Subsidiaries, which records and books of account, in the case of the Borrower, shall be in accordance with GAAP.      (g) Maintenance of Properties, Etc. Maintain good and marketable title to all of its properties which are used or useful in the conduct of its business, and preserve, maintain, develop, and operate in substantial conformity with all laws and material contractual obligations, all of its properties which are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted, except where the failure to do so would not 31 --------------------------------------------------------------------------------   reasonably be expected to have a Material Adverse Effect; provided, however, that nothing herein shall prevent the Borrower from discontinuing, or causing the discontinuance of, the operation and maintenance of any of its properties if such discontinuance is, in the reasonable judgment of the Borrower, desirable in the conduct of its business and such discontinuance would not reasonably be expected to have a Material Adverse Effect.      (h) Further Assurances. Use all reasonable efforts to duly obtain Governmental Approvals required from time to time on or prior to such date as the same may become legally required, and thereafter to maintain all such Governmental Approvals in full force and effect, except to the extent that any such failure to obtain or maintain such Governmental Approvals would not reasonably be expected to have a Material Adverse Effect.      (i) Reporting Requirements. Furnish to the Facility Agent, in sufficient number of copies for each Lender, the following:      (i) as soon as possible and in any event within five (5) Business Days after the occurrence of each Default or Event of Default continuing on the date of such statement, a statement of an Authorized Officer of the Borrower setting forth details of such Default or Event of Default and the action that the Borrower proposes to take with respect thereto;      (ii) as soon as available and in any event within sixty (60) days after the end of each of the first three (3) fiscal quarters of each fiscal year of the Borrower, a consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as at the end of such quarter and statements of consolidated income, consolidated retained earnings and consolidated cash flows of the Borrower and its Consolidated Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, all in reasonable detail and duly certified by an Authorized Officer of the Borrower as having been prepared in accordance with GAAP, together with (A) a schedule in form satisfactory to the Facility Agent of the computations used by the Borrower in determining compliance with the covenants contained in Sections 6.01(j) and (k) and (B) a certificate of said officer stating that no Default or Event of Default has occurred and is continuing or, if an Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and the action that the Borrower proposes to take with respect thereto;      (iii) as soon as available and in any event within one hundred and twenty (120) days after the end of each fiscal year of the Borrower, a copy of the consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as at the end of such fiscal year and statements of consolidated income, consolidated retained earnings and consolidated cash flows of the Borrower and its Consolidated Subsidiaries for such fiscal year, in each case accompanied by the audit report of Deloitte & Touche LLP or another nationally-recognized independent public accounting firm, together with (A) a schedule in form satisfactory to the Facility Agent of the computations used by the Borrower in determining, as of the end such fiscal year, compliance with the covenants contained in Sections 6.01(j) and (k) and (B) a certificate of an Authorized Officer of the Borrower stating that no Default or Event of Default has occurred and is continuing or, if an Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and the action that the Borrower proposes to take with respect thereto; 32 --------------------------------------------------------------------------------        (iv) as soon as possible and in any event (A) within thirty (30) days after any ERISA Event described in clause (i) of the definition of ERISA Event with respect to any Material Plan of the Borrower or any ERISA Affiliate of the Borrower has occurred and (B) within ten (10) days after any other ERISA Event with respect to any Material Plan of the Borrower or any ERISA Affiliate of the Borrower has occurred, a statement of an Authorized Officer of the Borrower describing such ERISA Event and the action, if any, which the Borrower or such ERISA Affiliate proposes to take with respect thereto;      (v) promptly after receipt thereof by the Borrower or any of its ERISA Affiliates from the PBGC, copies of each notice received by the Borrower or such ERISA Affiliate of the PBGC’s intention to terminate any Material Plan of the Borrower or such ERISA Affiliate or to have a trustee appointed to administer any such Plan;      (vi) promptly and in any event within thirty (30) days after the filing thereof with the Internal Revenue Service, copies of each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) with respect to each Material Plan (if any) to which the Borrower or any ERISA Affiliate of the Borrower is a contributing employer;      (vii) promptly after receipt thereof by the Borrower or any of its ERISA Affiliates from a Multiemployer Plan sponsor, a copy of each notice received by the Borrower or such ERISA Affiliate concerning the imposition or amount of withdrawal liability in an aggregate principal amount of at least $5,000,000 pursuant to Section 4202 of ERISA in respect of which the Borrower or such ERISA Affiliate is reasonably expected to be liable:      (viii) promptly after the Borrower becomes aware of the occurrence thereof, notice of all actions, suits, proceedings or other events (A) of the type described in Schedule 5(g) or (B) for which the Facility Agent and the Lenders will be entitled to indemnity under Section 9.05;      (ix) promptly after the sending or filing thereof, copies of all proxy statements, financial statements and reports which the Borrower or any of its Subsidiaries sends to its public security holders (if any), copies of all regular, periodic and special reports which the Borrower or any of its Subsidiaries files with the Securities and Exchange Commission or any governmental authority which may be substituted therefor, or with any national securities exchange, pursuant to the Exchange Act, and copies of all final prospectuses with respect to any securities issued or to be issued by the Borrower or any of its Subsidiaries; and      (x) within a reasonable time (but in no event more than thirty (30) days) after any request therefor, such other information respecting the business, properties, results of operations, revenues, condition or operations, financial or otherwise, of the Borrower or any of its Subsidiaries (including schedules of the Borrower’s investments) as the Facility Agent or any Lender through the Facility Agent may from time to time reasonably request.      (j) Consolidated Leverage Ratio. Maintain at all times a ratio of Consolidated Debt to Consolidated Capital of not more than 0.65 to 1.0. 33 --------------------------------------------------------------------------------        (k) Coverage Ratio. Maintain, with respect to each twelve month period ending on the last day of each fiscal quarter of the Borrower (determined as of the last day of such fiscal quarter), a Coverage Ratio of at least 2.0 to 1.0.      (l) Maintain Ownership of Duquesne Light. Maintain at all times, directly or indirectly, legal and beneficial ownership of 100% of the issued and outstanding shares of common stock of Duquesne Light, free and clear of any Liens (other than Permitted Liens), unless, in the case of the requirement to maintain such shares free and clear of all Liens other than Permitted Liens, the Lenders shall be similarly and ratably secured pursuant to documents in form and substance satisfactory to the Facility Agent and the Lenders.      (m) Use of Proceeds. Use all Loans as follows: (i) first, to finance the Keystone/Conemaugh Acquisition, (ii) second, to finance fees, commissions, costs and expenses incurred by or on behalf of the Borrower in connection with the Keystone/Conemaugh Acquisition and the Financing Documents and (iii) third, for general corporate purposes of the Borrower, including the on-lending of such proceeds to its Subsidiaries and/or other Affiliates of the Borrower; provided that the Debt evidenced by any such on-lending shall be evidenced by promissory notes made by such Subsidiary or other Affiliate, as the case may be.      SECTION 6.02. Negative Covenants. For so long as any Lender shall have any Commitment hereunder or any Loan or other Obligation hereunder or under any other Financing Document which is accrued and payable shall remain unpaid or unsatisfied, the Borrower shall not:      (a) Mergers, Etc. Except as contemplated by the Merger Agreement, merge with or into or consolidate with or into any other Person, except that the Borrower may merge or consolidate with or into any other Person; provided that immediately after giving effect thereto, (i) no event shall occur and be continuing that constitutes an Default or an Event of Default, (ii) the Borrower is the surviving corporation, (iii) this Agreement remains in full force and effect, and (iv) the surviving corporation is in compliance with the ratio set forth in Section 6.01(j).      (b) Sales, Etc., of Assets. Sell, lease, transfer, assign or otherwise dispose of all or substantially all of its assets, or permit any of its Significant Subsidiaries to sell, lease, transfer, assign or otherwise dispose of all or substantially all of its assets, except for sales, leases, transfers, assignments, and other dispositions of all or substantially all of the Borrower’s or any such Significant Subsidiary’s assets to the Borrower or any other Significant Subsidiary of the Borrower, in each case for good and valuable consideration (as determined in the reasonable judgment of the Borrower’s or such Significant Subsidiary’s, as the case may be, board of directors, and which consideration may include the assumption of obligations of such Significant Subsidiary); provided in each case that no Default or Event of Default shall have occurred and be continuing after giving effect thereto. ARTICLE VII DEFAULTS      SECTION 7.01. Events of Default. If any of the following events (each an “Event of Default”) shall occur and be continuing, the Facility Agent and the Lenders shall be entitled to exercise the remedies set forth in Section 7.02: 34 --------------------------------------------------------------------------------        (a) The Borrower shall fail to pay any principal of any Loan or any interest thereon, fees or other amounts payable hereunder or under any other Financing Document within three (3) days after the same becomes due and payable; or      (b) Any representation or warranty made by or on behalf of the Borrower in any Financing Document or certificate or other writing delivered pursuant thereto shall prove to have been incorrect in any material respect when made or deemed made; or      (c) The Borrower shall fail to perform or observe any term or covenant on its part to be performed or observed contained in Section 6.01(c), Section 6.01(i)(i), Section 6.01(j), Section 6.01(k), Section 6.01(l), Section 6.01(m) or Section 6.02; or      (d) The Borrower shall fail to perform or observe any other term or covenant on its part to be performed or observed contained in any Financing Document and any such failure shall remain unremedied, after written notice thereof shall have been given to the Borrower by the Facility Agent, for a period of fifteen (15) days; or      (e) The Borrower or any of its Significant Subsidiaries (including Duquesne Light) shall fail to pay any of its Debt (including any interest or premium thereon but excluding Debt incurred under this Agreement) aggregating $50,000,000 or more, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in any agreement or instrument relating to such Debt; or any other default under any agreement or instrument relating to any such Debt, or any other event, shall occur and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such default or event is to accelerate, or to permit the acceleration of, the maturity of such Debt; or any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment) prior to the stated maturity thereof as a result of a default or similar adverse event; or      (f) The Borrower or any Significant Subsidiary shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make an assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower or any Significant Subsidiary seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of its debts under any law relating to bankruptcy, insolvency, or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property and, in the case of a proceeding instituted against the Borrower or such Significant Subsidiary, any such proceeding shall remain undismissed or unstayed for a period of sixty (60) days or any of the actions sought in such proceeding (including the entry of an order for relief against the Borrower or such Significant Subsidiary or the appointment of a receiver, trustee, custodian or other similar official for the Borrower or such Significant Subsidiary or any of its property) shall occur; or the Borrower or any Significant Subsidiary shall take any corporate or other action to authorize any of the actions set forth above in this subsection (f); or      (g) Any judgment or order (other than a judgment or order for a rate refund) shall be rendered against the Borrower, any of its Significant Subsidiaries (including Duquesne Light) or their respective properties for the payment of money exceeding applicable insurance coverage (as to which such Person has received no notice or claim of protest, dishonor or non-payment) by 35 --------------------------------------------------------------------------------   $50,000,000, and either (A) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (B) there shall be any period of thirty (30) consecutive days during which such judgment or order shall remain undischarged and there shall be no stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, in effect; or      (h) Any material provision of this Agreement or any other Financing Document to which the Borrower is a party shall for any reason, except to the extent permitted by the express terms hereof or thereof, cease to be valid and binding on or enforceable against the Borrower, or the Borrower shall so assert in writing; or      (i) Any Governmental Approval shall be rescinded, revoked, otherwise terminated, or amended or modified in any manner which is materially adverse to the interests of the Lenders and the Facility Agent; or      (j) The Borrower or any of its ERISA Affiliates shall fail to pay when due an amount or amounts aggregating in excess of $20,000,000 which it shall have become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate a Material Plan, other than a Multiemployer Plan, shall be filed under Title IV of ERISA by the Borrower or any of its ERISA Affiliates, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any Material Plan, other than a Multiemployer Plan, or a proceeding shall be instituted by a fiduciary of any Material Plan which is a Multiemployer Plan against the Borrower or any of its ERISA Affiliates to enforce an obligation of the Borrower or any of its ERISA Affiliates exceeding $20,000,000 under Section 515 of ERISA in connection with a withdrawal or alleged withdrawal from such Multiemployer Plan or to take any action under Section 4219(c)(5) of ERISA and any such proceeding shall not have been dismissed within thirty (30) days thereafter; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated; or any other ERISA Event shall occur that, in the opinion of the Majority Lenders, would reasonably be expected to have a Material Adverse Effect.      SECTION 7.02. Remedies. If any Event of Default has occurred and is continuing, then the Facility Agent shall at the request, or may with the consent, of the Majority Lenders, upon notice to the Borrower (i) declare the obligation of each Lender to make or convert Loans to be terminated, whereupon the same shall forthwith terminate and/or (ii) declare the principal amount outstanding hereunder, all interest thereon and all other amounts payable under this Agreement and the other Financing Documents to be forthwith due and payable, whereupon the principal amount outstanding hereunder, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under the Federal Bankruptcy Code, the principal amount outstanding hereunder, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower. 36 --------------------------------------------------------------------------------   ARTICLE VIII FACILITY AGENT      SECTION 8.01. Appointment and Authorization of Facility Agent. Each Lender hereby appoints Barclays Bank PLC as the Facility Agent hereunder and irrevocably appoints, designates and authorizes the Facility Agent to take such action on its behalf under the provisions of this Agreement and each other Financing Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Financing Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere herein or in any other Financing Document, the Facility Agent shall have no duties or responsibilities, except those expressly set forth herein, nor shall the Facility Agent have or be deemed to have any fiduciary relationship with any Lender or participant, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Financing Document or otherwise exist against the Facility Agent. Without limiting the generality of the foregoing sentence, the use of the term “agent” herein and in the other Financing Documents with reference to the Facility Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.      SECTION 8.02. Delegation of Duties. The Facility Agent may execute any of its duties under this Agreement or any other Financing Document by or through agents, employees or attorneys-in-fact including for the purpose of the Borrowing, such sub-agents as shall be deemed necessary by the Facility Agent and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. The Facility Agent shall not be responsible for the negligence or misconduct of any agent or sub-agent or attorney-in-fact that it selects in the absence of gross negligence or willful misconduct (as determined in the final judgment of a court of competent jurisdiction).      SECTION 8.03. Liability of Facility Agent. No Agent-Related Person shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Financing Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct, as determined by the final judgment of a court of competent jurisdiction, in connection with its duties expressly set forth herein), or (b) be responsible in any manner to any Lender or participant for any recital, statement, representation or warranty made by the Borrower, any Subsidiary or any officer thereof, contained herein or in any other Financing Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Facility Agent under or in connection with, this Agreement or any other Financing Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Financing Document, or for any failure of the Borrower or any other party to any Financing Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender or participant to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Financing Document, or to inspect the properties, books or records of the Borrower, any Subsidiary or any Affiliate thereof. 37 --------------------------------------------------------------------------------        SECTION 8.04. Reliance by Facility Agent.      (a) The Facility Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, communication, signature, resolution, representation, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, electronic mail message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to the Borrower), independent accountants and other experts selected by the Facility Agent. The Facility Agent shall be fully justified in failing or refusing to take any action under any Financing Document unless it shall first receive such advice or concurrence of the Majority Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Facility Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Financing Document in accordance with a request or consent of the Majority Lenders (or such greater number of Lenders as may be expressly required hereby in any instance) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders.      (b) For purposes of determining compliance with the conditions specified in Article IV, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Facility Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.      SECTION 8.05. Notice of Default. The Facility Agent shall not be deemed to have knowledge or notice of the occurrence of any Default, except with respect to Defaults in the payment of principal, interest and fees required to be paid to the Facility Agent for the account of the Lenders, unless the Facility Agent shall have received written notice from a Lender or the Borrower referring to this Agreement, describing such Default and stating that such notice is a “notice of default.” The Facility Agent will notify the Lenders of its receipt of any such notice. The Facility Agent shall take such action with respect to any Event of Default as may be directed by the Majority Lenders in accordance with Article VII; provided that unless and until the Facility Agent has received any such direction, the Facility Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Event of Default as it shall deem advisable or in the best interest of the Lenders.      SECTION 8.06. Credit Decision; Disclosure of Information by the Facility Agent. Each Lender acknowledges that no Agent-Related Person has made any representation or warranty to it, and that no act by the Facility Agent hereafter taken, including any consent to and acceptance of any assignment or review of the affairs of the Borrower or any Affiliate thereof, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender as to any matter, including whether Agent-Related Persons have disclosed material information in their possession. Each Lender represents to the Facility Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrower and its Subsidiaries, and all applicable bank or other regulatory Laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to 38 --------------------------------------------------------------------------------   extend credit to the Borrower hereunder. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Financing Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrower. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Facility Agent herein, the Facility Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of Borrower or any of its Affiliates which may come into the possession of any Agent-Related Person.      SECTION 8.07. Indemnification of the Facility Agent. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand the Facility Agent (to the extent the Facility Agent is required to be but is not reimbursed by or on behalf of the Borrower and without limiting the obligation of the Borrower to do so), pro rata (at the time such indemnity is sought), and hold harmless the Facility Agent from and against any and all Indemnified Liabilities incurred by it; provided that no Lender shall be liable for the payment to any the Facility Agent of any portion of such Indemnified Liabilities resulting from the Facility Agent’s own gross negligence or willful misconduct, as determined by the final judgment of a court of competent jurisdiction; provided that no action taken in accordance with the directions of the Majority Lenders (or such other number or percentage of the Lenders as shall be required by the Financing Documents) shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section 8.07. In the case of any investigation, litigation or proceeding giving rise to any Indemnified Liabilities, this Section 8.07 applies whether any such investigation, litigation or proceeding is brought by any Lender or any other Person. Without limitation of the foregoing, each Lender shall reimburse the Facility Agent upon demand for its ratable share (determined at the time such reimbursement is sought) of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Facility Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Financing Document, or any document contemplated by or referred to herein, to the extent that the Facility Agent is not reimbursed for such expenses by or on behalf of the Borrower. The undertaking in this Section 8.07 shall survive payment of all Obligations and the resignation of the Facility Agent.      SECTION 8.08. Facility Agent in its Individual Capacity. Barclays Bank PLC and its Affiliates may make loans to, accept deposits from, acquire interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with the Borrower and its Affiliates as though Barclays Bank PLC were not the Facility Agent hereunder and without notice to or consent of the Lenders. The Lenders acknowledge that, pursuant to such activities, Barclays Bank PLC or its Affiliates may receive information regarding the Borrower or its Affiliates (including information that may be subject to confidentiality obligations in favor of the Borrower or such Affiliates) and acknowledge that the Facility Agent shall be under no obligation to provide such information to them.      SECTION 8.09. Successor Agent. The Facility Agent may resign as the Facility Agent upon thirty (30) days’ notice to the Lenders and the Borrower. If the Facility Agent resigns under this Agreement, the Majority Lenders shall appoint a successor agent for the 39 --------------------------------------------------------------------------------   Lenders, which successor agent shall be consented to by the Borrower at all times other than during the occurrence and continuance of a Default (which consent of the Borrower shall not be unreasonably withheld or delayed). If no successor agent is appointed prior to the effective date of the resignation of the Facility Agent, the Facility Agent may appoint, after consulting with the Lenders and subject to the consent of the Borrower as provided for above, a successor agent from among the Lenders. Upon the acceptance of its appointment as successor agent hereunder, the Person acting as such successor agent shall succeed to all the rights, powers and duties of the retiring Facility Agent and the term “Facility Agent,” shall mean such successor Facility Agent, and the retiring Facility Agent’s appointment, powers and duties as the Facility Agent shall be terminated. After the retiring Facility Agent’s resignation hereunder as the Facility Agent, the provisions of this Article VIII and Section 9.04 and Section 9.05 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Facility Agent under this Agreement. If no successor agent has accepted appointment as the Facility Agent by the date which is thirty (30) days following the retiring Facility Agent’s notice of resignation, the retiring Facility Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Facility Agent hereunder until such time, if any, as the Majority Lenders appoint a successor agent as provided for above. Upon the acceptance of any appointment as the Facility Agent hereunder by a successor, the Facility Agent shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges, and duties of the retiring Facility Agent, and the retiring Facility Agent shall be discharged from its duties and obligations under the Financing Documents. After the retiring Facility Agent’s resignation hereunder as the Facility Agent, the provisions of this Article VIII shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Facility Agent.      SECTION 8.10. Facility Agent May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Borrower or any of its Subsidiaries, the Facility Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Facility Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:      (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Facility Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Facility Agent and their respective agents and counsel and all other amounts due the Lenders and the Facility Agent under Section 2.06 and Section 9.04) allowed in such judicial proceeding; and      (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Facility Agent and, in the event that the Facility Agent shall consent to the making of such payments directly to the Lenders, to pay to the Facility Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Facility Agent and its agents and counsel, and any other amounts due the Facility Agent under Section 2.06 and Section 9.04. 40 --------------------------------------------------------------------------------        Nothing contained herein shall be deemed to authorize the Facility Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Facility Agent to vote in respect of the claim of any Lender in any such proceeding.      SECTION 8.11. Other Agents; Arrangers and Managers. None of the Lenders or other Persons identified on the facing page or signature pages of this Agreement as “joint bookrunner” or “arranger” shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders. Without limiting the foregoing, none of the Lenders or other Persons so identified shall have or be deemed to have any fiduciary relationship with any Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders or other Persons so identified in deciding to enter into this Agreement or in taking or not taking action hereunder. ARTICLE IX MISCELLANEOUS      SECTION 9.01. Amendments, Etc. Except as otherwise set forth in this Agreement, including, for the avoidance of doubt, Section 9.19, no amendment or waiver of any provision of this Agreement, and no consent to any departure by the Borrower or any of its Subsidiaries therefrom, shall be effective unless in writing signed by the Majority Lenders (or by the Facility Agent acting on the written instructions of the Majority Lenders) and the Borrower, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that, no such amendment, waiver or consent shall:      (a) extend or increase the Commitment of any Lender without the written consent of each Lender directly affected thereby (it being understood that a waiver of any condition precedent set forth in Article IV, or the waiver of any Default shall not constitute an extension or increase of any Commitment of any Lender);      (b) postpone any date scheduled for, or reduce or forgive the amount of, any payment of principal or interest under Section 2.04 or Section 2.05, or waive any Event of Default under Section 7.01(a) or, following the acceleration pursuant to Section 7.02 of amounts payable hereunder, any other Event of Default, without the written consent of each Lender directly affected thereby;      (c) reduce or forgive the principal of, or the rate of interest specified herein on, any Loan or any fees (including fees set forth in Section 2.06 or other amounts payable hereunder or under any other Financing Document), or extend, postpone or waive the date upon which any fees are to be paid, without the written consent of each Lender directly affected thereby; or      (d) change any provision of this Section 9.01, the definition of “Majority Lenders” or Section 2.02(a)(ii), Section 2.03(b), Section 2.09(a), or Section 2.10 without the written consent of each Lender affected thereby; and provided, further that no amendment, waiver or consent shall, unless in writing and signed by the Facility Agent in addition to the Lenders required above, affect the rights or duties of, or any fees or other amounts payable to, the Facility Agent under this Agreement. 41 --------------------------------------------------------------------------------        SECTION 9.02. Notices and Other Communications; Facsimile Copies.      (a) General. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder or under any other Financing Document shall be in writing (including by facsimile transmission). All such written notices shall be mailed, faxed or delivered to the applicable address, facsimile number or electronic mail address, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:      (1) if to the Borrower, any Subsidiary or the Facility Agent, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 9.02 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties; and      (2) if to any Lender, to the address, facsimile number, electronic mail address or telephone number specified for such Lender on Schedule 9.02 or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such Lender in a notice to the Borrower and the Facility Agent. All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the relevant party hereto and (ii) (A) if delivered by hand or by courier, when signed for by or on behalf of the relevant party hereto; (B) if delivered by mail, four (4) Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic mail (which form of delivery is subject to the provisions of Section 9.02(c)), when delivered; provided that notices and other communications to the Facility Agent pursuant to Article II shall not be effective until actually received by such Person. In no event shall a voice mail message be effective as a notice, communication or confirmation hereunder.      (b) Effectiveness of Facsimile Documents and Signatures. Financing Documents may be transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures shall, subject to applicable Law, have the same force and effect as manually signed originals and shall be binding on each party to Financing Document.      (c) Reliance by Facility Agent and Lenders. The Facility Agent and the Lenders shall be entitled to rely and act upon any notices purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify each Agent-Related Person and each Lender from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrowers in the absence of gross negligence, bad faith or willful misconduct, in accordance with Section 9.05. All telephonic notices to the Facility Agent may be recorded by the Facility Agent, and each of the parties hereto hereby consents to such recording.      SECTION 9.03. No Waiver; Cumulative Remedies. No failure by any Lender or the Facility Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Financing Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or 42 --------------------------------------------------------------------------------   privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Financing Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by Law.      SECTION 9.04. Attorney Costs and Expenses. The Borrower agrees (a) to pay or reimburse the Facility Agent, the Joint Mandated Lead Arrangers and each of the Lenders for all reasonable and documented out-of-pocket costs and expenses incurred in connection with the preparation, negotiation, syndication and execution of this Agreement and the other Financing Documents, and any amendment, waiver, consent or other modification of the provisions hereof and thereof (whether or not the transactions contemplated hereby and thereby are consummated), and the consummation and administration of the transactions contemplated hereby and thereby, including all Attorney Costs of Milbank, Tweed, Hadley & McCloy LLP, any one (1) local counsel retained by the Facility Agent and any experts retained in connection herewith and therewith, and (b) to pay or reimburse the Facility Agent, the Joint Mandated Lead Arrangers and each Lender for all documented out-of-pocket costs and expenses incurred in connection with the enforcement of any rights or remedies under this Agreement or the other Financing Documents (including all such costs and expenses incurred during any legal proceeding, including any proceeding under any Debtor Relief Law, and including all Attorney Costs of counsel to the Facility Agent). The foregoing costs and expenses shall include all reasonable search, filing and recording charges and fees and taxes related thereto, and other reasonable and documented out-of-pocket expenses incurred by the Facility Agent. The agreements in this Section 9.04 shall survive the termination of the Commitments and repayment of all Obligations. All amounts due under this Section 9.04 shall be paid within ten (10) Business Days of receipt by the Borrower of an invoice relating thereto setting forth such expenses in reasonable detail. If the Borrower fails to pay when due any costs, expenses or other amounts payable by it hereunder or under any Financing Document, such amount may be paid on behalf of the Borrower by the Facility Agent in its sole discretion.      SECTION 9.05. Indemnification by the Borrower.      (a) Whether or not the transactions contemplated hereby are consummated, the Borrower shall indemnify and hold harmless each Agent-Related Person, each Lender and their respective Affiliates, directors, officers, employees, agents, representatives, trustees and attorneys-in-fact (collectively, the “Indemnitees”) from and against any and all liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever which may at any time be imposed on, incurred by or asserted against any such Indemnitee in any way relating to or arising out of or in connection with (a) the execution, delivery, enforcement, performance or administration of any Financing Document or any other agreement, letter or instrument delivered in connection with the transactions contemplated thereby, (b) any Commitment or Loan or the use or proposed use of the proceeds therefrom, (c) any actual or alleged presence or release of Hazardous Substances on or from any property currently or formerly owned or operated by the Borrower or any Subsidiary, or any Environmental Liability related in any way to the Borrower or any Subsidiary, or (d) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory (including any investigation of, preparation for or defense of any pending or threatened claim, investigation, litigation or proceeding) (all the foregoing, collectively, the “Indemnified Liabilities”), in all cases, whether or not caused by or arising, in whole or in part, out of the negligence of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such liabilities, obligations, losses, damages, penalties, claims, demands, actions, 43 --------------------------------------------------------------------------------   judgments, suits, costs, expenses or disbursements resulted from (i) the gross negligence, bad faith or willful misconduct of such Indemnitee or of any affiliate, director, officer, employee, agent, trustee or attorney-in-fact of such Indemnitee or (ii) any actions or claims for the breach by any Indemnitee of any of its obligations under the Financing Documents that are successful in whole or in part, in each case, as finally determined by a court of competent jurisdiction. No Indemnitee shall be liable for any damages arising from the use by others of any information or other materials obtained through intralinks or other similar information transmission systems in connection with this Agreement, nor shall any Indemnitee or the Borrower have any liability for any special, punitive, indirect or consequential damages relating to this Agreement or any other Financing Document or arising out of its activities in connection herewith or therewith. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 9.05 applies, such indemnity shall be effective whether or not any of the transactions contemplated hereunder or under any of the other Financing Documents is consummated. All amounts due under this Section 9.05 shall be paid within ten (10) Business Days after demand therefor; provided, however, that such Indemnitee shall promptly refund such amount to the extent that there is a final judicial or arbitral determination that such Indemnitee was not entitled to indemnification or contribution rights with respect to such payment pursuant to the express terms of this Section 9.05. The agreements in this Section 9.05 shall survive the resignation of the Facility Agent, the replacement of any Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all Obligations.      (b) In the event that any claim or demand by a third party for which the Borrower may be required to indemnify an Indemnitee hereunder (a “Claim”) is asserted against or sought to be collected from any Indemnitee by a third party, such Indemnitee shall as promptly as practicable notify the Borrower in writing of such Claim, and such notice shall specify (to the extent known) in reasonable detail the amount of such Claim and any relevant facts and circumstances relating thereto; provided, however, that any failure to give such prompt notice or to provide any such facts and circumstances shall not constitute a waiver of any rights of the Indemnitee, except to the extent that the rights of the Borrower are actually prejudiced thereby.      (c) The Borrower shall be entitled to appoint counsel of its choice at the expense of the Borrower to represent an Indemnitee in any action for which indemnification is sought (in which case the Borrower shall not thereafter be responsible for the fees and expenses of any separate counsel retained by that Indemnitee except as set forth below); provided, however, that such counsel shall be satisfactory to such Indemnitee. Notwithstanding the Borrower’s election to appoint counsel to represent an Indemnitee in any action, such Indemnitee shall have the right to employ separate counsel (including local counsel, but only one such counsel in any jurisdiction in connection with any action), and the Borrower shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the Borrower to represent the Indemnitee would present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or targets of, any such action include both the Indemnitee and the Borrower and the Indemnitee shall have reasonably concluded that there may be legal defenses available to it and/or other Indemnitees which are different from or additional to those available to the Borrower; (iii) the Borrower shall not have employed counsel to represent the Indemnitee within a reasonable time after notice of the institution of such action; or (iv) the Borrower shall authorize the Indemnitee to employ separate counsel at the Borrower’s expense. The Borrower shall not be liable for any settlement or compromise of any action or claim by an Indemnitee affected without the Borrower’s prior written consent, which consent shall not be unreasonably withheld. 44 --------------------------------------------------------------------------------        SECTION 9.06. Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made to the Facility Agent or any Lender, or the Facility Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Facility Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the Facility Agent upon demand its applicable share of any amount so recovered from or repaid by the Facility Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the applicable Overnight Rate from time to time in effect.      SECTION 9.07. Successors and Assigns.      (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Assignee in accordance with the provisions of Section 9.07(b)(1), (ii) by way of participation in accordance with the provisions of Section 9.07(e), or (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section 9.07(g). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Assignees, Participants to the extent provided in Section 9.07(e) and, to the extent expressly contemplated hereby, the Indemnitees) any legal or equitable right, remedy or claim under or by reason of this Agreement.      (b) Subject to the conditions set forth in paragraph (b)(1) below, any Lender may assign to one or more assignees (“Assignees”) all or a portion of its rights and obligations under this Agreement (including all or a portion of the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld or delayed) of the Facility Agent and the Borrower; provided that (i) no consent of the Borrower or the Facility Agent shall be required for an assignment to a Lender, an Affiliate of a Lender, or an Approved Fund and (ii) no consent of the Borrower shall be required if an Event of Default has occurred and is continuing; and provided, further, that the Borrower will be deemed to have consented to any proposed assignment if the Borrower has not rejected the proposed assignment within two (2) Business Days of its receipt of the request for consent.      (1) Assignments shall be subject to the following additional conditions:      (i) except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Loans, the amount of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Facility Agent) shall not be less than $5,000,000 unless each of the Borrower and the Facility Agent otherwise consent which consents will be deemed given if the Borrower or the Facility Agent, as the case may be, has not specifically rejected an assignment request within two (2) Business Days after its receipt 45 --------------------------------------------------------------------------------   of such request for consent); provided, that (1) no such consent of the Borrower shall be required if an Event of Default has occurred and is continuing and (2) such amounts shall be aggregated in respect of each Lender and its Affiliates or Approved Funds, if any;      (ii) the parties to each assignment shall execute and deliver to the Facility Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500; and      (iii) the Assignee, if it shall not be a Lender, shall provide to the Facility Agent its address, facsimile number, electronic mail address or telephone number for receipt of notices and other communications hereunder. Each assignment under this paragraph (b) shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement.      (c) Subject to acceptance and recording thereof by the Facility Agent pursuant to Section 9.07(d), from and after the effective date specified in each Assignment and Assumption, the Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Section 3.01, Section 3.04, Section 9.04 and Section 9.05 with respect to facts and circumstances occurring prior to the effective date of such assignment). Upon request, and the surrender by the assigning Lender of its Note, the Borrower (at its expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with clause (b) and this clause (c) of this Section 9.07 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 9.07(e).      (d) The Facility Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Facility Agent’s Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and related interest amounts) of the Loans and amounts owing to each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, absent manifest error, and the Borrower, the Facility Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Facility Agent and any Lender, at any reasonable time and from time to time upon reasonable prior notice.      (e) Any Lender may at any time, without the consent of, or notice to, the Borrower or the Facility Agent, sell participations to any Person (other than a natural person) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Facility Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or 46 --------------------------------------------------------------------------------   instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and the other Financing Documents and to approve any amendment, modification or waiver of any provision of this Agreement or the other Financing Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 9.01 that directly affects such Participant. Subject to Section 9.07(f), the Borrower agrees that each Participant shall be entitled to the benefits of Section 3.01, Section 3.04 and Section 2.07(b) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 9.07(c) but (x) shall not be entitled to recover greater amounts under any such Section than the selling Lender would be entitled to recover and (y) shall be subject to replacement by the Borrower under Section 3.06 to the same extent as if it were a Lender. To the extent permitted by applicable Law, each Participant also shall be entitled to the benefits of Section 9.09 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.10 as though it were a Lender.      (f) A Participant shall not be entitled to receive any greater payment under any of Section 3.01, Section 3.04 and Section 2.07(b) than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant shall not be entitled to the benefits of Section 3.01 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees to be subject to the provisions of Section 3.01 as though it were a Lender.      (g) Any Lender may at any time, without the consent of the Borrower or the Facility Agent, pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided, that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.      (h) Notwithstanding anything to the contrary contained herein, (i) any Lender may in accordance with applicable Law create a security interest in all or any portion of the Loans owing to it and the Note, if any held by it and (ii) any Lender that is a Fund may, without the consent of the Borrower or the Facility Agent, create a security interest in all or any portion of the Loans owing to it and the Note, if any, held by it to the trustee for holders of obligations owed, or securities issued, by such Fund as security for such obligations or securities; provided that unless and until such trustee actually becomes a Lender in compliance with the other provisions of this Section 9.07, (x) no such pledge shall release the pledging Lender from any of its obligations under the Financing Documents and (y) such trustee shall not be entitled to exercise any of the rights of a Lender under the Financing Documents even though such trustee may have acquired ownership rights with respect to the pledged interest through foreclosure or otherwise.      SECTION 9.08. Confidentiality. Each of the Facility Agent and the Lenders agrees to maintain the confidentiality of the Information, except that Information may be disclosed (a) to its Affiliates and its Affiliates’ directors, officers, employees, trustees, investment advisors and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential); (b) to the extent required to be disclosed to any Governmental Authority; (c) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process; (d) to any other party to this Agreement, 47 --------------------------------------------------------------------------------   (e) subject to an agreement containing provisions substantially the same as those of this Section 9.08 (or as may otherwise be reasonably acceptable to the Borrower), to any pledgee referred to in Section 9.07(g), Assignee of or Participant in, or any prospective Assignee of or Participant in, any of its rights or obligations under this Agreement; (f) with the written consent of the Borrower; (g) to the extent such Information becomes publicly available other than as a result of a breach of this Section 9.08; (h) to any Governmental Authority or examiner (including the National Association of Insurance Commissioners or any other similar organization) regulating any Lender, to the extent requested by such Governmental Authority or examiner; or (i) to any rating agency when required by it (it being understood that, prior to any such disclosure, such rating agency shall undertake to preserve the confidentiality of any Information relating to the Borrower received by it from such Lender). In addition, the Facility Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry, and service providers to the Facility Agent and the Lenders in connection with the administration and management of this Agreement, the other Financing Documents, the Commitments and the Loans. For the purposes of this Section 9.08, “Information” means all information received from the Borrower relating to the Borrower or any Subsidiary or its business, other than any such information that is publicly available to the Facility Agent or any Lender prior to disclosure by the Borrower other than as a result of a breach of this Section 9.08; provided that, in the case of information received from the Borrower after the date hereof, such information (i) is clearly identified at the time of delivery as confidential or (ii) is delivered pursuant to Section 6.01 hereof.      SECTION 9.09. Setoff. In addition to any rights and remedies of the Lenders provided by Law, upon the occurrence and during the continuance of any Event of Default, each Lender and each of its Affiliates are authorized at any time and from time to time, without prior notice to the Borrower or any of its Subsidiaries, any such notice being waived by the Borrower (on its own behalf and on behalf of its Subsidiaries) to the fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other Debt at any time owing by, such Lender and its Affiliates to or for the credit or the account of the Borrower and its Subsidiaries against any and all Obligations owing to such Lender and its Affiliates hereunder or under any other Financing Document, now or hereafter existing, irrespective of whether or not the Facility Agent or such Lender or Affiliate shall have made demand under this Agreement or any other Financing Document and although such Obligations may be contingent or unmatured or denominated in a currency different from that of the applicable deposit or Debt. Each Lender agrees promptly to notify the Borrower and the Facility Agent after any such set off and application made by such Lender; provided, that the failure to give such notice shall not affect the validity of such setoff and application. The rights of the Facility Agent and each Lender under this Section 9.09 are in addition to other rights and remedies (including other rights of setoff) that the Facility Agent and such Lender may have.      SECTION 9.10. Counterparts. This Agreement and each other Financing Document may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery by telecopier or other means of electronic delivery of an executed counterpart of a signature page to this Agreement and each other Financing Document shall be effective as delivery of an original executed counterpart of this Agreement and such other Financing Document. The Facility Agent may also require that any such documents and signatures delivered by telecopier or other means of electronic delivery be confirmed by a manually signed original thereof; provided, that the failure to request or deliver 48 --------------------------------------------------------------------------------   the same shall not limit the effectiveness of any document or signature delivered by telecopier or other means of electronic delivery.      SECTION 9.11. Integration. This Agreement, together with the other Financing Documents, comprises the complete and integrated agreement of the parties on the subject matter hereof and thereof and supersedes all prior agreements, written or oral, on such subject matter. In the event of any conflict between the provisions of this Agreement and those of any other Financing Document, the provisions of this Agreement shall control; provided that the inclusion of supplemental rights or remedies in favor of the Facility Agent or the Lenders in any other Financing Document shall not be deemed a conflict with this Agreement. Each Financing Document was drafted with the joint participation of the respective parties thereto and shall be construed neither against nor in favor of any party, but rather in accordance with the fair meaning thereof.      SECTION 9.12. Survival of Representations and Warranties. All representations and warranties made hereunder and in any other Financing Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Facility Agent and each Lender, regardless of any investigation made by the Facility Agent or any Lender or on their behalf and notwithstanding that the Facility Agent or any Lender may have had notice or knowledge of any Default at the time of the Borrowing.      SECTION 9.13. Severability. If any provision of this Agreement or the other Financing Documents is held to be illegal, invalid or unenforceable, the legality, validity and enforceability of the remaining provisions of this Agreement and the other Financing Documents shall not be affected or Impaired thereby. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.      SECTION 9.14. GOVERNING LAW.      (a) THIS AGREEMENT AND EACH OTHER FINANCING DOCUMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.      (b) ANY LEGAL ACTION OR PROCEEDING ARISING UNDER ANY FINANCING DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY FINANCING DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER, EACH AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER, EACH AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY FINANCING DOCUMENT OR OTHER DOCUMENT RELATED THERETO. 49 --------------------------------------------------------------------------------        SECTION 9.15. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY FINANCING DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY FINANCING DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 9.15 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.      SECTION 9.16. Binding Effect. This Agreement shall become effective when it shall have been executed by the Borrower, each Lender and the Facility Agent and thereafter shall be binding upon and inure to the benefit of the Borrower, the Facility Agent, and each Lender and their respective permitted successors and assigns.      SECTION 9.17. Lender Action. Each Lender agrees that it shall not take or institute any actions or proceedings, judicial or otherwise, for any right or remedy against the Borrower under any of the Financing Documents (including the exercise of any right of setoff, rights on account of any banker’s lien or similar claim or other rights of self-help), or institute any actions or proceedings, or otherwise commence any remedial procedures, with respect to any property of the Borrower and its Subsidiaries, without the prior written consent of the Facility Agent. The provision of this Section 9.17 are for the sole benefit of the Lenders and shall not afford any right to, or constitute a defense available to, the Borrower and its Subsidiaries.      SECTION 9.18. USA PATRIOT Act. Each Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act, it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the USA Patriot Act.      SECTION 9.19. Amendment and Restatement on Merger Completion Date. On the Merger Completion Date, this Agreement shall be consolidated with, and amended and restated to read as set forth in, the DQE Merger Sub, Inc. Credit Agreement dated as of December 20, 2006 attached hereto as Exhibit E (the “DLH Credit Agreement”), whereupon Loans outstanding under this Agreement shall become, and continue to be outstanding as, the Tranche B Term Loans under the DLH Credit Agreement and the Lenders shall become Tranche B Term Loan Lenders under and as defined in the DLH Credit Agreement. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.] 50 --------------------------------------------------------------------------------        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.             DUQUESNE LIGHT HOLDINGS, INC.       By   /s/ Mark E. Kaplan         Name:   Mark E. Kaplan        Title:   Senior Vice President and Chief Financial Officer      DLH CREDIT AGREEMENT   --------------------------------------------------------------------------------                     BARCLAYS BANK PLC, individually and as Facility Agent                       By   /s/ Philip Capparis   Name: Philip Capparis             Title: Director                       DRESDNER BANK AG, NEW YORK AND GRAND CAYMAN BRANCHES, as a Lender                       By   /s/ Jorge Rodriguez                           Name: Jorge Rodriguez             Title: Director                       By   /s/ Jonathan Newman                           Name: Jonathan Newman             Title: Vice President                       BAYERISCHE LANDESBANK, NEW YORK BRANCH, as a Lender                       By   /s/ John Gregory   /s/ Donna M. Quilty                       Name: John Gregory   DONNA M. QUILTY         Title: Vice President   Vice President                   THE BANK OF NOVA SCOTIA, as a Lender                       By   /s/ Thane A. Rattew                           Name: THANE A. RATTEW             Title: MANAGING DIRECTOR     DLH CREDIT AGREEMENT   --------------------------------------------------------------------------------                         JPMORGAN CHASE BANK, N.A., as a Lender                               By   /s/ Nancy R. Barwig   Name: Nancy R. Barwig                 Title: Vice President                           MIZUHO CORPORATE BANK, LTD., as a Lender                               By   /s/ James R. Fayen                                   Name: James R. Fayen                 Title: Deputy General Manager                           UNION BANK OF CALIFORNIA, N.A., as a Lender                               By   /s/ Dennis G. Blank                                   Name: Dennis G. Blank                 Title: Vice President                           COBANK, ACB, as a Lender                               By   /s/ Clarence J. Mahoulich                                   Name: CLARENCE J. MAHOULICH                 Title: Vice President                           COMMONWEALTH BANK OF AUSTRALIA, as a Lender                               By   /s/ John Russell                                   Name: JOHN RUSSELL                 Title: HEAD OF INFRASTRUCTURE AND UTILITIES,           NORTH AMERICA     DLH CREDIT AGREEMENT   --------------------------------------------------------------------------------                         WESTPAC BANKING CORPORATION, as a Lender                               By   /s/ Isaac Rankin   Name: Isaac Rankin                 Title: Head of Relationship Management                      TIER 2 ATTORNEY     DLH CREDIT AGREEMENT  

  Exhibit 10.28 CELANESE CORPORATION 2004 STOCK INCENTIVE PLAN NONQUALIFIED STOCK OPTION AGREEMENT (Non-Employee Director)           THIS AGREEMENT, is made effective as of May 16, 2006 (the “Date of Grant”), between Celanese Corporation (the “Company”) and the individual named as a participant on the signature page hereto (the “Participant”). R E C I T A L S:           WHEREAS, the Company has adopted the Plan (as defined below), the terms of which are hereby incorporated by reference and made a part of this Agreement; and           WHEREAS, the Compensation Committee (the “Committee”) has determined that it would be in the best interests of the Company and its stockholders to grant the Option provided for herein to the Participant pursuant to the Plan and the terms set forth herein;           NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows:           1. Definitions. Whenever the following terms are used in this Agreement, they shall have the meanings set forth below. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan.           (a) Cause: Any of the following events: (i) the Participant’s willful failure to perform Participant’s duties to the Company (other than as a result of total or partial incapacity due to physical or mental illness) for a period of 30 days following written notice by the Company to the Participant of such failure, (ii) commission of (x) a felony (other than traffic-related) under the laws of the United States or any state thereof or any similar criminal act in a jurisdiction outside the United States or (y) a crime involving moral turpitude, (iii) Participant’s willful malfeasance or willful misconduct which is demonstrably injurious to the Company, (iv) any act of fraud by the Participant or (v) the Participant’s breach of the provisions of any confidentiality, noncompetition or nonsolicitation to which the Participant is subject.           (b) Disability: The Participant becomes physically or mentally incapacitated and is therefore unable for a period of six consecutive months or for an aggregate of nine months in any 24 consecutive month period to perform Participant’s duties.           (c) Expiration Date: The tenth anniversary of the Date of Grant.           (d) Plan: The Celanese Corporation 2004 Stock Incentive Plan, as from time to time amended.           (e) Vested Portion: At any time, the portion of the Option which has become vested, as described in Section 3 of this Agreement.   --------------------------------------------------------------------------------             2. Grant of Option. The Company hereby grants to the Participant the right and option to purchase, on the terms and conditions hereinafter set forth, 25,000 Shares of the Company (the “Option”), subject to adjustment as set forth in the Plan. The exercise price of the Shares subject to the Option shall be $21.02 per Share (the “Option Price”), subject to adjustment as set forth in the Plan. The Option is intended to be a nonqualified stock option and is not intended to be treated as an ISO that complies with Section 422 of the Code. The Option Price is no less than the Fair Market Value of the Shares on the Date of the Grant.           3. Vesting of the Option.           (a) In General. Subject to the Participant’s continued Employment with the Company and its Affiliates, the Option shall vest and become exercisable with respect to twenty-five percent (25%) of the Shares subject to the Option on each of the first, second, third and fourth anniversaries of the Date of the Grant.           (b) Change in Control. Notwithstanding the foregoing, upon a Change in Control, the Option shall, to the extent not previously cancelled or expired, immediately become 100% vested and exercisable.           (c) Termination of Employment. If the Participant’s Employment with the Company and its Affiliates terminates for any reason, the Option, to the extent not then vested and exercisable, shall be immediately canceled by the Company without consideration; provided, however, that if the Participant’s Employment terminates due to the Participant’s death or Disability, to the extent not previously cancelled or expired, the Option shall immediately become vested and exercisable as to the Shares subject to the Option that would have otherwise vested and become exercisable in the calendar year in which such termination of Employment occurs.           4. Exercise of Option.           (a) Period of Exercise. Subject to the provisions of the Plan and this Agreement, the Participant may exercise all or any part of the Vested Portion of the Option at any time prior to the Expiration Date. Notwithstanding the foregoing, if the Participant’s Employment terminates prior to the Expiration Date, the Vested Portion of the Option shall remain exercisable for the period set forth below:                (i) Termination due to Death or Disability, Termination by the Company without Cause or Termination by the Participant. If the Participant’s Employment with the Company and its Affiliates is terminated (a) due to the Participant’s death or Disability, (b) by the Company without Cause or (c) by the Participant, the Participant may exercise the Vested Portion of the Option for a period ending on the earlier of (A) one year following the date of such termination and (B) the Expiration Date; and                (ii) Termination by the Company for Cause. If the Participant’s Employment with the Company and its Affiliates is terminated by the Company for Cause, the Vested Portion of the Option shall immediately terminate in full and cease to be exercisable.   --------------------------------------------------------------------------------             (b) Method of Exercise.                (i) Subject to Section 4(a) of this Agreement, the Vested Portion of an Option may be exercised by delivering to the Company at its principal office written notice of intent to so exercise; provided that the Option may be exercised with respect to whole Shares only. Such notice shall specify the number of Shares for which the Option is being exercised and, other than as described in clause (C) of the following sentence, shall be accompanied by payment in full of the aggregate Option Price in respect of such Shares. Payment of the aggregate Option Price may be made (A) in cash, or its equivalent (e.g., a check), (B) by transferring to the Company Shares having a Fair Market Value equal to the aggregate Option Price for the Shares being purchased and satisfying such other requirements as may be imposed by the Committee; provided that such Shares have been held by the Participant for at least the minimum period, if any, required by the Company’s accountants to avoid an adverse accounting impact on the Company under generally accepted accounting principles, (C) if there is a public market for the Shares at the time of payment, subject to such rules as may be established by the Committee, through delivery of irrevocable instructions to a broker to sell the Shares otherwise deliverable upon the exercise of the Option and deliver promptly to the Company an amount equal to the aggregate Option Price or (D) such other method as approved by the Committee. No Participant shall have any rights to dividends or other rights of a stockholder with respect to the Shares subject to an Option until the Participant has given written notice of exercise of the Option, paid in full for such Shares or otherwise completed the exercise transaction as described in the preceding sentence and, if applicable, has satisfied any other conditions imposed pursuant to this Agreement.                (ii) Notwithstanding any other provision of the Plan or this Agreement to the contrary, absent an available exemption to registration or qualification, the Option may not be exercised prior to the completion of any registration or qualification of the Option or the Shares under applicable state and federal securities or other laws, or under any ruling or regulation of any governmental body or national securities exchange that the Committee shall in its sole reasonable discretion determine to be necessary or advisable.                (iii) Upon the Company’s determination that the Option has been validly exercised as to any of the Shares, the Company shall issue certificates in the Participant’s name for such Shares. However, the Company shall not be liable to the Participant for damages relating to any delays in issuing the certificates to the Participant, any loss by the Participant of the certificates, or any mistakes or errors in the issuance of the certificates or in the certificates themselves.                (iv) In the event of the Participant’s death, the Vested Portion of the Option shall remain vested and exercisable by the Participant’s executor or administrator, or the person or persons to whom the Participant’s rights under this Agreement shall pass by will or by the laws of descent and distribution as the case may be, to the extent set forth in Section 4(a) of this Agreement. Any heir or legatee of the Participant shall take rights herein granted subject to the terms and conditions hereof.   --------------------------------------------------------------------------------             5. No Right to Continued Employment. Neither the Plan nor this Agreement shall be construed as giving the Participant the right to be retained in the employ of, or in any relationship to, the Company or any Affiliate. Further, the Company or its Affiliate may at any time terminate the Participant or discontinue any relationship, free from any liability or any claim under the Plan or this Agreement, except as otherwise expressly provided herein.           6. Legend on Certificates. The certificates representing the Shares purchased by exercise of the Option shall be subject to such stop transfer orders and other restrictions as the Committee may deem reasonably advisable under the Plan or the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares are listed, any applicable federal or state laws and the Company’s Certificate of Incorporation and Bylaws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.           7. Transferability. Unless otherwise determined by the Committee, the Option may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by the Participant otherwise than by will or by the laws of descent and distribution, and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate; provided that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance. During the Participant’s lifetime, the Option is exercisable only by the Participant.           8. Withholding. The Participant may be required to pay to the Company or its Affiliate and the Company or its Affiliate shall have the right and is hereby authorized to withhold from any payment due or transfer made under the Option or under the Plan or from any compensation or other amount owing to a Participant the amount (in cash, Shares, other securities, other Awards or other property) of any applicable withholding taxes in respect of the Option, its exercise, or any payment or transfer under the Option or under the Plan and to take such action as may be necessary in the option of the Company to satisfy all obligations for the payment of such taxes.           9. Securities Laws. Upon the acquisition of any Shares pursuant to the exercise of the Option, the Participant will make or enter into such written representations, warranties and agreements as the Committee may reasonably request in order to comply with applicable securities laws or with this Agreement.           10. Notices. Any notice under this Agreement shall be addressed to the Company in care of its General Counsel, addressed to the principal executive office of the Company and to the Participant at the address appearing in the personnel records of the Company for the Participant or to either party at such other address as either party hereto may hereafter designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.           11. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of laws provisions thereof.   --------------------------------------------------------------------------------             12. Option Subject to Plan. By entering into this Agreement the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The Option and the Shares received upon exercise of the Option are subject to the Plan. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.           13. Signature in Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.           IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto.                   CELANESE CORPORATION                       By   David N. Weidman                           David N. Weidman             President and Chief Executive Officer                       PARTICIPANT                       /s/ David F. Hoffmeister                   David F. Hoffmeister      

EXHIBIT 10(a) Execution Version         CREDIT AGREEMENT     DATED AS OF   June 13, 2006       AMONG       PEOPLES ENERGY CORPORATION,   THE FINANCIAL INSTITUTIONS PARTY HERETO, as Banks,   BANK OF AMERICA, N.A., as Administrative Agent,   JPMORGAN CHASE BANK, N.A., as Syndication Agent,   ABN AMRO INCORPORATED, US BANK NATIONAL ASSOCATION, and THE BANK OF TOKYO-MITSUBISHI, LTD. CHICAGO BRANCH, as Co-Documentation Agents,   and   BANC OF AMERICA SECURITIES LLC, J.P. MORGAN SECURITIES INC., and ABN AMRO INCORPORATED, as Co-Lead Arrangers and Joint Bookrunners       TABLE OF CONTENTS   Page SECTION 1.  DEFINITIONS; INTERPRETATION. 1   Section 1.1  Definitions 1   Section 1.2  Interpretation 7 SECTION 2.  THE REVOLVING CREDIT. 7   Section 2.1  The Loan Commitment, Increase Option, Extension Option. 7   Section 2.2  Letters of Credit 9   Section 2.3  Applicable Interest Rates 11   Section 2.4  Minimum Borrowing Amounts 13   Section 2.5  Manner of Borrowing Loans and Designating Interest Rates Applicable to Loans. 13   Section 2.6  Interest Periods 15   Section 2.7  Maturity of Loans 15   Section 2.8  Prepayments 15   Section 2.9  Default Rate. 16   Section 2.10  Evidence of Debt. 16   Section 2.11  Funding Indemnity 17   Section 2.12  Revolving Credit Commitment Terminations 17   Section 2.13  Regulation D Compensation 17   Section 2.14  Arbitrage Compensation 18 SECTION 3.  FEES. 18   Section 3.1  Fees 18   Section 3.2  Replacement of Banks 19 SECTION 4.  PLACE AND APPLICATION OF PAYMENTS. 20   Section 4.1  Place and Application of Payments 20 SECTION 5.  REPRESENTATIONS AND WARRANTIES. 20   Section 5.1  Corporate Organization and Authority 20   Section 5.2  Corporate Authority and Validity of Obligations 20   Section 5.3  Financial Statements 21   Section 5.4  Approvals 21   Section 5.5  ERISA 21   Section 5.6  Government Regulation 21   Section 5.7  Margin Stock; Proceeds 21   Section 5.8  Full Disclosure 21 SECTION 6.  CONDITIONS PRECEDENT. 22   Section 6.1  Initial Credit Event 22   Section 6.2  All Credit Events 23 SECTION 7.  COVENANTS. 23   Section 7.1  Corporate Existence 23   Section 7.2  ERISA 23   Section 7.3  Financial Reports and Other Information 24   Section 7.4  Regulation U; Proceeds 25   Section 7.5  Sales of Assets. 25   Section 7.6  Capital Ratio 25   Section 7.7  Compliance with Laws 25   Section 7.8  Mergers and Consolidations 26 SECTION 8.  EVENTS OF DEFAULT AND REMEDIES. 26   Section 8.1  Events of Default 26   Section 8.2  Non-Bankruptcy Defaults 27   Section 8.3  Bankruptcy Defaults 27   Section 8.4  Expenses 27 SECTION 9.  CHANGE IN CIRCUMSTANCES. 28   Section 9.1  Change of Law 28   Section 9.2  Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR. 28   Section 9.3  Increased Cost and Reduced Return 28   Section 9.4   Lending Offices 30   Section 9.5  Discretion of Bank as to Manner of Funding 30 SECTION 10.  THE ADMINISTRATIVE AGENT. 30   Section 10.1  Appointment and Authority 30   Section 10.2  Rights as a Bank 31   Section 10.3  Exculpatory Provisions 31   Section 10.4  Reliance by Administrative Agent. 31   Section 10.5  Delegation of Duties. 32   Section 10.6  Resignation of Administrative Agent. 32   Section 10.7  Non-Reliance on Administrative Agent and Other Banks 33   Section 10.8  No Other Duties; Etc. 33   Section 10.9  Administrative Agent May File Proofs of Claim. 33 SECTION 11.  MISCELLANEOUS. 34   Section 11.1  Withholding Taxes 34   Section 11.2  No Waiver of Rights 35   Section 11.3  Non-Business Day 35   Section 11.4  Documentary Taxes 35   Section 11.5  Survival of Representations 35   Section 11.6  Survival of Indemnities 35   Section 11.7  Set-Off 35   Section 11.8  Notices; Effectiveness, Electronic Communications. 36   Section 11.9  Counterparts 38   Section 11.10  Successors and Assigns  38   Section 11.11  [Intentionally Omitted]  38   Section 11.12  Assignments, Participations, Etc  38   Section 11.13  Amendments  41   Section 11.14  Headings  42   Section 11.15  Legal Fees, Other Costs and Indemnification  42   Section 11.16  [Reserved]  42   Section 11.17  Entire Agreement  42   Section 11.18  Construction  42   Section 11.19  Governing Law  42   Section 11.20  SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL  42   Section 11.21  Confidentiality  42   Section 11.22  Patriot Act  42   Section 11.23  Rights and Liabilities of Syndication Agent and Arrangers  43   Section 11.24  No Advisory or Fiduciary Responsibility  43     -------------------------------------------------------------------------------- SCHEDULES 1.1   Interest Rates and Fees 2.1   Revolving Credit Commitment 11.8   Notices 11.12   Processing and Recordation Fees EXHIBITS Form of 2.10   Note 6.1   Opinion 7.3   Compliance Certificate 11.12   Assignment and Assumption   -------------------------------------------------------------------------------- CREDIT AGREEMENT CREDIT AGREEMENT, dated as of June 13, 2006 among Peoples Energy Corporation, an Illinois corporation (the “Borrower”), the financial institutions from time to time party hereto (each a “Bank,” and collectively the “Banks”), Bank of America, N.A., in its capacity as administrative agent for the Banks hereunder (in such capacity, the “Administrative Agent”), and JPMorgan Chase Bank, N.A., in its capacity as syndication agent for the Banks hereunder (in such capacity, the “Syndication Agent”). WITNESSETH THAT: WHEREAS, the Borrower desires to obtain the several commitments of the Banks to make available a 5-year revolving credit facility for loans and letters of credit (the “Revolving Credit”), as described herein; and WHEREAS, the Banks are willing to extend such commitments subject to all of the terms and conditions hereof and on the basis of the representations and warranties hereinafter set forth. NOW, THEREFORE, in consideration of the recitals set forth above and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. DEFINITIONS; INTERPRETATION. Section 1.1 Definitions. The following terms when used herein have the following meanings: “Administrative Agent” is defined in the first paragraph of this Agreement and includes any successor Administrative Agent appointed pursuant to Section 10.6 hereof. “Administrative Agent's Office” means the Administrative Agent's address and, as appropriate, account as set forth on Schedule 11.8 or such other address or account as the Administrative Agent may from time to time notify to the Borrower and the Banks. “Administrative Questionnaire” means an administrative questionnaire in a form supplied by the Administrative Agent. “Affiliate” means, as to any Person, any other Person which directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, “control” (including, with their correlative meanings, “controlled by” and “under common control with”) means possession, directly or indirectly, of power to direct or cause the direction of management or policies of a Person (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), provided that, in any event for purposes of this definition: (i) any Person which owns directly or indirectly 5% or more of the securities having ordinary voting power for the election of directors or other governing body of a corporation or 5% or more of the partnership or other ownership interests of any other Person (other than as a limited partner of such other Person) will be deemed to control such corporation or other Person; and (ii) each director and executive officer of the Borrower or any Subsidiary shall be deemed an Affiliate of the Borrower and each Subsidiary. “Agreement” means this Credit Agreement, including all Exhibits and Schedules hereto, as it may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof. 1 -------------------------------------------------------------------------------- “Applicable Margin” means, at any time (i) with respect to Base Rate Loans, the Base Rate Margin and (ii) with respect to LIBOR Loans, the LIBOR Margin. “Application” is defined in Section 2.2(b) hereof. “Approved Fund” means any Fund that is administered or managed by (a) a Bank, (b) an Affiliate of a Bank or (c) an entity or an Affiliate of an entity that administers or manages a Bank. “Arrangers” means, collectively, Banc of America Securities LLC and J.P. Morgan Securities Inc. “Assignee Group” means two or more Eligible Assignees that are Affiliates of one another or two or more Approved Funds managed by the same investment advisor. “Assignment and Assumption” means an assignment and assumption entered into by a Bank and an Eligible Assignee (with the consent of any party whose consent is required by Section 11.12(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit 11.12 or any other form approved by the Administrative Agent. “Authorized Representative” means those persons shown on the list of employees provided by the Borrower pursuant to Section 6.1(e) hereof, or on any such updated list provided by the Borrower to the Administrative Agent, or any further or different employee of the Borrower so named by any officer of the Borrower in a written notice to the Administrative Agent. “Bank” is defined in the first paragraph of this Agreement. “Bank of America” means Bank of America, N.A. and its successors. “Base Rate” is defined in Section 2.3(a) hereof. “Base Rate Loan” means a Loan bearing interest prior to maturity at a rate specified in Section 2.3(a) hereof. “Base Rate Margin” means the percentage set forth in Schedule 1.1 hereto corresponding to the then applicable Credit Rating. “BofA Fee Letter” means that certain letter among the Administrative Agent, Banc of America Securities LLC and the Borrower dated May 22, 2006 pertaining to fees to be paid by the Borrower to the Administrative Agent for its sole account and benefit. “Borrower” is defined in the first paragraph of this Agreement. “Borrower Materials” has the meaning specified in Section 7.3. “Borrowing” means the total of Loans of a single type advanced, continued for an additional Interest Period, or converted from a different type into such type by the Banks on a single date and for a single Interest Period. Borrowings of Loans are made and maintained ratably from each of the Banks according to their Percentages. A Borrowing is “advanced” on the day Banks advance funds comprising such Borrowing to the Borrower, is “continued” on the date a new Interest Period for the same type of Loans commences for such Borrowing, and is “converted” when such Borrowing is changed from one type of Loan to the other, all as requested by the Borrower pursuant to Section 2.5(a). 2 -------------------------------------------------------------------------------- “Business Day” means any day other than a Saturday or Sunday on which Banks are not authorized or required to close where the Administrative Agent’s Office is located and, if the applicable Business Day relates to the borrowing or payment of a LIBOR Loan, on which banks are dealing in U.S. Dollars in the interbank market in London, England. “Capital” means, as of any date of determination thereof, without duplication, the sum of (a) Consolidated Net Worth excluding accumulated other comprehensive income and loss plus (b) Consolidated Indebtedness. “Capital Lease” means at any date any lease of Property which, in accordance with GAAP, would be required to be capitalized on the balance sheet of the lessee. “Capital Ratio” means, as of any date of determination thereof, the ratio, rounded downwards to two decimal points, of (a) Consolidated Indebtedness to (b) Capital. “Capitalized Lease Obligations” means, for any Person, the amount of such Person’s liabilities under Capital Leases determined at any date in accordance with GAAP. “Code” means the Internal Revenue Code of 1986, as amended. “Commitment” means, as to each Bank, the Revolving Credit Commitment of such Bank.   “Commitment Fee Rate” means the percentage set forth on Schedule 1.1 hereto corresponding to the then applicable Credit Rating. “Compliance Certificate” means a certificate in the form of Exhibit 7.3 hereto. “Consolidated Indebtedness” means, as of any date of determination thereof, the aggregate consolidated Indebtedness of the Borrower and it Subsidiaries, as determined in accordance with GAAP. “Consolidated Net Worth” means, as of any date of determination thereof, the amount reflected as shareholders equity upon a consolidated balance sheet of the Borrower and its Subsidiaries, as determined in accordance with GAAP. “Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or undertaking to which such Person is a party or by which it or any of its Property is bound. “Controlled Group” means all members of a controlled group of corporations and all trades and businesses (whether or not incorporated) under common control that, together with the Borrower or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code. “Credit Documents” means this Agreement, the Notes, the Fee Letters, the Master Letter of Credit Agreement, the Applications and the Letters of Credit. “Credit Event” means the Borrowing of any Loan or the issuance of, or extension of the expiration date or any increase in the amount of, any Letter of Credit. 3 -------------------------------------------------------------------------------- “Credit Rating” means, at any time, the long-term senior unsecured non-credit enhanced debt rating of the Borrower as determined by Standard & Poors’ Ratings Services and/or Moody’s Investors Service. “Default” means any event or condition the occurrence of which would, with the passage of time or the giving of notice, or both, constitute an Event of Default. “Effective Date” means June 13, 2006. “Eligible Assignee” means (a) a Bank, (b) an Affiliate of a Bank, and (c) any other Person (other than a natural person) approved by (i) the Administrative Agent, (ii) the Issuing Bank(s) and (iii) unless an Event of Default has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed); provided that notwithstanding the foregoing, “Eligible Assignee” shall not include the Borrower or any of the Borrower’s Affiliates or Subsidiaries. “ERISA” is defined in Section 5.5 hereof. “Event of Default” means any of the events or circumstances specified in Section 8.1 hereof. “Existing Credit Agreement” means the Borrower’s existing credit agreement by and among the Borrower, the financial institutions party thereto and ABN AMRO Bank N.V., as Agent thereunder, dated March 8, 2004, as amended, restated, supplemented or otherwise modified prior to the Effective Date. “Federal Funds Rate” means the fluctuating interest rate per annum described in part (x) of clause (ii) of the definition of Base Rate set forth in Section 2.3(a) hereof. “Fee Letters” means the BofA Fee Letter and the Joint Fee Letter. “Fund” means any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business. “GAAP” means generally accepted accounting principles as in effect in the United States from time to time, applied by the Borrower and its Subsidiaries on a basis consistent with the preparation of the Borrower’s financial statements furnished to the Banks as described in Section 5.3 hereof. “Granting Bank” is defined in Section 11.12(g) hereof. “Guarantee” means, in respect of any Person, any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Indebtedness of another Person, including, without limitation, by means of an agreement to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to maintain financial covenants, or to assure the payment of such Indebtedness by an agreement to make payments in respect of goods or services regardless of whether delivered, or otherwise, provided, that the term “Guarantee” shall not include endorsements for deposit or collection in the ordinary course of business; and such term when used as a verb shall have a correlative meaning. “Indebtedness” means, as to any Person, without duplication: (i) all obligations of such Person for borrowed money or evidenced by bonds, debentures, notes or similar instruments; (ii) all obligations of such Person for the deferred purchase price of property or services (other than in respect of trade accounts payable arising in the ordinary course of business, customer deposits, provisions for rate refunds (if any), deferred fuel expenses and obligations in respect of pensions and other post-retirement benefits and employee welfare plans); (iii) all Capitalized Lease Obligations of such Person; (iv) all Indebtedness of others secured by a Lien on any properties, assets or revenues of such Person (other than stock, partnership interests or other equity interests of the Borrower or any Subsidiaries in other entities) to the extent of the lesser of the value of the property subject to such Lien or the amount of such Indebtedness; (v) all Indebtedness of others Guaranteed by such Person; and (vi) all obligations of such Person, contingent or otherwise, in respect of any letters or credit (whether commercial or standby) or bankers’ acceptances. 4 -------------------------------------------------------------------------------- “Information” has the meaning specified in Section 11.21. “Interest Period” is defined in Section 2.6 hereof. “Issuing Banks” means: (i) Bank of America, N.A. and (ii) any one other Bank designated by Borrower from time to time by written notice to Administrative Agent, with the consent of such Bank; provided that no Bank may be an Issuing Bank with respect to a Letter of Credit issued after the date such Bank becomes a Refusing Bank pursuant to Section 2.1(c). “Joint Fee Letter” means that certain letter among the Administrative Agent, the Syndication Agent, the Arrangers and the Borrower dated May 22, 2006 pertaining to fees to be paid by the Borrower to the Administrative Agent for its sole account and benefit. “L/C Documents” means the Letters of Credit, the Master Letter of Credit Agreement, any draft or other document presented in connection with a drawing under a Letter of Credit, the Applications and this Agreement. “L/C Fee Rate” means, at any time of determination, a percentage per annum equal to the LIBOR Margin in effect at such time. “L/C Obligations” means the aggregate undrawn face amounts of all outstanding Letters of Credit and all unpaid Reimbursement Obligations. “Lending Office” is defined in Section 9.4 hereof. “Letter of Credit” is defined in Section 2.2(a) hereof. “LIBOR” is defined in Section 2.3(b) hereof. “LIBOR Loan” means a Loan bearing interest prior to maturity at the rate specified in Section 2.3(b) hereof. “LIBOR Margin” means the percentage set forth in Schedule 1.1 hereto beside the then applicable Credit Rating. “LIBOR Reserve Percentage” is defined in Section 2.3(b) hereof. “Lien” means any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, including, but not limited to, the security interest lien arising from a mortgage, encumbrance, pledge, conditional sale, security agreement or trust receipt, or a lease, consignment or bailment for security purposes. For the purposes of this definition, a Person shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement, Capital Lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person for security purposes, and such retention of title shall constitute a “Lien.” 5 -------------------------------------------------------------------------------- “Loan” is defined in Section 2.1(a) hereof and, as so defined, includes a Base Rate Loan or LIBOR Loan, each of which is a “type” of Loan hereunder. “Master Letter of Credit Agreement” is defined in Section 2.2(a) hereof. “Material Adverse Effect” means a material adverse effect on (i) the business, financial position or results of operations of the Borrower, (ii) the ability of the Borrower to perform its obligations under the Credit Documents, (iii) the validity or enforceability of the obligations of the Borrower, (iv) the rights and remedies of the Banks or the Administrative Agent against the Borrower or (v) the timely payment of the principal of and interest on the Loans or other amounts payable by the Borrower hereunder. “Note” is defined in Section 2.10(a) hereof. “Obligations” means all fees payable hereunder, all obligations of the Borrower to pay principal or interest on Loans and L/C Obligations, and all other payment obligations of the Borrower arising under or in relation to any Credit Document. “Participant” has the meaning specified in Section 11.12(d). “Percentage” means, for each Bank, the percentage of the Revolving Credit Commitments represented by such Bank’s Revolving Credit Commitment or, if the Revolving Credit Commitments have been terminated, the percentage held by such Bank (including through participation interests in L/C Obligations) of the aggregate principal amount of all outstanding Obligations. “Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization or any other entity or organization, including a government or any agency or political subdivision thereof. “Plan” means at any time an employee pension benefit plan covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code that is either (i) maintained by a member of the Controlled Group or (ii) maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which a member of the Controlled Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions. “Platform” has the meaning specified in Section 7.3. “PBGC” is defined in Section 5.5 hereof. “Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, whether now owned or hereafter acquired. “Refusing Bank” is defined in Section 2.1(c) hereof. “Reimbursement Obligation” is defined in Section 2.2(c) hereof. 6 -------------------------------------------------------------------------------- “Related Parties” means, with respect to any Person, such Person's Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person's Affiliates. “Required Banks” means, as of the date of determination thereof, Banks holding more than 50% of the Percentages. “Revolving Credit Commitment” is defined in Section 2.1(a) hereof. “SEC” means the Securities and Exchange Commission. “SPC” is defined in Section 11.12(g) hereof. “Subsidiary” means, as to the Borrower, any corporation or other entity of which more than fifty percent (50%) of the outstanding stock or comparable equity interests having ordinary voting power for the election of the Board of Directors of such corporation or similar governing body in the case of a non-corporation (irrespective of whether or not, at the time, stock or other equity interests of any other class or classes of such corporation or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned by the Borrower or by one or more of its Subsidiaries. “Syndication Agent” is defined in the first paragraph of this Agreement. “Termination Date” means the later of (a) June 13, 2011 and (b) if maturity is extended pursuant to 2.1(c), such extended maturity date as determined pursuant to such Section; provided, however, that, in each case, if such date is not a Business Day, the Termination Date shall be the next preceding Business Day. “Unfunded Vested Liabilities” means, with respect to any Plan at any time, the amount (if any) by which (i) the present value of all vested non-forfeitable accrued benefits under such Plan exceeds (ii) the fair market value of all Plan assets allocable to such benefits, all determined as of the then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of a member of the Controlled Group to the PBGC or the Plan under Title IV of ERISA. “U.S. Dollars” and “$” each means the lawful currency of the United States of America. “Welfare Plan” means a “welfare plan”, as defined in Section 3(l) of ERISA. Section 1.2 Interpretation. The foregoing definitions shall be equally applicable to both the singular and plural forms of the terms defined. All references to times of day in this Agreement shall be references to Eastern time (daylight or standard, as applicable) unless otherwise specifically provided. Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, the same shall be done in accordance with GAAP, to the extent applicable, except where such principles are inconsistent with the specific provisions of this Agreement. SECTION 2. THE REVOLVING CREDIT. Section 2.1 The Loan Commitment, Increase Option, Extension Option. (a) The Loan Commitment. Subject to the terms and conditions hereof, each Bank, by its acceptance hereof, severally agrees to make a loan or loans (individually a “Loan” and collectively “Loans”) to the Borrower from time to time on a revolving basis in an aggregate outstanding amount up to the amount of its revolving credit commitment set forth on Schedule 2.1 attached hereto (such amount, as increased or reduced pursuant to Sections 2.1(b), 2.1(c) or 2.12 or changed as a result of one or more assignments under Section 11.12, its “Revolving Credit Commitment” and, cumulatively for all the Banks, the “Revolving Credit Commitments”) before the Termination Date; provided that the sum of the aggregate amount of Loans and of L/C Obligations at any time outstanding shall not exceed the Revolving Credit Commitments in effect at such time. Each Borrowing of Loans shall be made ratably from the Banks in proportion to their respective Percentages. As provided in Section 2.5(a) hereof, the Borrower may elect that each Borrowing of Loans be either Base Rate Loans or LIBOR Loans. Loans may be repaid and the principal amount thereof re-borrowed before the Termination Date, subject to all the terms and conditions hereof. The initial amount of Revolving Credit Commitments under this Agreement equals FOUR HUNDRED MILLION DOLLARS ($400,000,000). 7 -------------------------------------------------------------------------------- (b) Increase Option. Notwithstanding Section 2.1(a) and so long as no Default or Event of Default exists, Borrower may, upon written election delivered to Administrative Agent, permanently increase the aggregate Revolving Credit Commitments by up to $100,000,000 to FIVE HUNDRED MILLION DOLLARS ($500,000,000) (less the amount of any previous reductions of the Revolving Credit Commitment pursuant to Sections 2.1(c) or 2.12); provided that each such increase must be in a minimum amount of $25,000,000 and in integral multiples of $1,000,000 in excess thereof, by (i) increasing the Revolving Credit Commitment of one or more Banks which have agreed to such increase and/or (ii) adding one or more commercial banks or other Persons as a Bank hereto (each an “Additional Bank”) with a Revolving Credit Commitment in an amount agreed to by any such Additional Bank; provided that no Additional Bank shall be added as a party hereto without the written consent of the Administrative Agent and the Issuing Banks (which shall not be unreasonably withheld) or if a Default or an Event of Default exists. Any increase in the aggregate Revolving Credit Commitment pursuant to this clause (b) shall be effective three Business Days after the date on which the Administrative Agent has received and accepted the applicable documentation memorializing and evidencing such increases by the applicable Banks. The Administrative Agent shall promptly notify the Borrower and the Banks of any increase in the amount of the aggregate Revolving Credit Commitment pursuant to this Section and of the Revolving Credit Commitment of each Bank after giving effect thereto. The Borrower acknowledges that, in order to maintain Loans in accordance with each Bank’s pro-rata share of all outstanding Borrowings prior to any increase in the aggregate Revolving Credit Commitment pursuant to this Section, a reallocation of the Revolving Credit Commitments as a result of a non-pro-rata increase in the aggregate Revolving Credit Commitment may require prepayment of all or portions of certain Borrowings on the date of such increase (and any such prepayment shall be subject to the provisions of Section 2.11). (c) Extension Option. (i) Not more than 60 days and not less than 30 days prior to each annual anniversary of the Effective Date, the Borrower may, in each case, request in writing that the Banks extend the Termination Date for an additional one year (and the Administrative Agent shall promptly give the Banks notice of any such request); provided that the Borrower may not make a request that would cause the Termination Date to extend to a date more than eight years from the Effective Date. Each Bank shall provide the Administrative Agent, not more than 15 days subsequent to any such request by the Borrower, with written notice regarding whether it agrees to extend the then current Termination Date. Each decision by a Bank shall be in its sole discretion and failure by a Bank to give timely written notice hereunder shall be deemed a decision by such Bank not to extend the Termination Date. If all of the Banks timely agree in writing to extend the Termination Date, then the Termination Date shall be extended for an additional one year pursuant to a duly executed written amendment to this Credit Agreement. 8 -------------------------------------------------------------------------------- (ii) If any Bank fails to agree to extend the Termination Date (a “Refusing Bank”), then the Borrower may, on or before the applicable anniversary date, request, at its own discretion and its own expense, any of the Refusing Banks (and each Refusing Bank shall be required to transfer and assign upon such request) to transfer and assign in whole (but not in part), without recourse (in accordance with and subject to the terms of Section 11.12), all of its interests, rights and obligations under this Credit Agreement to an Eligible Assignee or Eligible Assignees (which may be one or more existing Banks if any existing Bank accepts such assignment); provided that (A) such assignment or assignments shall not conflict with any law, rule, regulation or order of any court or other governmental authority, (B) the Borrower or such Eligible Assignee or Eligible Assignees shall pay to the Refusing Banks in immediately available funds the principal of and interest accrued to the date of such payment on the portion of the Loans hereunder held by such Refusing Banks and all other amounts owed to such Refusing Banks hereunder, as well as any transfer fee owing to the Administrative Agent under Section 11.12 and (C) such transfer and assignment must occur on or prior to the applicable anniversary date. (iii) If there exists any Refusing Bank, and such Refusing Bank is not required by the Borrower to transfer and assign its interests prior to the applicable anniversary date as set forth in clause (ii) above, then the Borrower may, on or before the applicable anniversary date, as long as the Required Banks consent to the extension of the Termination Date, notify the Administrative Agent in writing that it wishes to (and all Banks who are not Refusing Banks shall agree to) extend the Termination Date with a Revolving Credit Commitment (for such additional year) equal to the Commitments of those Banks that are not Refusing Banks for such additional year. If the Borrower opts to extend the Termination Date pursuant to this clause (iii), then the Borrower shall, on the Termination Date in effect immediately prior to such extension, pay to the Refusing Banks in immediately available funds the principal of and interest accrued on the portion of the Loans hereunder held by the Refusing Banks, as well as all other amounts due and payable to the Refusing Banks (including, without limitation, any loss, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by the Bank to fund its Eurodollar Loans), on such date. Upon such payment, (A) the Commitments of each such Refusing Bank shall terminate, (B) each such Refusing Bank shall cease to be a Bank hereunder and (C) the Revolving Credit Commitment shall be reduced by an amount equal to the aggregate Commitments of each such Refusing Bank. Section 2.2 Letters of Credit. (a) General Terms. Subject to the terms and conditions hereof, as part of the Revolving Credit, the Issuing Banks shall issue standby letters of credit denominated in U.S. Dollars (each a “Letter of Credit”) for Borrower’s account; provided that the aggregate amount of L/C Obligations outstanding at any time shall not exceed the lesser of (i) the L/C Sublimit, and (ii) the difference between the Commitments in effect at such time and the aggregate amount of Loans then outstanding. Each Letter of Credit shall be a standby or documentary letter of credit issued to support the obligations (including pension or insurance obligations), contingent or otherwise, of the Borrower. Each Letter of Credit shall have a stated term not to exceed one year. Each Letter of Credit shall be issued by the applicable Issuing Bank, but each Bank shall be obligated to purchase an undivided percentage participation interest of such Letter of Credit from the applicable Issuing Bank pursuant to Section 2.2(d) hereof in an amount equal to its Percentage of the amount of each drawing thereunder and, accordingly, the undrawn face amount of each Letter of Credit shall constitute usage of the Commitment of each Bank pro rata in accordance with each Bank’s Percentage. The Borrower shall execute a master letter of credit agreement with each Issuing Bank (collectively, the “Master Letter of Credit Agreement”) which shall contain certain terms applicable to the Letters of Credit. To the extent any provision of the Master Letter of Credit Agreement is inconsistent with the terms of this Agreement, the terms of this Agreement shall control. No Issuing Bank shall have an obligation pursuant to the Credit Documents to issue any Letter of Credit if, after giving effect to the issuance of such Letter of Credit, the aggregate face amount of all Letters of Credit then outstanding would exceed $25,000,000 (the “L/C Sublimit”). (b) Applications. At any time before thirty (30) days prior to the Termination Date, an Issuing Bank shall, at the request of Borrower given to such Issuing Bank at least three (3) Business Days prior to the requested date of issuance, issue one or more Letters of Credit, in a form satisfactory to such Issuing Bank, with terms of up to one year each, in an aggregate face amount as set forth above, upon the receipt of a duly executed application for the relevant Letter of Credit in the form customarily prescribed by such Issuing Bank for the type of Letter of Credit, requested (each an “Application”). Notwithstanding anything contained in any Application to the contrary (i) Borrower’s obligation to pay fees in connection with each Letter of Credit shall be as exclusively set forth in Section 3.1(b) hereof, and (ii) if the applicable Issuing Bank is not timely reimbursed for the amount of any drawing under a Letter of Credit on the date such drawing is paid or on the next following Business Day (it being understood that a drawing which is reimbursed pursuant to, and in accordance with, the last sentence of Section 2.5(c) shall be deemed to have been timely reimbursed), Borrower’s obligation to reimburse the applicable Issuing Bank for the amount of such drawing shall bear interest (which Borrower hereby promises to pay on demand) from and after the date such drawing is paid at a rate per annum equal to the sum of two percent (2%) plus the Base Rate Margin plus the Base Rate from time to time in effect. The applicable Issuing Bank will promptly notify the Banks of each issuance by it of a Letter of Credit and any amendment or extension of a Letter of Credit. Each Issuing Bank agrees to issue amendments to any Letters of Credit issued by it increasing the amount, or extending the expiration date, thereof at the request of Borrower subject to the conditions set forth herein (including the conditions set forth in Section 6.2 and the other terms of this Section 2.2). Without limiting the generality of the foregoing, an Issuing Bank’s obligation to issue, amend or extend the expiration date of a Letter of Credit is subject to the conditions set forth herein (including the conditions set forth in Section 6.2 and the other terms of this Section 2.2) and an Issuing Bank will not issue, amend or extend the expiration date of any Letter of Credit if any Bank notifies such Issuing Bank of any failure to satisfy or otherwise comply with such conditions and terms and directs such Issuing Bank not to take such action. In the event any Letter(s) of Credit are outstanding at the time that Borrower is required to prepay or repay the Obligations, Borrower shall (A) cause such Letter(s) of Credit to be surrendered and delivered to the Issuing Bank for cancellation, (B) cause a financial institution acceptable to the Issuing Bank in its sole discretion to issue, for the benefit of the Issuing Bank, a sight draft letter of credit in amount, form and substance acceptable to the Issuing Bank in its sole discretion in order to backstop the Letter(s) of Credit, or (C) (1) deposit with the Issuing Bank, cash in an amount equal to one hundred and five percent (105%) of the aggregate L/C Obligations to be available to Issuing Bank to reimburse payments of drafts drawn under such Letter(s) of Credit and pay any fees and expenses related thereto and (2) prepay the fee payable with respect to such Letters of Credit for the full remaining terms of such Letters of Credit. Upon termination of any such Letter of Credit, the unearned portion of such prepaid fee attributable to such Letter of Credit shall be refunded to Borrower, together with the sight draft letters of credit described in clause (B) and the deposit described in the preceding clause (C)(1) to the extent not previously applied by the Issuing Bank in the manner described herein. 9 -------------------------------------------------------------------------------- (c) The Reimbursement Obligations. Subject to Section 2.2(b) hereof, the obligation of Borrower to reimburse the applicable Issuing Bank for all drawings under a Letter of Credit (a “Reimbursement Obligation”) shall be governed, to the extent not inconsistent with this Agreement, by the Master Letter of Credit Agreement and the Application related to such Letter of Credit, except that reimbursement of each drawing shall be made in immediately available funds at the applicable Issuing Bank’s principal office as set forth on Schedule 11.8 by no later than 1:30 p.m. (Eastern time) on the date when such drawing is paid or, if such drawing was paid after 12:30 p.m. (Eastern time), by 11:30 a.m. (Eastern time) the next day. If Borrower does not make any such reimbursement payment on the date due (whether through a deemed request for a Base Rate Loan pursuant to Section 2.5(c) or otherwise) and the Banks fund their participations therein in the manner set forth in Section 2.2(d) below, then all payments thereafter received by an Issuing Bank in discharge of any of the relevant Reimbursement Obligations shall be distributed in accordance with Section 2.2(d) below. An Issuing Bank shall notify Borrower promptly of its intent to pay, or payment of, a drawing under a Letter of Credit. (d) The Participating Interests. Each Bank, by its acceptance hereof, severally agrees to purchase from each Issuing Bank, and each Issuing Bank hereby agrees to sell to each such Bank, an undivided percentage participating interest (a “Participating Interest”), to the extent of its Percentage, in each Letter of Credit issued by, and each Reimbursement Obligation owed to, such Issuing Bank. Upon any failure by Borrower to pay any Reimbursement Obligation at the time required on the date the related drawing is paid, as set forth in Section 2.2(c) above, or if an Issuing Bank is required at any time to return to Borrower or to a trustee, receiver, liquidator, custodian or other Person any portion of any payment of any Reimbursement Obligation, each Bank shall, not later than the Business Day it receives a demand from such Issuing Bank to such effect, if such demand is received before 2:00 p.m. (Eastern time), or not later than the following Business Day, if such demand is received after such time, pay to such Issuing Bank an amount equal to its Percentage of such unpaid or recaptured Reimbursement Obligation together with interest on such amount accrued from the date the related payment was made by such Issuing Bank to the date of such payment by such Bank a rate per annum equal to (i) from the date the related payment was made by such Issuing Bank to the date two (2) Business Days after payment by such Bank is due hereunder, the Federal Funds Rate for each such day and (ii) from the date two (2) Business Days after the date such payment is due from such Bank to the date such payment is made by such Bank, the Base Rate in effect for each such day. Each such Bank shall thereafter be entitled to receive its Percentage of each payment received in respect of the relevant Reimbursement Obligation and of interest paid thereon, with the applicable Issuing Bank retaining its Percentage as a Bank hereunder. The several obligations of the Banks to the Issuing Banks under this Section 2.2 shall be absolute, irrevocable and unconditional under any and all circumstances whatsoever and shall not be subject to any set-off, counterclaim or defense to payment which any Bank may have or have had against Borrower, the Administrative Agent, the Issuing Banks, any Bank or any other Person whatsoever. Without limiting the generality of the foregoing, such obligations shall not be affected by any Default or Event of Default or by any reduction, increase or termination of any Commitment of any Bank, and each payment by a Bank under this Section 2.2 shall be made without any offset, abatement, withholding or reduction whatsoever. The Issuing Banks and the Administrative Agent shall be entitled to offset amounts received for the account of a Bank under the Credit Documents against unpaid amounts due from such Bank to the applicable Issuing Bank or the Administrative Agent, as applicable, hereunder (whether as fundings of participations, indemnities or otherwise). 10 -------------------------------------------------------------------------------- (e) Indemnification. The Banks shall, to the extent of their respective Percentages, indemnify each Issuing Bank (to the extent not reimbursed by Borrower) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such Issuing Bank’s gross negligence or willful misconduct) that an Issuing Bank may suffer or incur in connection with any Letter of Credit issued by it. The Issuing Banks shall be entitled to all of the rights and protections afforded the Administrative Agent under Section 10 hereof. The obligations of the Banks under this Section 2.2(e) and all other parts of this Section 2.2 shall survive termination of this Agreement and of all other L/C Documents. (f) Issuing Banks. Each Bank hereby appoints Bank of America, N.A. and each other Bank from time to time designated by Borrower as an Issuing Bank hereunder and hereby authorizes each such Issuing Bank to take such action as an Issuing Bank on its behalf and to exercise such powers under the Credit Documents as are delegated to the Issuing Banks by the terms thereof, together with such powers as are reasonably incidental thereto. The relationship between each of the Issuing Banks and the Banks is and shall be that of agent and principal only, and nothing contained in this Agreement or any other Credit Document shall be construed to constitute an Issuing Bank as a trustee or fiduciary for any Bank or the Borrower. Section 2.3 Applicable Interest Rates. (a) Base Rate Loans. Each Base Rate Loan made or maintained by a Bank shall bear interest during each Interest Period it is outstanding (computed (x) at all times the Base Rate is based on the rate described in clause (i) of the definition thereof, on the basis of a year of 365 or 366 days, as applicable, and actual days elapsed or (y) at all times the Base Rate is based on the rate described in clause (ii) of the definition thereof, on the basis of a year of 360 days and actual days elapsed) on the unpaid principal amount thereof from the date such Loan is advanced, continued or created by conversion from a LIBOR Loan until maturity (whether by acceleration or otherwise) at a rate per annum equal to the sum of the Applicable Margin plus the Base Rate from time to time in effect, payable on the last day of its Interest Period and at maturity (whether by acceleration or otherwise). “Base Rate” means for any day a fluctuating rate per annum equal to the greater of: (i) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate” (The “prime rate” is a rate set by Bank of America based upon various factors including Bank of America’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change); and (ii) the sum of (A) the rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (x) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (y) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of America on such day on such transactions as determined by the Administrative Agent, plus (B) one-half of one percent (0.50%). 11 -------------------------------------------------------------------------------- (b) LIBOR Loans. Each LIBOR Loan made or maintained by a Bank shall bear interest during each Interest Period it is outstanding (computed on the basis of a year of 360 days and actual days elapsed) on the unpaid principal amount thereof from the date such Loan is advanced, continued, or created by conversion from a Base Rate Loan until maturity (whether by acceleration or otherwise) at a rate per annum equal to the sum of the Applicable Margin plus the LIBOR Rate applicable for such Interest Period, payable on the last day of the Interest Period and at maturity (whether by acceleration or otherwise), and, if the applicable Interest Period is longer than three months, on each day occurring every three months after the commencement of such Interest Period. “LIBOR Rate” means, for any Interest Period with respect to a LIBOR Loan, the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as designated by the Administrative Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period. If such rate is not available at such time for any reason, then the “LIBOR Rate” for such Interest Period shall be the rate per annum determined by the Administrative Agent to be the rate at which deposits in U.S. Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the LIBOR Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period.. “LIBOR Reserve Percentage” means for any Borrowing of LIBOR Loans from any Bank, the daily average for the applicable Interest Period of the actual effective rate, expressed as a decimal, at which reserves (including, without limitation, any supplemental, marginal and emergency reserves) are maintained by such Bank during such Interest Period pursuant to Regulation D of the Board of Governors of the Federal Reserve System (or any successor) on “LIBOR liabilities”, as defined in such Board’s Regulation D (or in respect of any other category of liabilities that includes deposits by reference to which the interest rate on LIBOR Loans is determined or any category of extensions of credit or other assets that include loans by non-United States offices of any Bank to United States residents), subject to any amendments of such reserve requirement by such Board or its successor, taking into account any transitional adjustments thereto. For purposes of this definition, the LIBOR Loans shall be deemed to be “LIBOR liabilities” as defined in Regulation D without benefit or credit for any prorations, exemptions or offsets under Regulation D. (c) Rate Determinations. The Administrative Agent shall determine each interest rate applicable to Obligations and the amount of all Obligations, and a determination thereof by the Administrative Agent shall be conclusive and binding except in the case of manifest error. 12 -------------------------------------------------------------------------------- Section 2.4 Minimum Borrowing Amounts. Each Borrowing of Base Rate Loans shall be in an amount not less than $1,000,000 and in integral multiples of $500,000. Each Borrowing of LIBOR Loans shall be in an amount not less than $2,000,000 and in integral multiples of $1,000,000; provided that a Borrowing of Base Rate Loans applied to pay a Reimbursement Obligation pursuant to Section 2.5(c) hereof shall be in an amount equal to such Reimbursement Obligation. Section 2.5 Manner of Borrowing Loans and Designating Interest Rates Applicable to Loans.   (a) Notice to the Administrative Agent. The Borrower shall give notice to the Administrative Agent by no later than 11:00 a.m. (Eastern time) (i) at least two (2) Business Days before the date on which the Borrower requests the Banks to advance a Borrowing of LIBOR Loans and (ii) at least one (1) Business Day before the date on which the Borrower requests the Banks to advance a Borrowing of Base Rate Loans. The Loans included in each Borrowing shall bear interest initially at the type of rate specified in such notice of a new Borrowing. Thereafter, the Borrower may from time to time elect to change or continue the type of interest rate borne by each Borrowing or, subject to Section 2.4’s minimum amount requirement for each outstanding Borrowing, a portion thereof, as follows: (i) if such Borrowing is of LIBOR Loans, on the last day of the Interest Period applicable thereto, the Borrower may continue part or all of such Borrowing as LIBOR Loans for an Interest Period or Interest Periods specified by the Borrower or convert part or all of such Borrowing into Base Rate Loans, (ii) if such Borrowing is of Base Rate Loans, on any Business Day, the Borrower may convert all or part of such Borrowing into LIBOR Loans for an Interest Period or Interest Periods specified by the Borrower. The Borrower shall give all such notices requesting the advance, continuation, or conversion of a Borrowing to the Administrative Agent by telephone or facsimile (which notice shall be irrevocable once given and, if by telephone, shall be promptly confirmed in writing). Notices of the continuation of a Borrowing of LIBOR Loans for an additional Interest Period or of the conversion of part or all of a Borrowing of LIBOR Loans into Base Rate Loans or of Base Rate Loans into LIBOR Loans must be given by no later than 11:00 a.m. (Eastern time) at least three (3) Business Days before the date of the requested continuation or conversion. All such notices concerning the advance, continuation, or conversion of a Borrowing shall specify the date of the requested advance, continuation or conversion of a Borrowing (which shall be a Business Day), the amount of the requested Borrowing to be advanced, continued, or converted, the type of Loans to comprise such new, continued or converted Borrowing and, if such Borrowing is to be comprised of LIBOR Loans, the Interest Period applicable thereto. The Borrower agrees that the Administrative Agent may rely on any such telephonic or facsimile notice given by any person it in good faith believes is an Authorized Representative without the necessity of independent investigation, and in the event any such notice by telephone conflicts with any written confirmation, such telephonic notice shall govern if the Administrative Agent has acted in reliance thereon. There may be no more than fifteen different Interest Periods in effect at any one time; provided that for purposes of determining the number of Interest Periods in effect at any one time, all Base Rate Loans shall be deemed to have one and the same Interest Period. (b) Notice to the Banks. The Administrative Agent shall give prompt telephonic or facsimile notice to each Bank of any notice from the Borrower received pursuant to Section 2.5(a) above. The Administrative Agent shall give notice to the Borrower and each Bank by like means of the interest rate applicable to each Borrowing of LIBOR Loans. 13 -------------------------------------------------------------------------------- (c) Borrower’s Failure to Notify. Any outstanding Borrowing of Base Rate Loans shall, subject to Section 6.2 hereof, automatically be continued for an additional Interest Period on the last day of its then current Interest Period as a Base Rate Loan unless the Borrower has notified the Administrative Agent within the period required by Section 2.5(a) that it intends to convert such Borrowing into a Borrowing of LIBOR Loans or notifies the Administrative Agent within the period required by Section 2.8(a) that it intends to prepay such Borrowing. If the Borrower fails to give notice pursuant to Section 2.5(a) above of the continuation or conversion of any outstanding principal amount of a Borrowing of LIBOR Loans before the last day of its then current Interest Period within the period required by Section 2.5(a) and has not notified the Administrative Agent within the period required by Section 2.8(a) that it intends to prepay such Borrowing, such Borrowing shall automatically be converted into a Borrowing of Base Rate Loans, subject to Section 6.2 hereof. The Administrative Agent shall promptly notify the Banks of the Borrower’s failure to so give a notice under Section 2.5(a). In the event Borrower fails to give notice pursuant to Section 2.5(a) above of a Borrowing equal to the amount of a Reimbursement Obligation and has not notified the Administrative Agent by 12:00 noon (Eastern time) on the day such Reimbursement Obligation becomes due that it intends to repay such Reimbursement Obligation through funds not borrowed under this Agreement, Borrower shall be deemed to have requested a Borrowing of Base Rate Loans on such day in the amount of the Reimbursement Obligation then due, subject to Section 6.2 hereof, which Borrowing shall be applied to pay the Reimbursement Obligation then due. (d) Disbursement of Loans. Not later than 12:00 noon (Eastern time) on the date of any requested advance of a new Borrowing of LIBOR Loans, and not later than 1:00 p.m. (Eastern time) on the date of any requested advance of a new Borrowing of Base Rate Loans, subject to Section 6 hereof, each Bank shall make available its Loan comprising part of such Borrowing in funds immediately available at the Administrative Agent Office. The Administrative Agent shall make available to the Borrower Loans at the Administrative Agent’s Office or such other office as the Administrative Agent has previously agreed in writing to with the Borrower, in each case in the type of funds received by the Administrative Agent from the Banks. (e) Administrative Agent Reliance on Bank Funding. Unless the Administrative Agent shall have been notified by a Bank before the date on which such Bank is scheduled to make payment to the Administrative Agent of the proceeds of a Loan (which notice shall be effective upon receipt) that such Bank does not intend to make such payment, the Administrative Agent may assume that such Bank has made such payment when due and the Administrative Agent may in reliance upon such assumption (but shall not be required to) make available to the Borrower the proceeds of the Loan to be made by such Bank and, if any Bank has not in fact made such payment to the Administrative Agent, such Bank shall, on demand, pay to the Administrative Agent the amount made available to the Borrower attributable to such Bank together with interest thereon in respect of each day during the period commencing on the date such amount was made available to the Borrower and ending on (but excluding) the date such Bank pays such amount to the Administrative Agent at a rate per annum equal to the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by the Administrative Agent in connection with the foregoing. If such amount is not received from such Bank by the Administrative Agent immediately upon demand, the Borrower will, on demand, repay to the Administrative Agent the proceeds of the Loan attributable to such Bank with interest thereon at a rate per annum equal to the interest rate applicable to the relevant Loan; provided that such a repayment by the Borrower shall not be subject to Section 2.11 hereof. 14 -------------------------------------------------------------------------------- Section 2.6 Interest Periods. As provided in Section 2.5(a) hereof, at the time of each request to advance, continue, or create by conversion a Borrowing of LIBOR Loans, the Borrower shall select an Interest Period applicable to such Loans from among the available options. The term “Interest Period” means the period commencing on the date a Borrowing of Loans is advanced, continued, or created by conversion and ending: (a) in the case of Base Rate Loans, on the last Business Day of the calendar quarter in which such Borrowing is advanced, continued, or created by conversion (or on the last day of the following calendar quarter if such Loan is advanced, continued or created by conversion on the last Business Day of a calendar quarter), and (b) in the case of LIBOR Loans, 1, 2, 3, or 6 months thereafter; provided, however, that:   (a) any Interest Period for a Borrowing of Base Rate Loans that otherwise would end after the Termination Date shall end on the Termination Date; (b) for any Borrowing of LIBOR Loans, the Borrower may not select an Interest Period that extends beyond the Termination Date; (c) whenever the last day of any Interest Period would otherwise be a day that is not a Business Day, the last day of such Interest Period shall be extended to the next succeeding Business Day; provided that, if such extension would cause the last day of an Interest Period for a Borrowing of LIBOR Loans to occur in the following calendar month, the last day of such Interest Period shall be the immediately preceding Business Day; and (d) for purposes of determining an Interest Period for a Borrowing of LIBOR Loans, a month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month; provided, however, that if there is no numerically corresponding day in the month in which such an Interest Period is to end or if such an Interest Period begins on the last Business Day of a calendar month, then such Interest Period shall end on the last Business Day of the calendar month in which such Interest Period is to end. Section 2.7 Maturity of Loans. Subject to the terms of Section 2.1(c) and unless an earlier maturity is provided for hereunder (whether by acceleration or otherwise), each Loan shall mature and become due and payable by the Borrower on the Termination Date. Section 2.8 Prepayments. (a) The Borrower may prepay without premium or penalty and in whole or in part (but, if in part, then: (i) if such Borrowing is of Base Rate Loans, in an amount not less than $1,000,000 and integral multiples of $500,000 in excess thereof, (ii) if such Borrowing is of LIBOR Loans, in an amount not less than $2,000,000 and integral multiples of $1,000,000 in excess thereof and (iii) in an amount such that the minimum amount required for a Borrowing pursuant to Section 2.4 hereof remains outstanding) any Borrowing of LIBOR Loans upon three Business Days’ prior notice to the Administrative Agent or, in the case of a Borrowing of Base Rate Loans, notice delivered to the Administrative Agent no later than 11:00 a.m. (Eastern time) on the date of prepayment, such prepayment to be made by the payment of the principal amount to be prepaid and accrued interest thereon to the date fixed for prepayment. In the case of LIBOR Loans, any amounts owing under Section 2.11 hereof as a result of such prepayment shall be paid contemporaneously with such prepayment. The Administrative Agent will promptly advise each Bank of any such prepayment notice it receives from the Borrower. Any amount paid or prepaid before the Termination Date may, subject to the terms and conditions of this Agreement, be borrowed, repaid and borrowed again. 15 -------------------------------------------------------------------------------- (b) At any time that the Borrower becomes aware, or should have become aware (pursuant to Borrower’s ordinary business practices) that the aggregate amount of outstanding Loans and L/C Obligations shall at any time for any reason exceed the Revolving Credit Commitments then in effect, the Borrower shall, immediately notify the Administrative Agent of this determination. Within two (2) Business Days of the delivery of the notice described in the preceding sentence, the Borrower shall, without further notice or demand, pay the amount of such excess to the Administrative Agent for the ratable benefit of the Banks as a prepayment of the Loans and, if necessary, a cash collateralization of the Letters of Credit. Each such prepayment shall be accompanied by a payment of all accrued and unpaid interest on the Loans prepaid and shall be subject to Section 2.11. Section 2.9 Default Rate. If any payment of principal on any Loan or other Obligation is not made when due (whether by acceleration or otherwise), such Loan shall bear interest (computed on the basis of a year of 360 days and actual days elapsed or, if based on the rate described in clause (i) of the definition of Base Rate, on the basis of a year of 365 or 366 days, as applicable, and the actual number of days elapsed) from the date such payment was due until paid in full, payable on demand, at a rate per annum equal to: (a) for any Base Rate Loan or Obligation other than a LIBOR Loan, the sum of two percent (2%) plus the Applicable Margin for Base Rate Loans plus the Base Rate from time to time in effect; and (b) for any LIBOR Loan, the sum of two percent (2%) plus the rate of interest in effect thereon at the time of such default until the end of the Interest Period applicable thereto and, thereafter, at a rate per annum equal to the sum of two percent (2%) plus the Applicable Margin plus the Base Rate from time to time in effect.   Section 2.10 Evidence of Debt.   (a) Each Bank shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Bank resulting from each Loan owing to such Bank from time to time, including the amounts of principal and interest payable and paid to such Bank from time to time hereunder in respect of Loans. The Borrower agrees that upon notice by any Bank to the Borrower (with a copy of such notice to the Administrative Agent) to the effect that a Note is required or appropriate in order for such Bank to evidence (whether for purposes of pledge, enforcement or otherwise) the Loans owing to, or to be made by, such Bank under the Credit Documents, the Borrower shall promptly execute and deliver to such Bank a promissory note in the form of Exhibit 2.10 hereto (each such promissory note is hereinafter referred to as a “Note” and collectively such promissory notes are referred to as the “Notes”). (b) The Register maintained by the Administrative Agent pursuant to Section 11.12(c) shall include a control account, and a subsidiary account for each Bank, in which accounts (taken together) shall be recorded (i) the date and amount of each Borrowing made hereunder, the type of Loan comprising such Borrowing and, if appropriate, the Interest Period applicable thereto, (ii) the terms of each Assignment and Acceptance delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Bank hereunder and (iv) the amount of any sum received by the Administrative Agent from the Borrower hereunder and each Bank’s share thereof. (c) Entries made in good faith by the Administrative Agent in the Register pursuant to subsection (b) above, and by each Bank in its account or accounts pursuant to subsection (a) above, shall be prima facie evidence of the amount of principal and interest due and payable or to become due and payable from the Borrower to, in the case of the Register, each Bank and, in the case of such account or accounts, such Bank, under this Agreement, absent manifest error; provided, however, that the failure of the Administrative Agent or such Bank to make an entry, or any finding that an entry is incorrect, in the Register or such account or accounts shall not limit or otherwise affect the obligations of the Borrower under this Agreement.   16 -------------------------------------------------------------------------------- Section 2.11 Funding Indemnity. If any Bank shall incur any loss, cost or expense (including, without limitation, any loss, cost or expense (excluding loss of margin) incurred by reason of the liquidation or re-employment of deposits or other funds acquired by such Bank to fund or maintain any LIBOR Loan or the relending or reinvesting of such deposits or amounts paid or prepaid to such Bank) as a result of: (a) any payment (whether by acceleration or otherwise), prepayment or conversion of a LIBOR Loan on a date other than the last day of its Interest Period, (b) any failure (because of a failure to meet the conditions of Section 6 or otherwise) by the Borrower to borrow or continue a LIBOR Loan, or to convert a Base Rate Loan into a LIBOR Loan, on the date specified in a notice given pursuant to Section 2.5(a) or established pursuant to Section 2.5(c) hereof, (c) any failure by the Borrower to make any payment of principal on any LIBOR Loan when due (whether by acceleration or otherwise), or (d) any acceleration of the maturity of a LIBOR Loan as a result of the occurrence of any Event of Default hereunder, then, upon the demand of such Bank, the Borrower shall pay to such Bank such amount as will reimburse such Bank for such loss, cost or expense. If any Bank makes such a claim for compensation, it shall provide to the Borrower, with a copy to the Administrative Agent, a certificate executed by an officer of such Bank setting forth the amount of such loss, cost or expense in reasonable detail (including an explanation of the basis for and the computation of such loss, cost or expense) and the amounts shown on such certificate if reasonably calculated shall be conclusive absent manifest error. Section 2.12 Revolving Credit Commitment Terminations. The Borrower shall have the right at any time and from time to time, upon five (5) Business Days’ prior written notice to the Administrative Agent, to terminate the Revolving Credit Commitments without premium or penalty, in whole or in part, any partial termination to be (i) in an amount not less than $5,000,000 and integral multiples of $1,000,000 in excess thereof, and (ii) allocated ratably among the Banks in proportion to their respective Percentages; provided that the Revolving Credit Commitments may not be reduced to an amount less than the sum of the amount of all Loans and all L/C Obligations then outstanding. The Administrative Agent shall give prompt notice to each Bank of any such termination of Revolving Credit Commitments. Any termination of Revolving Credit Commitments pursuant to this Section 2.12 may not be reinstated. Section 2.13 Regulation D Compensation. Each Bank may require the Borrower to pay, contemporaneously with each payment of interest on the LIBOR Loans, additional interest on the related LIBOR Loans of such Bank at a rate per annum equal to the excess of (i)(A) the applicable LIBOR rate (or other base rate determined pursuant to Section 2.9(b)) divided by (B) one minus the LIBOR Reserve Percentage over (ii) the rate specified in clause (i)(A). Any computation by a Bank of such additional interest shall be conclusive absent manifest error. Any Bank wishing to require payment of such additional interest (x) shall notify the Borrower and the Administrative Agent that it is subject to LIBOR reserves under Regulation D of the Board of Governors of the Federal Reserve System (or any successor regulation), in which case such additional interest on the LIBOR Loans of such Bank shall be payable to such Bank at the place indicated in such notice with respect to each Interest Period commencing at least five (5) Business Days after the giving of such notice and (y) shall notify the Borrower at least five (5) Business Days prior to each date on which interest is payable on the LIBOR Loans of the amount then due under this Section. 17 -------------------------------------------------------------------------------- Section 2.14 Arbitrage Compensation. If at the time of the making of any Loan hereunder, the interest rate payable hereunder in respect of such Loan is less than the rate (as determined by the Administrative Agent in consultation with the Borrower) at which funds of comparable term and amount are generally available to the Borrower in the commercial paper market (the “CP Rate”) (an “Arbitrage Condition”), the Borrower agrees to pay to the Administrative Agent for the account of each Bank arbitrage compensation on such Loan at a rate equal to the difference between the effective interest rate payable hereunder (inclusive of all fees) in respect of such Loan and the CP Rate as applied to such Loan. Such payments shall continue, at the time and in the manner set forth for payments of interest on such Loan, for as long as the Arbitrage Condition continues. Upon the termination of the Arbitrage Condition for any reason (as determined by the Administrative Agent in consultation with the Borrower), such payments shall no longer be due with respect to such Loan, even if a future Arbitrage Condition were to occur prior to repayment in full of such Loan. SECTION 3. FEES. Section 3.1 Fees. (a) Commitment Fee. For the period from the Effective Date to and including the Termination Date, Borrower shall pay to the Administrative Agent for the ratable account of the Banks in accordance with their Percentages a commitment fee accruing at a rate per annum equal to the Commitment Fee Rate on the average daily amount of the unused Revolving Credit Commitments. Such commitment fee is payable in arrears on June 30, 2006, on the last Business Day of each calendar quarter thereafter and on the Termination Date, unless the Revolving Credit Commitments are terminated in whole on an earlier date, in which event the fee for the period to but not including the date of such termination shall be paid in whole on the date of such termination. (b) Letter of Credit Fees. (i) Borrower shall pay to the Administrative Agent for the account of each Bank letter of credit fees with respect to the Letters of Credit at a rate per annum equal to the L/C Fee Rate on the average daily maximum undrawn face amount of such outstanding Letters of Credit (including any Letters of Credit outstanding after the termination of the Commitments), computed in each case on a quarterly basis in arrears on the last Business Day of each calendar quarter and on the Termination Date. (ii) Borrower shall pay to the Administrative Agent for the benefit of each Issuing Bank, as issuer of each Letter of Credit issued by such Issuing Bank, for the sole account of such Issuing Bank, a letter of credit fronting fee for each outstanding Letter of Credit issued by such Issuing Bank at the rate set forth in the BofA Fee Letter (or in the case of an Issuing Bank other that Bank of America, N.A., an amount to be agreed by the Borrower and such Issuing Bank and disclosed to the Administrative Agent) on the average daily maximum undrawn face amount of outstanding Letters of Credit (including any Letters of Credit outstanding after the termination of the Commitments), computed on the last Business Day of each calendar quarter and on the Termination Date. 18 -------------------------------------------------------------------------------- (iii) The letter of credit fees payable under Section 3.1(b)(i) and the fronting fees payable under Section 3.1(b)(ii) shall be due and payable quarterly in arrears on the last Business Day of each calendar quarter during which Letters of Credit are outstanding, commencing on the first such quarterly date to occur after the Effective Date, and on the Termination Date, and if the Commitments are terminated in whole on an earlier date, the fee for the period to but not including the date of such termination shall be paid in whole on the date of such termination.   (iv) Borrower shall pay to each Issuing Bank from time to time on demand the standard costs and charges of such Issuing Bank relating to letters of credit as from time to time in effect. Each Issuing Bank shall provide the Borrower with a schedule of such costs and charges in effect from time to time. (c) Administrative Agent Fees. The Borrower shall pay to the Administrative Agent for the sole account of the Administrative Agent the fees set forth in the BofA Fee Letter or as otherwise agreed to by the parties to the BofA Fee Letter. (d) Arranger Fees. Borrower shall pay to the Arrangers for the accounts of the Arrangers (and no other Persons) the fees agreed to among the Arrangers and Borrower in the Joint Fee Letter or as otherwise agreed in writing among them. (e) Participation Fee. Borrower shall pay to each Bank for the account of each such Bank on the Effective Date a participation fee equal to .05% of such Bank’s Revolving Credit Commitment. (f) Fee Calculations. All fees payable under this Agreement shall be payable in U.S. Dollars and shall be computed on the basis of a year of 360 days, for the actual number of days elapsed. All determinations of the amount of fees owing hereunder (and the components thereof) shall be made by the Administrative Agent and shall be conclusive absent manifest error. Section 3.2 Replacement of Banks. If any Bank requests compensation pursuant to Section 9.3 or 11.1 hereof, or any Bank’s obligations to make Loans shall be suspended pursuant to Section 9.1 or 9.2 hereof, or any Bank becomes a Defaulting Bank pursuant to Section 11.13 hereof (any such Bank requesting such compensation, or whose obligations are so suspended, or that becomes and remains a Defaulting Bank being herein called a “Subject Bank”), the Borrower, upon three Business Days’ notice to the Administrative Agent and the Subject Bank, may require that such Subject Bank enter into an agreement in form and substance satisfactory to the Borrower and the Administrative Agent which transfers all of its right, title and interest under this Agreement and such Subject Bank’s Note to any bank or other financial institution (a “Proposed Bank”) identified by the Borrower that is satisfactory to the Administrative Agent; provided that (i) the Administrative Agent shall have received an assignment fee in accordance with Section 11.12(b), (ii) such Proposed Bank agrees to assume all of the obligations of such Subject Bank hereunder, and to purchase all of such Subject Bank’s Loans for a consideration equal to the aggregate outstanding principal amount of such Subject Bank’s Loans, together with interest thereon to the date of such purchase, and satisfactory arrangements are made for payment to such Subject Bank of all other amounts payable hereunder to such Subject Bank on or prior to the date of such transfer (including any fees accrued hereunder, any requested compensation pursuant to Section 9.3 or 11.1 hereof and any amounts that would be payable under Section 2.11 hereof as if all of such Subject Bank’s Loans were being prepaid in full on such date), (iii) if such Subject Bank has requested compensation pursuant to Section 9.3 or 11.1 hereof, such Proposed Bank’s aggregate requested compensation, if any, pursuant to said Section 9.3 or 11.1 with respect to such Subject Bank’s Loans is lower than that of the Subject Bank, and thereupon such Proposed Bank shall be a “Bank” for all purposes of this Agreement and (iv) such assignment does not conflict with applicable laws. 19 -------------------------------------------------------------------------------- SECTION 4. PLACE AND APPLICATION OF PAYMENTS. Section 4.1 Place and Application of Payments. All payments of principal of and interest on the Loans, and of all other Obligations and other amounts payable by the Borrower under the Credit Documents, shall be made by the Borrower to the Administrative Agent or the applicable Issuing Bank if such payment is being made with respect to a Reimbursement Obligation, by no later than 1:30 p.m. (Eastern time) on the due date thereof at the principal office of the Administrative Agent or the applicable Issuing Bank, as applicable, as set forth on Schedule 11.8 hereof (or such other location in the United States as the Administrative Agent or the applicable Issuing Bank, as applicable, may designate to the Borrower) or, if such payment is on a Reimbursement Obligation, no later than provided by Section 2.2(c) hereof, in each case for the benefit of the Person or Persons entitled thereto. Any payments received after such time shall be deemed to have been received by the Administrative Agent or the Issuing Bank on the next Business Day. All such payments shall be made free and clear of, and without deduction for, any set-off, counterclaim, levy, or any other deduction of any kind in U.S. Dollars, in immediately available funds at the place of payment. The Administrative Agent or the applicable Issuing Bank, as applicable, will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest on Loans or applicable fees ratably to the Banks and like funds relating to the payment of any other amount payable to any Person to such Person, in each case to be applied in accordance with the terms of this Agreement. SECTION 5. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and warrants to each Bank as to itself and, where the following representations and warranties apply to Subsidiaries, as to each of its Subsidiaries, as follows: Section 5.1 Corporate Organization and Authority. The Borrower is duly organized and existing in good standing under the laws of the State of Illinois; has all necessary corporate power to carry on its present business; and is duly licensed or qualified and, in good standing in each jurisdiction in which the failure to be so licensed, qualified or in good standing would have a Material Adverse Effect. Section 5.2 Corporate Authority and Validity of Obligations. The Borrower has full right and authority to enter into this Agreement and the other Credit Documents to which it is a party, to make the borrowings herein provided for, to issue its Notes in evidence thereof (and to have applied) for the issuance of the Letters of Credit, and to perform all of its obligations under the Credit Documents to which it is a party. Each Credit Document to which it is a party has been duly authorized, executed and delivered by the Borrower and constitutes valid and binding obligations of the Borrower enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforceability of creditors’ rights generally and by equitable principles of general applicability (regardless of whether such enforceability is considered in a proceeding in equity or at law). No Credit Document, nor the performance or observance by the Borrower of any of the matters or things therein provided for, contravenes any provision of law or any charter or by-law provision of the Borrower or any material Contractual Obligation of or affecting the Borrower or any of its Properties or results in or requires the creation or imposition of any Lien on any of the Properties or revenues of the Borrower. 20 -------------------------------------------------------------------------------- Section 5.3 Financial Statements. All financial statements heretofore delivered to the Banks showing historical performance of the Borrower for each of the Borrower’s fiscal years ending on or before September 30, 2005, have been prepared in accordance with generally accepted accounting principles applied on a basis consistent, except as otherwise noted therein, with that of the previous fiscal year. Each of such financial statements fairly presents on a consolidated basis the financial condition of the Borrower and its Subsidiaries as of the dates thereof and the results of operations for the periods covered thereby. The Borrower and its Subsidiaries have no material contingent liabilities other than those disclosed in the financial statements or in comments or footnotes thereto, or in any report supplementary thereto, most recently furnished to the Banks as of the time such representation and warranty is made, including reports of the Borrower filed with the SEC from time to time. Since September 30, 2005 through the Effective Date, there has been no event or series of events which has resulted in a Material Adverse Effect. Section 5.4 Approvals. No authorization, approval, consent, license, exemption, filing or registration with any court or governmental department, agency or instrumentality, nor any approval or consent of the stockholders of the Borrower or any Subsidiary or from any other Person, is necessary to the valid execution, delivery or performance by the Borrower or any Subsidiary of any Credit Document to which it is a party. Section 5.5 ERISA. With respect to each Plan, the Borrower and each other member of the Controlled Group has fulfilled its obligations under the minimum funding standards of and is in compliance in all material respects with the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and with the Code to the extent applicable to it and has not incurred any liability to the Pension Benefit Guaranty Corporation (“PBGC”) or a Plan under Title IV of ERISA other than a liability to the PBGC for premiums under Section 4007 of ERISA. Neither the Borrower nor any Subsidiary has any contingent liabilities for any post-retirement benefits under a Welfare Plan, other than liability for continuation coverage described in Part 6 of Title I of ERISA. Section 5.6 Government Regulation. Neither the Borrower nor any Subsidiary is an “investment company” within the meaning of the Investment Company Act of 1940, as amended. Section 5.7 Margin Stock; Proceeds. Neither the Borrower nor any Subsidiary is engaged principally, or as one of its primary activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (“margin stock” to have the same meaning herein as in Regulation U of the Board of Governors of the Federal Reserve System). The Borrower will not use the proceeds of any Loan or any Letter of Credit in a manner that violates any provision of Regulation U or X of the Board of Governors of the Federal Reserve System. The Borrower is not subject to regulation under the Investment Company Act of 1940. In addition, the Borrower is not an “investment company” registered or required to be registered under the Investment Company Act of 1940. Proceeds of the Loans and the Letters of Credit will only be used to backstop commercial paper issued by the Borrower and for general corporate purposes. Section 5.8 Full Disclosure. All information heretofore furnished by the Borrower to the Administrative Agent or any Bank for purposes of or in connection with the Credit Documents or any transaction contemplated thereby is, and all such information hereafter furnished by the Borrower to the Administrative Agent or any Bank will be, to the best of the Borrower’s knowledge, after due inquiry, true and accurate in all material respects and not misleading on the date as of which such information is stated or certified.   21 -------------------------------------------------------------------------------- SECTION 6. CONDITIONS PRECEDENT. The obligation of each Bank to advance any Loan, or of an Issuing Bank to issue, extend the expiration date of or increase the amount of any Letter of Credit, shall be subject to the following conditions precedent:   Section 6.1 Initial Credit Event. Before or concurrently with the Effective Date: (a) The Administrative Agent shall have received the favorable written opinion of counsel to the Borrower reasonably acceptable to Administrative Agent and in substantially the form attached hereto as Exhibit 6.1 hereto; (b) The Administrative Agent shall have received copies of (i) the Articles of Incorporation, together with all amendments, recently certified by the appropriate governmental authority and (ii) the Borrower’s bylaws (or comparable constituent documents) and any amendments thereto, certified in each instance by its Secretary or an Assistant Secretary; (c) The Administrative Agent shall have received copies of resolutions of the Borrower’s Board of Directors authorizing the execution and delivery of the Credit Documents and the consummation of the transactions contemplated thereby together with specimen signatures of the persons authorized to execute such documents on the Borrower’s behalf, all certified in each instance by its Secretary or an Assistant Secretary; (d) The Administrative Agent shall have received for each Bank that has requested one, such Bank’s duly executed Note of the Borrower dated the date hereof and otherwise in compliance with the provisions of Section 2.10(a) hereof; (e) The Administrative Agent shall have received a duly executed original of (i) this Agreement, (ii) a list of the Borrower’s Authorized Representatives and (iii) such other documents as the Administrative Agent may reasonably request on behalf of any Bank; (f) The Administrative Agent shall have received a certificate by the chief financial officer of the Borrower, stating that on the Effective Date no Default or Event of Default has occurred and is continuing, that all representations and warranties set forth herein are true and correct as of such date, and that the Existing Credit Agreement has been terminated (and by its execution hereof each Bank party to the Existing Credit Agreement agrees that the Existing Credit Agreement is terminated); (g) With respect to all Indebtedness and other obligations, absolute or contingent, under the Existing Credit Agreement, a payoff letter from the agent for the lenders thereunder in form and substance reasonably satisfactory to the Administrative Agent, together with such termination statements, releases of mortgage Liens and other instruments, documents and/or agreements necessary or appropriate to terminate any Liens in favor of such agent securing such obligations which is to be paid off on the Effective Date as the Administrative Agent may reasonably request, duly executed and in form and substance reasonably satisfactory to the Administrative Agent; (h) The Administrative Agent shall have received a duly executed original of the Fee Letters together with any fees then payable thereunder, and each Bank shall have received its participation fee; and (i) The Administrative Agent shall have received a duly executed Compliance Certificate containing information as of March 31, 2006.   22 -------------------------------------------------------------------------------- Section 6.2 All Credit Events. As of the time of each Credit Event hereunder: (a) In the case of any Loan, the Administrative Agent shall have received the notice required by Section 2.5 hereof. In the case of the issuance of any Letter of Credit, the applicable Issuing Bank shall have received the request for such Letter of Credit required by Section 2.2(b), and a duly completed Application for a Letter of Credit. In the case of an extension or increase in the amount of a Letter of Credit, the applicable Issuing Bank shall have received a written request therefor, in a form acceptable to such Issuing Bank (b) Each of the representations and warranties set forth in Section 5 hereof (except the last sentence of Section 5.3) shall be and remain true and correct in all material respects as of said time, taking into account any amendments to such Section (including without limitation any amendments, modifications and updates to the Schedules referenced therein) made after the date of this Agreement in accordance with its provisions, except that if any such representation or warranty relates solely to an earlier date it need only remain true as of such date; and (c) The Borrower shall be in full compliance with all of the terms and conditions hereof, and no Default or Event of Default shall have occurred and be continuing or would occur as a result of such Credit Event. Each request for a Borrowing consisting of an advance of a Loan hereunder shall be deemed to be a representation and warranty by the Borrower on the date of such Credit Event as to the facts specified in paragraphs (b) and (c) of this Section 6.2.   SECTION 7. COVENANTS. The Borrower covenants and agrees that, so long as any Note, Loan or L/C Obligation is outstanding hereunder, or any Revolving Credit Commitment is available to or in use by the Borrower hereunder, except to the extent compliance in any case is waived in writing by the Required Banks:   Section 7.1 Corporate Existence. Borrower shall preserve and maintain its corporate existence.   Section 7.2 ERISA. The Borrower will, and will cause each of its Subsidiaries to, promptly pay and discharge all obligations and liabilities arising under ERISA of a character which if unpaid or unperformed might result in the imposition of a Lien against any of its properties or assets and will promptly notify the Administrative Agent of (i) the occurrence of any reportable event (as defined in ERISA) affecting a Plan, other than any such event of which the PBGC has waived notice by regulation, (ii) receipt of any notice from PBGC of its intention to seek termination of any Plan or appointment of a trustee therefor, (iii) its or any of its Subsidiaries’ intention to terminate or withdraw from any Plan, and (iv) the occurrence of any event affecting any Plan which could result in the incurrence by the Borrower or any of its Subsidiaries of any material liability, fine or penalty, or any material increase in the contingent liability of the Borrower or any of its Subsidiaries under any post-retirement Welfare Plan benefit. The Administrative Agent will promptly distribute to each Bank any notice it receives from the Borrower pursuant to this Section 7.2. 23 -------------------------------------------------------------------------------- Section 7.3 Financial Reports and Other Information. (a) The Borrower will maintain a system of accounting in accordance with GAAP and will furnish to the Banks and their respective duly authorized representatives such information respecting the business and financial condition of the Borrower as any Bank may reasonably request; and without any request, the Borrower will furnish each of the following to the Administrative Agent: (i) within one hundred twenty (120) days after the end of its fiscal year of the Borrower, a copy of the Borrower’s financial statements for such fiscal year, including the consolidated balance sheet of the Borrower for such year and the related statement of income and statement of cash flow, as certified by independent public accountants of recognized national standing selected by the Borrower in accordance with GAAP with such accountants’ opinion to the effect that the financial statements have been prepared in accordance with GAAP and present fairly in all material respects in accordance with GAAP the consolidated financial position of the Borrower and its Subsidiaries as of the close of such fiscal year and the results of their operations and cash flows for the fiscal year then ended and that an examination of such accounts in connection with such financial statements has been made in accordance with generally accepted auditing standards and, accordingly, such examination included such tests of the accounting records and such other auditing procedures as were considered necessary in the circumstances; (ii) within sixty (60) days after the end of each of the three quarterly fiscal periods of the Borrower during the term hereof, a consolidated unaudited balance sheet of the Borrower, and the related statement of income and statement of cash flow, as of the close of such period, all of the foregoing prepared by the Borrower in reasonable detail in accordance with GAAP and certified by the Borrower’s chief financial officer as fairly presenting the financial condition as at the dates thereof and the results of operations for the periods covered thereby; and (iii) within five (5) days after Borrower files a Form 8-K with the SEC, a copy of said form 8-K. (b) Each financial statement furnished to the Banks pursuant to subsection (i) or (ii) of this Section 7.3 shall be accompanied by (i) a written certificate signed by the Borrower’s chief financial officer to the effect that no Default or Event of Default has occurred during the period covered by such statements or, if any such Default or Event of Default has occurred during such period, setting forth a description of such Default or Event of Default and specifying the action, if any, taken by the Borrower to remedy the same, and (ii) a Compliance Certificate in the form of Exhibit 7.3 hereto showing the Borrower’s compliance with the covenants set forth in Sections 7.5 and 7.6 hereof. (c) The Borrower will promptly (and in any event within five Business Days after an officer of the Borrower has knowledge thereof) give notice to the Administrative Agent and each Bank of the occurrence of any Default or Event of Default. 24 -------------------------------------------------------------------------------- The Borrower hereby acknowledges that (A) the Administrative Agent and/or the Arrangers will make available to the Banks and the Issuing Bank materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on IntraLinks or another similar electronic system (the “Platform”) and (B) certain of the Banks may be “public-side” Banks (i.e., Banks that do not wish to receive material non-public information with respect to the Borrower or its securities) (each, a “Public Bank”). The Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Banks shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the Arranger and the Banks to treat such Borrower Materials as not containing any material non-public information with respect to the Borrower or its securities for purposes of United States federal and state securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 11.21); (y) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated as “Public Investor;” and (z) the Administrative Agent and the Arranger shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not marked as “Public Investor.” Notwithstanding the foregoing, the Borrower shall be under no obligation to mark any Borrower Materials “PUBLIC.” Section 7.4 Regulation U; Proceeds. The Borrower will not use any part of the proceeds of any of the Borrowings or any of the credit provided by Letters of Credit, directly or indirectly to purchase or carry any margin stock (as defined in Section 5.7 hereof) or to extend credit to others for the purpose of purchasing or carrying any such margin stock. The Borrower will only use proceeds of the Loans for general corporate purposes. Section 7.5 Sales of Assets. (a) The Borrower will not during the term of this Agreement sell, lease or otherwise dispose of more that (i) thirty-five percent (35%) of the consolidated fixed assets of the Borrower or (ii) fifteen percent (15%) of the consolidated "regulated assets" of the Borrower. For purposes of this Section 7.5(a) the amount of consolidated fixed assets shall be determined using the net book value of such assets at the time of such sale, lease or disposition. (b) The Borrower will not during the term of this Agreement sell, transfer or otherwise dispose of, or permit any Subsidiary to issue, sell, transfer or otherwise dispose of, more than twenty percent (20%) of any of its public utility Subsidiaries' shares of stock of any class (including as “stock” for purposes of this Section, any warrants, rights or options to purchase or otherwise acquire stock or other Securities exchangeable for or convertible into stock). Section 7.6 Capital Ratio. The Borrower will not at any time permit the Capital Ratio to exceed 0.65 to 1.00.   Section 7.7 Compliance with Laws. Without limiting any of the other covenants of the Borrower in this Section 7, the Borrower will conduct its business, and otherwise be, in compliance with all applicable laws, regulations, ordinances and orders of any governmental or judicial authorities; provided, however, that the Borrower shall not be required to comply with any such law, regulation, ordinance or order if the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect. 25 -------------------------------------------------------------------------------- Section 7.8 Mergers and Consolidations. The Borrower will not, and will not permit any public utility Subsidiary, to consolidate with or be a party to merger with any other Person; provided, however, that the Borrower or any public utility Subsidiary of the Borrower may, upon prior notice to the Agent, enter into one or more mergers or acquisitions with any other Person so long as (a) in the case of the Borrower, the Borrower is the surviving entity and (b) in the case of a public utility Subsidiary of the Borrower, the Borrower will at all times continue to own at least 80% of the equity securities of such public utility Subsidiary. SECTION 8. EVENTS OF DEFAULT AND REMEDIES.   Section 8.1 Events of Default. Any one or more of the following shall constitute an Event of Default: (a) non-payment (i) when due of the principal of any Loan or any Reimbursement Obligation or (ii) in the payment of fees, interest or of any other Obligation within five (5) days of the due date; (b) default by the Borrower in the observance or performance of any covenant set forth in Section 7.1 or (ii) Section 7.3(c), Section 7.4 through 7.6 hereof; (c) default by the Borrower in the observance or performance of any provision hereof or of any other Credit Document not mentioned in (a) or (b) above, which is not remedied within thirty (30) days after notice thereof shall have been given to the Borrower by the Administrative Agent, provided that, with respect only to Section 7.7, if Borrower has made good faith efforts to cure such default, then the Borrower shall be afforded an additional period of time to cure such default, such additional cure period not to exceed thirty (30) days; (d) failure to pay when due Indebtedness in an aggregate principal amount of $15,000,000 or more of the Borrower, or (ii) default shall occur under one or more indentures, agreements or other instruments under which any Indebtedness of the Borrower in an aggregate principal amount of $15,000,000 or more and such default shall continue for a period of time sufficient to permit the holder or beneficiary of such Indebtedness or a trustee therefor to cause the acceleration of the maturity of any such Indebtedness or any mandatory unscheduled prepayment, purchase or funding; (e) representation or warranty made herein or in any other Credit Document by the Borrower, or in any statement or certificate furnished pursuant hereto or pursuant to any other Credit Document by the Borrower, or in connection with any Credit Document, proves untrue in any material respect as of the date of the issuance or making, or deemed making or issuance, thereof; (f) Borrower shall (i) have entered involuntarily against it an order for relief under the United States Bankruptcy Code, as amended, or any analogous action is taken under any other applicable law relating to bankruptcy or insolvency and such action continues undischarged or is not dismissed or stayed for a period of sixty (60) days, (ii) fail to pay its debts generally as they become due and such failure to pay would constitute an Event of Default under Section 8.1(d) or admit in writing its inability to pay its debts generally as they become due, (iii) make an assignment for the benefit of creditors, (iv) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its Property, (v) institute any proceeding seeking to have entered against it an order for relief under the United States Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (vi) take any corporate action (such as the passage by its board of directors of a resolution) in furtherance of any matter described in parts (i)-(v) above, or (vii) fail to contest in good faith any appointment or proceeding described in Section 8.1(g) hereof; 26 -------------------------------------------------------------------------------- (g) Custodian, receiver, trustee, examiner, liquidator or similar official shall be appointed for the Borrower or any of its Significant Subsidiaries, or any substantial part of any of their Property, or a proceeding described in Section 8.1(f)(v) shall be instituted against the Borrower, and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of sixty (60) days; (h) the Borrower shall fail within thirty (30) days to pay, bond or otherwise discharge any judgment or order for the payment of money in excess of $15,000,000 which is not stayed on appeal or otherwise being appropriately contested in good faith in a manner that stays execution thereon; or (i) the Borrower or any other member of the Controlled Group shall fail to pay when due an amount or amounts which it shall have become liable, to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate a Plan or Plans having aggregate Unfunded Vested Liabilities in excess of $5,000,000 (collectively, a “Material Plan”) shall be filed under Title IV of ERISA by the Borrower or any other member of the Controlled Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any Material Plan or a proceeding shall be instituted by a fiduciary of any Material Plan against the Borrower or any other member of the Controlled Group to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall not have been dismissed within thirty (30) days thereafter; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan must be terminated. Section 8.2 Non-Bankruptcy Defaults. When any Event of Default other than those described in subsections (f) or (g) of Section 8.1 hereof has occurred and is continuing, the Administrative Agent shall, by written notice to the Borrower if so directed by the Required Banks: (a) terminate the remaining Revolving Credit Commitments and all other obligations of the Banks hereunder (other than the obligations of the Banks under section 11.21 hereof) on the date stated in such notice (which may be the date thereof); (b) declare the principal of and the accrued interest on all outstanding Notes to be forthwith due and payable and thereupon all outstanding Notes, including both principal and interest thereon, and all other Obligations, shall be and become immediately due and payable together with all other amounts payable under the Credit Documents without further demand, presentment, protest or notice of any kind and (c) demand that Borrower immediately pay to the Administrative Agent, subject to Section 8.4, the full amount then available for drawing under each or any Letter of Credit. The Administrative Agent, after giving notice to the Borrower pursuant to Section 8.1(c) or this Section 8.2, shall also promptly send a copy of such notice to the other Banks, but the failure to do so shall not impair or annul the effect of such notice. Section 8.3 Bankruptcy Defaults. When any Event of Default described in subsections (f) or (g) of Section 8.1 hereof has occurred and is continuing, then all outstanding Notes shall immediately become due and payable together with all other amounts payable under the Credit Documents without presentment, demand, protest or notice of any kind and the obligation of the Banks to extend further credit pursuant to any of the terms hereof shall immediately terminate. Section 8.4 Expenses. The Borrower agrees to pay to the Administrative Agent, the Issuing Banks and each Bank, and any other holder of any Note outstanding hereunder, all costs and expenses incurred or paid by the Administrative Agent, the Issuing Bank or such Bank or any such holder, including reasonable attorneys’ fees (including reasonable allocable fees of in-house counsel) and court costs, in connection with any Default or Event of Default by the Borrower hereunder or in connection with the enforcement of any of the Credit Documents.   27 -------------------------------------------------------------------------------- SECTION 9. CHANGE IN CIRCUMSTANCES. Section 9.1 Change of Law. Notwithstanding any other provisions of this Agreement or any Note, if at any time after the date hereof any change in applicable law or regulation or in the interpretation thereof makes it unlawful for any Bank to make or continue to maintain LIBOR Loans or to perform its obligations as contemplated hereby, such Bank shall promptly give notice thereof to the Borrower and such Bank’s obligations to make or maintain LIBOR Loans under this Agreement shall terminate until it is no longer unlawful for such Bank to make or maintain LIBOR Loans. The Borrower shall prepay on demand the outstanding principal amount of any such affected LIBOR Loans, together with all interest accrued thereon at a rate per annum equal to the interest rate applicable to such Loan; provided, however, subject to all of the terms and conditions of this Agreement, the Borrower may then elect to borrow the principal amount of the affected LIBOR Loans from such Bank by means of Base Rate Loans from such Bank, which Base Rate Loans shall not be made ratably by the Banks but only from such affected Bank. Section 9.2 Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR.  If on or prior to the first day of any Interest Period for any Borrowing of LIBOR Loans: (a) the Administrative Agent determines that deposits in U.S. Dollars (in the applicable amounts) are not being offered to major banks in the LIBOR interbank market for such Interest Period, or that by reason of circumstances affecting the interbank LIBOR market adequate and reasonable means do not exist for ascertaining the applicable LIBOR Rate, or (b) Banks having twenty five percent (25%) or more of the aggregate amount of the Revolving Credit Commitments reasonably determine and so advise the Administrative Agent that LIBOR Rate as reasonably determined by the Administrative Agent will not adequately and fairly reflect the cost to such Banks or Bank of funding their or its LIBOR Loans or Loan for such Interest Period, then the Administrative Agent shall forthwith give notice thereof to the Borrower and the Banks, whereupon until the Administrative Agent notifies the Borrower that the circumstances giving rise to such suspension no longer exist, the obligations of the Banks or of the relevant Bank to make LIBOR Loans shall be suspended. Section 9.3 Increased Cost and Reduced Return. (a) If, on or after the date hereof, the adoption of any applicable law, rule or regulation, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Lending Office) with any request or directive (whether or not having the force of law but, if not having the force of law, compliance with which is customary in the relevant jurisdiction) of any such authority, central bank or comparable agency: (i) shall subject any Bank (or its Lending Office) to any tax, duty or other charge with respect to its LIBOR Loans, its Notes, its Letter(s) of Credit, or its participation in any thereof, any Reimbursement Obligations owed to it or its obligation to make LIBOR Loans, issue a Letter of Credit, or to participate therein, or shall change the basis of taxation of payments to any Bank (or its Lending Office) of the principal of or interest on its LIBOR Loans, Letter(s) of Credit, or participations therein or any other amounts due under this Agreement in respect of its LIBOR Loans, Letter(s) of Credit, or participations therein, any Reimbursement Obligations owed to it, or its obligation to make LIBOR Loans, issue a Letter of Credit, or acquire participations therein (except for changes in the rate of tax on the overall net income or profits of such Bank or its Lending Office imposed by the jurisdiction in which such Bank or its lending office is incorporated in which such Bank’s principal executive office or Lending Office is located); or 28 -------------------------------------------------------------------------------- (ii) shall impose, modify or deem applicable any reserve, special deposit or similar requirement (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding with respect to any LIBOR Loans any such requirement included in an applicable LIBOR Reserve Percentage) against assets of, deposits with or for the account of, or credit extended by, any Bank (or its Lending Office) or shall impose on any Bank (or its Lending Office) or on the interbank market any other condition affecting its LIBOR Loans, its Notes, its Letter(s) of Credit, or its participation in any thereof, any Reimbursement Obligation owed to it, or its obligation to make LIBOR Loans, to issue a Letter of Credit, or to participate therein; and the result of any of the foregoing is to increase the cost to such Bank (or its Lending Office) of making or maintaining any LIBOR Loan, issuing or maintaining a Letter of Credit, or participating therein, or to reduce the amount of any sum received or receivable by such Bank (or its Lending Office) under this Agreement or under its Notes with respect thereto, by an amount deemed by such Bank to be material, then, within fifteen (15) days after demand by such Bank (with a copy to the Administrative Agent), the Borrower shall be obligated to pay to such Bank such additional amount or amounts as will compensate such Bank for such increased cost or reduction. In the event any law, rule, regulation or interpretation described above is revoked, declared invalid or inapplicable or is otherwise rescinded, and as a result thereof a Bank is determined to be entitled to a refund from the applicable authority for any amount or amounts which were paid or reimbursed by Borrower to such Bank hereunder, such Bank shall refund such amount or amounts to Borrower without interest. (b) If, after the date hereof, any Bank or the Administrative Agent shall have determined that the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein (including, without limitation, any revision in the Final Risk-Based Capital Guidelines of the Board of Governors of the Federal Reserve System (12 CFR Part 208, Appendix A; 12 CFR Part 225, Appendix A) or of the Office of the Comptroller of the Currency (12 CFR Part 3, Appendix A), or in any other applicable capital rules heretofore adopted and issued by any governmental authority), or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Bank (or its Lending Office) with any request or directive regarding capital adequacy (whether or not having the force of law but, if not having the force of law, compliance with which is customary in the applicable jurisdiction) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Bank’s capital, or on the capital of any corporation controlling such Bank, as a consequence of its obligations hereunder to a level below that which such Bank could have achieved but for such adoption, change or compliance (taking into consideration such Bank’s policies with respect to capital adequacy) by an amount deemed by such Bank to be material, then from time to time, within fifteen (15) days after demand by such Bank (with a copy to the Administrative Agent), the Borrower shall pay to such Bank such additional amount or amounts as will compensate such Bank for such reduction. 29 -------------------------------------------------------------------------------- (c) Each Bank that determines to seek compensation under this Section 9.3 shall notify the Borrower and the Administrative Agent of the circumstances that entitle the Bank to such compensation pursuant to this Section 9.3 and will designate a different Lending Office if such designation will avoid the need for, or reduce the amount of, such compensation and will not, in the sole judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank claiming compensation under this Section 9.3 and setting forth the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, such Bank may use any reasonable averaging and attribution methods. No Bank shall be entitled to demand compensation under this Section 9.3 for any period more than 90 days prior to the day on which such demand is made; provided however, that the foregoing shall in no way limit the right of any Bank to demand or receive such compensation to the extent that such compensation relates to the retroactive application of any law, regulation, guideline or request if such demand is made within 90 days after the implementation of such retroactive law, interpretation, guideline or request. A certificate as to the nature and amount of such increased cost, submitted to the Borrower and the Administrative Agent by such Bank in good faith, shall be conclusive and binding for all purposes, absent manifest error. Section 9.4  Lending Offices. Each Bank may, at its option, elect to make its Loans hereunder at the branch, office or affiliate specified in its Administrative Questionnaire or in the assignment agreement which any assignee bank executes pursuant to Section 11.12 hereof (each a “Lending Office”) for each type of Loan available hereunder or at such other of its branches, offices or affiliates as it may from time to time elect and designate in a written notice to the Borrower and the Administrative Agent. Section 9.5 Discretion of Bank as to Manner of Funding. Notwithstanding any other provision of this Agreement, each Bank shall be entitled to fund and maintain its funding of all or any part of its Loans in any manner it sees fit, it being understood, however, that for the purposes of this Agreement all determinations hereunder shall be made as if each Bank had actually funded and maintained each LIBOR Loan through the purchase of deposits in the LIBOR interbank market having a maturity corresponding to such Loan’s Interest Period and bearing an interest rate equal to the LIBOR Rate for such Interest Period. SECTION 10. THE ADMINISTRATIVE AGENT.   Section 10.1 Appointment and Authority.  Each of the Banks and the Issuing Bank hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Credit Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Section 10 are solely for the benefit of the Administrative Agent, the Banks and the Issuing Bank, and the Borrower shall not have rights as a third party beneficiary of any of such provisions. 30 -------------------------------------------------------------------------------- Section 10.2 Rights as a Bank. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Bank as any other Bank and may exercise the same as though it were not the Administrative Agent and the term “Bank” or “Banks” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Banks. Section 10.3 Exculpatory Provisions. The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Credit Documents. Without limiting the generality of the foregoing, the Administrative Agent: (a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing; (b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Credit Documents that the Administrative Agent is required to exercise as directed in writing by the Required Banks (or such other number or percentage of the Banks as shall be expressly provided for herein or in the other Credit Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Credit Document or applicable law; and (c) shall not, except as expressly set forth herein and in the other Credit Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Banks (or such other number or percentage of the Banks as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 11.13 and Section 8) or (ii) in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent by the Borrower, a Bank or the Issuing Bank. The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Credit Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Credit Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Section 6 or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent. Section 10.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Bank or the Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to such Bank or the Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Bank or the Issuing Bank prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. 31 -------------------------------------------------------------------------------- Section 10.5 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Credit Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Section 10 shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. Section 10.6 Resignation of Administrative Agent. The Administrative Agent may at any time give notice of its resignation to the Banks, the Issuing Bank and the Borrower. Upon receipt of any such notice of resignation, the Required Banks shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Banks and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Banks and the Issuing Bank, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that if the Administrative Agent shall notify the Borrower and the Banks that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (a) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Credit Documents and (b) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Bank and the Issuing Bank directly, until such time as the Required Banks appoint a successor Administrative Agent as provided for above in this Section. Upon the acceptance of a successor's appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Credit Documents (if not already discharged therefrom as provided above in this Section 10.6). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Administrative Agent's resignation hereunder and under the other Credit Documents, the provisions of this Section 10 and Section 11.15 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent. Any resignation by Bank of America as Administrative Agent pursuant to this Section 10.6 shall also constitute its resignation as Issuing Bank. Upon the acceptance of a successor's appointment as Administrative Agent hereunder, (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Bank, (ii) the retiring Issuing Bank shall be discharged from all of their respective duties and obligations hereunder or under the other Credit Documents, and (iii) the successor Issuing Bank shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring Issuing Bank to effectively assume the obligations of the retiring Issuing Bank with respect to such Letters of Credit. 32 -------------------------------------------------------------------------------- Section 10.7 Non-Reliance on Administrative Agent and Other Banks. Each Bank and the Issuing Bank acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Bank or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Bank and the Issuing Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Bank or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Credit Document or any related agreement or any document furnished hereunder or thereunder. Section 10.8 No Other Duties; Etc. Anything herein to the contrary notwithstanding, none of the bookrunners, arrangers, syndication agents, documentation agents or co-agents shall have any powers, duties or responsibilities under this Agreement or any of the other Credit Documents, except in its capacity, as applicable, as the Administrative Agent, a Bank or the Issuing Bank hereunder. Section 10.9 Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under the United States Bankruptcy Code, as amended, or any analogous action is taken under any other applicable law relating to bankruptcy or insolvency or any other judicial proceeding relative to the Borrower, the Administrative Agent (irrespective of whether the principal of any Loan or L/C Obligation shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise: (a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans, L/C Obligations and all other Obligations arising under the Credit Documents that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Banks, the Issuing Bank and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Banks, the Issuing Bank and the Administrative Agent and their respective agents and counsel and all other amounts due the Banks, the Issuing Bank and the Administrative Agent under 3.1 and 11.15) allowed in such judicial proceeding; and (b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Bank and the Issuing Bank to make such payments to the Administrative Agent and, if the Administrative Agent shall consent to the making of such payments directly to the Banks and the Issuing Bank, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 3.1 and 11.15. Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Bank or the Issuing Bank any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Bank or the Issuing Bank to authorize the Administrative Agent to vote in respect of the claim of any Bank or the Issuing Bank in any such proceeding. 33 -------------------------------------------------------------------------------- SECTION 11. MISCELLANEOUS.   Section 11.1 Withholding Taxes. (a) Payments Free of Withholding. Subject to Section 11.1(b) hereof, each payment by the Borrower under this Agreement or the other Credit Documents shall be made without withholding for or on account of any present or future taxes (other than overall net income taxes on the recipient). If any such withholding is so required, the Borrower shall make the withholding, pay the amount withheld to the appropriate governmental authority before penalties attach thereto or interest accrues thereon and forthwith pay such additional amount as may be necessary to ensure that the net amount actually received by each Bank and the Administrative Agent free and clear of such taxes (including such taxes on such additional amount) is equal to the amount which that Bank or the Administrative Agent (as the case may be) would have received had such withholding not been made. If the Administrative Agent or any Bank pays any amount in respect of any such taxes, penalties or interest the Borrower shall reimburse the Administrative Agent or that Bank for that payment on demand. If the Borrower pays any such taxes, penalties or interest, it shall deliver official tax receipts evidencing that payment or certified copies thereof to the Bank or Administrative Agent on whose account such withholding was made (with a copy to the Administrative Agent if not the recipient of the original) on or before the thirtieth day after payment. If any Bank or the Administrative Agent determines it has received or been granted a credit against or relief or remission for, or repayment of, any taxes paid or payable by it because of any taxes, penalties or interest paid by the Borrower and evidenced by such a tax receipt, such Bank or Administrative Agent shall, to the extent it can do so without prejudice to the retention of the amount of such credit, relief, remission or repayment, pay to the Borrower such amount as such Bank or Administrative Agent determines is attributable to such deduction or withholding and which will leave such Bank or Administrative Agent (after such payment) in no better or worse position than it would have been in if the Borrower had not been required to make such deduction or withholding. Nothing in this Agreement shall interfere with the right of each Bank and the Administrative Agent to arrange its tax affairs in whatever manner it thinks fit nor oblige any Bank or the Administrative Agent to disclose any information relating to its tax affairs or any computations in connection with such taxes. (b) U.S. Withholding Tax Exemptions. Each Bank that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) shall submit to the Borrower and the Administrative Agent on or before the earlier of the date the initial Borrowing is made hereunder and thirty (30) days after the date hereof, two duly completed and signed copies of either Form W8BEN (relating to such Bank and entitling it to a complete exemption from withholding under the Code on all amounts to be received by such Bank, including fees, pursuant to the Credit Documents and the Loans) or Form W8ECI (relating to all amounts to be received by such Bank, including fees, pursuant to the Credit Documents and the Loans of the United States Internal Revenue Service. Thereafter and from time to time, each Bank shall submit to the Borrower and the Administrative Agent such additional duly completed and signed copies of one or the other of such Forms (or such successor forms as shall be adopted from time to time by the relevant United States taxing authorities) as may be (i) requested by the Borrower in a written notice, directly or through the Administrative Agent, to such Bank and (ii) required under then current United States law or regulations to avoid or reduce United States withholding taxes on payments in respect of all amounts to be received by such Bank, including fees, pursuant to the Credit Documents or the Loans. (c) Inability of Bank to Submit Forms. If any Bank determines, as a result of any change in applicable law, regulation or treaty, or in any official application or interpretation thereof, that it is unable to submit to the Borrower or Administrative Agent any form or certificate that such Bank is obligated to submit pursuant to subsection (b) of this Section 11.1. or that such Bank is required to withdraw or cancel any such form or certificate previously submitted or any such form or certificate otherwise becomes ineffective or inaccurate, such Bank shall promptly notify the Borrower and Administrative Agent of such fact and the Bank shall to that extent not be obligated to provide any such form or certificate and will be entitled to withdraw or cancel any affected form or certificate, as applicable. 34 -------------------------------------------------------------------------------- Section 11.2 No Waiver of Rights. No delay or failure on the part of the Administrative Agent or any Bank or on the part of the holder or holders of any Note in the exercise of any power or right under any Credit Document shall operate as a waiver thereof, nor as an acquiescence in any default, nor shall any single or partial exercise thereof preclude any other or further exercise of any other power or right, and the rights and remedies hereunder of the Administrative Agent, the Banks and the holder or holders of any Notes are cumulative to, and not exclusive of, any rights or remedies which any of them would otherwise have. Section 11.3 Non-Business Day. If any payment of principal or interest on any Loan or of any other Obligation shall fall due on a day which is not a Business Day, interest or fees (as applicable) at the rate, if any, such Loan or other Obligation bears for the period prior to maturity shall continue to accrue on such Obligation from the stated due date thereof to and including the next succeeding Business Day, on which the same shall be payable. Section 11.4 Documentary Taxes. The Borrower agrees that it will pay any documentary, stamp or similar taxes payable in respect to any Credit Document, including interest and penalties, in the event any such taxes are assessed, irrespective of when such assessment is made and whether or not any credit is then in use or available hereunder. Section 11.5 Survival of Representations. All representations and warranties made herein or in certificates given pursuant hereto shall survive the execution and delivery of this Agreement and the other Credit Documents, and shall continue in full force and effect with respect to the date as of which they were made as long as any Loan or any other obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding. Section 11.6 Survival of Indemnities. All indemnities and all other provisions relative to reimbursement to the Banks of amounts sufficient to protect the yield of the Banks with respect to the Loans, including, but not limited to, Section 2.11, Section 9.3 and Section 11.15 hereof, shall survive the termination of this Agreement and the other Credit Documents and the payment of the Loans and all other Obligations. Section 11.7 Set-Off. (a) In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence of any Event of Default, each Bank and each subsequent holder of any Note is hereby authorized by the Borrower at any time or from time to time, without notice to the Borrower or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, Indebtedness evidenced by certificates of deposit, whether matured or unmatured, and in whatever currency denominated) and any other Indebtedness at any time held or owing by that Bank or that subsequent holder to or for the credit or the account of the Borrower, whether or not matured, against and on account of the obligations and liabilities of the Borrower to that Bank or that subsequent holder under the Credit Documents, including, but not limited to, all claims of any nature or description arising out of or connected with the Credit Documents, irrespective of whether or not (a) that Bank or that subsequent holder shall have made any demand hereunder or (b) the principal of or the interest on the Loans or Notes and other amounts due hereunder shall have become due and payable pursuant to Section 8 and although said obligations and liabilities, or any of them, may be contingent or unmatured. 35 -------------------------------------------------------------------------------- (b) Each Bank agrees with each other Bank a party hereto that if such Bank shall receive and retain any payment, whether by set-off or application of deposit balances or otherwise, on any of the Loans or Reimbursement Obligations in excess of its ratable share of payments on all such obligations then outstanding to the Banks, then such Bank shall purchase for cash at face value, but without recourse, ratably from each of the other Banks such amount of the Loans, or Reimbursement Obligations, or participations therein, held by each such other Banks (or interest therein) as shall be necessary to cause such Bank to share such excess payment ratably with all the other Banks; provided, however, that if any such purchase is made by any Bank, and if such excess payment or part thereof is thereafter recovered from such purchasing Bank, the related purchases from the other Banks shall be rescinded ratably and the purchase price restored as to the portion of such excess payment so recovered, but without interest. For purposes of this Section 11.7(b), amounts owed to or recovered by, an Issuing Bank in connection with Reimbursement Obligations in which Banks have been required to fund their participation shall be treated as amounts owed to or recovered by such Issuing Bank as a Bank hereunder. Section 11.8 Notices; Effectiveness, Electronic Communications. (a) Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows: (i) if to the Borrower, the Administrative Agent, the Issuing Bank, to the address, telecopier number, electronic mail address or telephone number specified for such Person on Schedule 11.8; and (ii) if to any other Bank, to the address, telecopier number, electronic mail address or telephone number specified in its Administrative Questionnaire. Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient). Notices delivered through electronic communications to the extent provided in subsection (b) below, shall be effective as provided in such subsection (b). (b) Electronic Communications. Notices and other communications to the Banks and the Issuing Bank hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Bank or the Issuing Bank pursuant to Section 2 if such Bank or the Issuing Bank, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications. 36 -------------------------------------------------------------------------------- Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor. (c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any Bank, the Issuing Bank or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower's or the Administrative Agent’s transmission of Borrower Materials through the Internet, except to the extent that such losses, claims, damages, liabilities or expenses are determined by a court of competent jurisdiction by a final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Agent Party; provided, however, that in no event shall any Agent Party have any liability to the Borrower, any Bank, the Issuing Bank or any other Person for indirect, special, incidental, consequential or punitive damages (as opposed to direct or actual damages). (d) Change of Address, Etc. Each of the Borrower, the Administrative Agent, the Issuing Bank may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the other parties hereto. Each other Bank may change its address, telecopier or telephone number for notices and other communications hereunder by notice to the Borrower, the Administrative Agent, the Issuing Bank. In addition, each Bank agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, telecopier number and electronic mail address to which notices and other communications may be sent and (ii) accurate wire instructions for such Bank. (e) Reliance by Administrative Agent, Issuing Bank and Banks. The Administrative Agent, the Issuing Banks and the Banks shall be entitled to rely and act upon any notices (including telephonic Loan Notices) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Borrower shall indemnify the Administrative Agent, the Issuing Banks, each Bank and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of the Borrower. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording. 37 -------------------------------------------------------------------------------- Section 11.9 Counterparts. This Agreement may be executed in any number of counterpart signature pages, and by the different parties on different counterparts, each of which when executed shall be deemed an original but all such counterparts taken together shall constitute one and the same instrument. Delivery of an executed counterpart via facsimile or other electronic means shall for all purposes be deemed as effective as delivery of an original counterpart.   Section 11.10 Successors and Assigns. This Agreement shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of each of the Banks and the benefit of their respective successors, and assigns, including any subsequent holder of any Note. The Borrower may not assign any of its rights or obligations under any Credit Document without the written consent of all of the Banks.   Section 11.11 [Intentionally Omitted].   Section 11.12 Assignments, Participations, Etc. (a) Successors and Assigns Generally . The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Bank and no Bank may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of paragraph (b) of this Section, (ii) by way of participation in accordance with the provisions of paragraph (d) of this Section or (iii) by way of pledge or assignment of a security interest subject to the restrictions of paragraph (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in paragraph (d) of this Section and, to the extent expressly contemplated hereby, the affiliates of each of the Administrative Agent and the Banks) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Assignments by Banks. Any Bank may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Revolving Credit Commitment and the Loans at the time owing to it); provided that (i) except in the case of an assignment of the entire remaining amount of the assigning Bank’s Revolving Credit Commitment and the Loans at the time owing to it or in the case of an assignment to a Bank or an Affiliate of a Bank or an Approved Fund with respect to a Bank, the aggregate amount of the Revolving Credit Commitment (which for this purpose includes Loans outstanding thereunder) or, if the applicable Revolving Credit Commitment is not then in effect, the principal outstanding balance of the Loan of the assigning Bank subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $5,000,000 (and the remaining aggregate amount of the Revolving Credit Commitment of such assigning Bank shall not be less than $5,000,000 after giving effect to such assignment), unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed); provided, however, that concurrent assignments to members of an Assignee Group and concurrent assignments from members of an Assignee Group to a single assignee (or to an assignee and members of its Assignee Group) will be treated as a single assignment for purposes of determining whether such minimum amount has been met; 38 -------------------------------------------------------------------------------- (ii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Bank’s rights and obligations under this Agreement with respect to the Loan, L/C Obligations or the Revolving Credit Commitment assigned; (iii) any assignment of a Revolving Credit Commitment must be approved by the Administrative Agent and the Issuing Bank and, so long as no Event of Default has occurred and is continuing, the Borrower, unless the Person that is the proposed assignee is itself an Eligible Assignee, which approval shall not be unreasonably withheld; (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount, if any, required as set forth in Schedule 11.12; provided, however, that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The Eligible Assignee, if it shall not be a Bank, shall deliver to the Administrative Agent an Administrative Questionnaire; (v) no such assignment shall be made to the Borrower or any of the Borrower’s Affiliates or Subsidiaries; and (vi) no such assignment shall be made to a natural person. Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Bank under this Agreement, and the assigning Bank thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Bank’s rights and obligations under this Agreement, such Bank shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 9.3 and 11.1 with respect to facts and circumstances occurring prior to the effective date of such assignment. Any assignment or transfer by a Bank of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Bank of a participation in such rights and obligations in accordance with paragraph (d) of this Section. (c) Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at the Administrative Agent’s office identified in Section 11.8 a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Banks, and the Revolving Credit Commitments of, and principal amounts of the Loans owing to, each Bank pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, and the Borrower, the Administrative Agent and the Banks may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Bank hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Bank at any reasonable time upon reasonable prior notice. 39 -------------------------------------------------------------------------------- (d) Participations. Any Bank may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural person or a Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Bank’s rights and/or obligations under this Agreement (including all or a portion of its Revolving Credit Commitment and/or the Loans owing to it); provided that (i) such Bank’s obligations under this Agreement shall remain unchanged, (ii) such Bank shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the other Banks shall continue to deal solely and directly with such Bank in connection with such Bank’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Bank sells such a participation shall provide that such Bank shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Bank will not, without the consent of the Participant, agree to any amendment, modification or waiver of the type described in Section 11.13(i) that directly affects such Participant. Subject to paragraph (e) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Section 2.11, Section 9.3 and Section 11.7 to the same extent as if it were a Bank and had acquired its interest by assignment pursuant to paragraph (b) of this Section. Each Bank granting a participation under this Section 11.11(d) shall keep a register, meeting the requirements of Treasury Regulation Section 5f.103-1(c), of each participant, specifying such participant’s entitlement to payments of principal and interest with respect to such participation. (e) Limitations upon Participant Rights. A Participant shall not be entitled to receive any greater payment under Section 2.11, Section 9.3 or Section 11.7 than the applicable Bank would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a foreign Bank if it were a Bank shall not be entitled to the benefits of Section 3.1 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 3.1(e) as though it were a Bank. (f) Certain Pledges. Any Bank may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Bank, including without limitation any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Bank from any of its obligations hereunder or substitute any such pledgee or assignee for such Bank as a party hereto. (g) Electronic Execution of Assignments. The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act. 40 -------------------------------------------------------------------------------- (h) Certain Funding Arrangements. Notwithstanding anything to the contrary contained herein, any Bank (a “Granting Bank”) may grant to a special purpose funding vehicle (a “SPC”), identified as such in writing from time to time by the Granting Bank to the Administrative Agent and the Borrower, the option to provide to the Borrower all or any part of any Loan that such Granting Bank would otherwise be obligated to make to the Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Loan, (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Bank shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the Revolving Credit Commitment of the Granting Bank to the same extent, and as if, such Loan were made by such Granting Bank. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Bank). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof arising out of any claim relating to the Credit Documents. In addition, notwithstanding anything to the contrary contained in this Section 11.12(b), any SPC may (i) with notice to, but without the prior written consent of, the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loan to the Granting Bank or to any financial institutions (consented to by the Borrower and Administrative Agent) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC. This section may not be amended without the written consent of the SPC.   Section 11.13 Amendments. Any provision of the Credit Documents may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by (a) the Borrower, (b) the Required Banks, and (c) if the rights or duties of the Administrative Agent are affected thereby, the Administrative Agent; provided that: (i) no amendment or waiver pursuant to this Section 11.13 shall (A) increase, decrease or extend any Revolving Credit Commitment of any Bank without the consent of such Bank except as permitted by Section 2.1 or (B) reduce the amount of or postpone any fixed date for payment of any principal of or interest on any Loan or Reimbursement Obligation or of any fee payable hereunder without the consent of each Bank; and (ii) no amendment or waiver pursuant to this Section 11.13 shall, unless signed by each Bank, change this Section 11.13, or the definition of Required Banks, or affect the number of Banks required to take any action under the Credit Documents. Anything in this Agreement to the contrary notwithstanding, if any time when the conditions precedent set forth in Section 6.2 hereof to any Loan hereunder are satisfied, any Bank shall fail to fulfill its obligations to make such Loan (any such Bank, a “Defaulting Bank”) then, for so long as such failure shall continue, the Defaulting Bank shall (unless the Borrower and the Required Banks determined as if the Defaulting Bank were not a Bank hereunder, shall otherwise consent in writing) be deemed for all purposes related to amendments, modifications, waivers or consents under this Agreement (other than amendments or waivers referred to in clause (i) and (ii) above) to have no Loans or Revolving Credit Commitments, shall not be treated as a Bank hereunder when performing the computation of the Required Banks. 41 -------------------------------------------------------------------------------- Section 11.14 Headings. Section headings used in this Agreement are for reference only and shall not affect the construction of this Agreement.   Section 11.15 Legal Fees, Other Costs and Indemnification. The Borrower agrees to pay all reasonable costs and expenses of the Administrative Agent and the Arrangers in connection with the preparation and negotiation of the Credit Documents, including without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent and the Arrangers, in connection with the preparation and execution of the Credit Documents, and any amendment, waiver or consent related hereto, whether or not the transactions contemplated herein are consummated. The Borrower further agrees to indemnify each Bank, the Administrative Agent, the Issuing Banks, and their respective directors, agents, officers and employees, against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all reasonable expenses of litigation or preparation therefor, whether or not the indemnified Person is a party thereto) which any of them may incur or reasonably pay arising out of or relating to any Credit Document or any of the transactions contemplated thereby or the direct or indirect application or proposed application of the proceeds of any Loan or Letter of Credit, other than those which arise from the gross negligence or willful misconduct of the party claiming indemnification. The Borrower, upon demand by the Administrative Agent, an Issuing Bank or a Bank at any time, shall reimburse the Administrative Agent, such Issuing Bank or Bank for any reasonable legal or other expenses (including reasonable allocable fees and expenses of in-house counsel) incurred in connection with investigating or defending against any of the foregoing except if the same is directly due to the gross negligence or willful misconduct of the party to be indemnified. Section 11.16 [Reserved].   Section 11.17 Entire Agreement. The Credit Documents constitute the entire understanding of the parties thereto with respect to the subject matter thereof and any prior or contemporaneous agreements, whether written or oral, with respect thereto are superseded thereby. Section 11.18 Construction. The parties hereto acknowledge and agree that neither this Agreement nor the other Credit Documents shall be construed more favorably in favor of one than the other based upon which party drafted the same, it being acknowledged that all parties hereto contributed substantially to the negotiation of this Agreement and the other Credit Documents. Section 11.19 Governing Law. This Agreement and the other Credit Documents, and the rights and duties of the parties hereto, shall be construed and determined in accordance with the internal laws of the State of Illinois. Section 11.20 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. THE BORROWER HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS AND OF ANY ILLINOIS STATE COURT SITTING IN THE CITY OF CHICAGO FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE BORROWER IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE BORROWER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO ANY CREDIT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY.   Section 11.21 Confidentiality. Each of the Administrative Agent, the Banks and the Issuing Banks agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors and representatives and to any direct or indirect contractual counterparty (or such contractual counterparty's professional advisor) under any swap contract relating to Loans outstanding under this Agreement (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it or its Affiliates (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under any other Credit Document or any action or proceeding relating to this Agreement or any other Credit Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent, any Bank, the Issuing Banks or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower. For purposes of this Section, “Information” means all information received from the Borrower or any Subsidiary relating to the Borrower, other than any such information that is available to the Administrative Agent, any Bank or the Issuing Banks on a nonconfidential basis prior to disclosure by the Borrower or any Subsidiary, provided that, in the case of information received from the Borrower or any Subsidiary after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. Each of the Administrative Agent, the Banks and the Issuing Banks acknowledges that (a) the Information may include material non-public information concerning the Borrower or a Subsidiary, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable law, including Federal and state securities laws. Section 11.22 Patriot Act. As required by federal law or the Administrative Agent or a Bank’s policies and practices, the Administrative Agent or a Bank shall need to collect, and the Borrower shall deliver, upon reasonable request of the Administrative Agent or any Bank, certain customer identification information and documentation in connection with opening or maintaining accounts or establishing or continuing to provide services. 42 -------------------------------------------------------------------------------- Section 11.23 Rights and Liabilities of Syndication Agent and Arrangers. Neither the Syndication Agent nor any Arranger have any special rights, powers, obligations, liabilities, responsibilities or duties under this Agreement as a result of acting in the capacity of Syndication Agent or Arranger, as applicable, other than those applicable to them in their capacity as Banks hereunder (if any). Without limiting the foregoing, neither the Syndication Agent nor any Arranger shall have or be deemed to have a fiduciary relationship with any Bank. Each Bank hereby makes the same acknowledgments and undertakings with respect to the Syndication Agent and each Arranger as it makes with respect to the liability of the Administrative Agent and any directors, officers, agents and employees of the Administrative Agent in Section 10. Section 11.24 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby, the Borrower acknowledges and agrees that: (a) the credit facility provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Credit Document) are an arm’s-length commercial transaction between the Borrower and its Affiliates, on the one hand, and the Administrative Agent and the Arrangers, on the other hand, and the Borrower is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated hereby and by the other Credit Documents (including any amendment, waiver or other modification hereof or thereof); (b) in connection with the process leading to such transaction, the Administrative Agent and the Arrangers each is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary, for the Borrower or any of its Affiliates, stockholders, creditors or employees or any other Person; (c) neither the Administrative Agent nor the Arranger has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Borrower with respect to any of the transactions contemplated hereby or the process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Credit Document (irrespective of whether the Administrative Agent or the Arrangers has advised or is currently advising the Borrower or any of its Affiliates on other matters) and neither the Administrative Agent nor the Arrangers has any obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Credit Documents; (d) the Administrative Agent and the Arrangers and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and neither the Administrative Agent nor the Arrangers has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (e) the Administrative Agent and the Arrangers have not provided and will not provide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Credit Document) and the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate. The Borrower hereby waives and releases, to the fullest extent permitted by law, any claims that it may have against the Administrative Agent and the Arrangers with respect to any breach or alleged breach of agency or fiduciary duty. - Remainder of Page Intentionally Left Blank; Signature Pages Follow -   43 -------------------------------------------------------------------------------- In Witness Whereof, the parties hereto have caused this Credit Agreement to be duly executed and by their duly authorized officers as of the day and year first above written. BORROWER   PEOPLES ENERGY CORPORATION,     as Borrower           By:  /s/ D. M. Ruschau     Name:  Douglas M. Ruschau     Title:  Vice President & Treasurer         Peoples Energy Corporation Credit Agreement 44 --------------------------------------------------------------------------------     ADMINSTRATIVE AGENT   BANK OF AMERICA, N.A.,     as Administrative Agent           By:  /s/ Todd MacNeill     Name:  Todd MacNeill     Title:  Vice President, Agency Management Officer III     Peoples Energy Corporation Credit Agreement 45 --------------------------------------------------------------------------------     BANKS   BANK OF AMERICA, N.A.,     as a Bank and an Issuing Bank           By:  /s/ Richard D. Hill, Jr.     Name:  Richard D. Hill, Jr.     Title:  Managing Director             Peoples Energy Corporation Credit Agreement 46 --------------------------------------------------------------------------------         JPMORGAN CHASE BANK, N.A.,     as a Bank           By:  /s/ Gabriel Simon     Name:  Gabriel Simon     Title:  Assistant Vice President             Peoples Energy Corporation Credit Agreement 47 --------------------------------------------------------------------------------       ABN AMRO BANK, N.V.,     as a Bank           By:  /s/ John Reed     Name:  John Reed     Title:  Director            By:  /s/ M. Aamir Khan      Name:  M. Aamir Khan      Title:  Assistant Vice President             Peoples Energy Corporation Credit Agreement 48 --------------------------------------------------------------------------------       THE BANK OF TOKYO-MITSUBISHI UFJ, LTD., CHICAGO BRANCH,     as a Bank           By:  /s/ Tsuguyuki Umene     Name:  Tsuguyuki Umene     Title:  Deputy General Manager           Peoples Energy Corporation Credit Agreement 49 --------------------------------------------------------------------------------       U.S. BANK NATIONAL ASSOCIATION,     as a Bank           By:  /s/ R. Michael Newton     Name:  R. Michael Newton     Title:  Vice President             Peoples Energy Corporation Credit Agreement 50 --------------------------------------------------------------------------------       CITIBANK, N.A.,     as a Bank           By:  /s/ David E. Hunt     Name:  David E. Hunt     Title:  Attorney-in-Fact             Peoples Energy Corporation Credit Agreement 51 --------------------------------------------------------------------------------       MORGAN STANLEY BANK,     as a Bank           By:  /s/ Daniel Twenge     Name:  Daniel Twenge     Title:  Vice President, Morgan Stanley Bank             Peoples Energy Corporation Credit Agreement 52 --------------------------------------------------------------------------------       THE NORTHERN TRUST COMPANY,     as a Bank           By:  /s/ Peter Hallan     Name:  Peter Hallan     Title:  Vice President             Peoples Energy Corporation Credit Agreement 53 --------------------------------------------------------------------------------       SUNTRUST BANK,     as a Bank           By:  /s/ Kelley B. Brandenburg     Name:  Kelley B. Brandenburg     Title:  Vice President             Peoples Energy Corporation Credit Agreement 54 --------------------------------------------------------------------------------       HARRIS NESBITT FINANCING, INC.,     as a Bank           By:  /s/ Ian M. Plester     Name:  Ian M. Plester     Title:  Director             Peoples Energy Corporation Credit Agreement 55 --------------------------------------------------------------------------------       FIFTH THIRD BANK (CHICAGO), A MICHIGAN BANK CORPORATION,     as a Bank           By:  /s/ Kim Puszczewicz     Name:  Kim Puszczewicz     Title:  Vice President             Peoples Energy Corporation Credit Agreement 56 --------------------------------------------------------------------------------       UBS LOAN FINANCE LLC,     as a Bank           By:  /s/ Richard L. Tavrow     Name:  Richard L. Tavrow     Title:  Director       By:  /s/ Irja R. Otsa     Name:  Irja R. Otsa     Title:  Associate Director         Peoples Energy Corporation Credit Agreement 57 -------------------------------------------------------------------------------- SCHEDULE 1.1 INTEREST RATES AND FEES S & P/ Moody's Senior A/A2 or A-/A3 BBB+/ BBB/ BBB-/ lower than Unsecured Rating higher Baa1 Baa2 Baa3 BBB-/ Baa3 Commitment Fee Rate 6.0 7.0 8.0 10.0 12.5 20.0 Base Rate Margin 0.0 0.0 0.0 0.0 0.0 0.0 LIBOR Margin 25.0 30.0 40.0 50.0 62.5 87.5 Any change in a Credit Rating of the Borrower (and if applicable, any change in fees or interest payable hereunder based on such Credit Rating), shall be effective as of the date such change is announced by the applicable rating agency. * If the Borrower is split-rated and the ratings differential is one level, the higher rating will apply. If the Borrower is split-rated and the ratings differential is two levels or more, the rating level one below the higher level will apply. If at any time the Borrower has no Moody's rating or no Standard & Poors' rating, the "Lower than BBB-/Baa3" level will apply; provided, however, that in such event the Borrower may propose an alternative rating agency or mechanism in replacement thereof, subject to the written consent of the Required Banks, such consent not to be unreasonably withheld, delayed or conditioned. -------------------------------------------------------------------------------- SCHEDULE 2.1 REVOLVING CREDIT COMMITMENT Bank Revolving Credit Commitment Revolving Credit Commitment Percentage Bank of America, N.A. $45,000,000.00 11.250000000% JPMorgan Chase Bank, N.A. $45,000,000.00 11.250000000% ABN AMRO Bank, N.V. $45,000,000.00 11.250000000% The Bank of Tokyo - Mitsubishi UFJ, Ltd., Chicago Branch $35,000,000.00 8.750000000% U.S. Bank National Association $35,000,000.00 8.750000000% Citibank, N.A. $30,000,000.00 7.500000000% Morgan Stanley Bank $30,000,000.00 7.500000000% The Northern Trust Company $30,000,000.00 7.500000000% SunTrust Bank $30,000,000.00 7.500000000% Harris Nesbitt Financing, Inc. $25,000,000.00 6.250000000% Fifth Third Bank (Chicago), A Michigan Bank Corporation $25,000,000.00 6.250000000% UBS Loan Finance LLC $25,000,000.00 6.250000000% Total $400,000,000.00 100.000000000% -------------------------------------------------------------------------------- SCHEDULE 11.8 NOTICES BORROWER Peoples Energy Corporation 130 East Randolph Drive Chicago, Illinois 60601 Attention: Vice President, Finance Facsimile: 312.373.4123 Telephone: 312.240.3818 ADMINISTRATIVE AGENT Agency Servicing contact (daily borrowing/repaying activity): Lewis Walker Telephone: (704) 387-1184 Fax: (704) 409-0019 Wire Instructions Bank of America, N.A. New York, NY ABA#: 026-009-593 Acct.# 136-621-225-0600 Attn: Credit Services Ref: People's Energy Agency Management contact: Todd Mac Neill Agency Officer Bank of America 100 Federal Street Boston, MA 02110 Mail Code: MA5-100-11-02 Telephone: (617) 434-6842 Fax: (617) 790-1361 Email: [email protected] -------------------------------------------------------------------------------- Letters of Credit contact: Al Malave Bank of America 1 Fleet Way Mail Code: PA6-580-02-30 Scranton,PA 18507 Telephone: (570) 330-4212 Fax: (570) 330-4186 Email: [email protected] -------------------------------------------------------------------------------- SCHEDULE 11.12 PROCESSING AND RECORDATION FEES The Administrative Agent will charge a processing and recordation fee (an "Assignment Fee") in the amount of $2,500 for each assignment; provided, however, that in the event of two or more concurrent assignments to members of the same Assignee Group (which may be effected by a suballocation of an assigned amount among members of such Assignee Group) or two or more concurrent assignments by members of the same Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and members of its Assignee Group), the Assignment Fee will be $2,500 plus the amount set forth below: Transaction Assignment Fee     First four concurrent assignments or -0- suballocations to members of an Assignee Group   (or from members of an Assignee Group, as   applicable)   Each additional concurrent assignment or $500 suballocation to a member of such Assignee   Group (or from a member of such Assignee   Group, as applicable)   -------------------------------------------------------------------------------- EXHIBIT 2.10 FORM OF NOTE __________ ___, 2006 FOR VALUE RECEIVED, the undersigned, Peoples Energy Corporation, an Illinois corporation (the "Borrower"), promises to pay to the order of [___________] (the "Bank") on the Termination Date of the hereinafter defined Credit Agreement, or such earlier date as provided in the Credit Agreement or this Note, of Bank of America, N.A., in U.S. Dollars, in accordance with Section 4.1 of the Credit Agreement, the aggregate unpaid principal of all Loans made by the Bank to the Borrower pursuant to the Credit Agreement, together with interest on the principal amount of each Loan from time to time outstanding hereunder at the rates, and payable in the manner and on the dates, specified in the Credit Agreement. The Bank shall record on its books or records or on a schedule attached to this Note, which is a part hereof, each Loan made by it pursuant to the Credit Agreement, together with all payments of principal and interest and the principal balances from time to time outstanding hereon, whether the Loan is a Base Rate Loan or a LIBOR Loan and the interest rate and Interest Period applicable thereto, provided that prior to the transfer of this Note all such amounts shall be recorded on a schedule attached to this Note. The record thereof, whether shown on such books or records or on a schedule to this Note, shall be prima facie evidence of the same, provided, however, that the failure of the Bank to record any of the foregoing or any error in any such record shall not limit or otherwise affect the obligation of the Borrower to repay all Loans made to it pursuant to the Credit Agreement together with accrued interest thereon. This Note is one of the Notes referred to in the Credit Agreement dated as of ________ ___, 2006, by and among the Borrower, Bank of America, N.A., as Administrative Agent, and the Banks party thereto (the "Credit Agreement"), and this Note and the holder hereof are entitled to all the benefits provided for thereby or referred to therein, to which Credit Agreement reference is hereby made for a statement thereof. This Note may only be conveyed, transferred, assigned or otherwise negotiated to a holder in accordance with the terms of the Credit Agreement. All defined terms used in this Note, except terms otherwise defined herein, shall have the same meaning as in the Credit Agreement. This Note shall be governed by and construed in accordance with the internal laws of the State of Illinois. Prepayments may be made hereon and this Note may be declared due prior to the expressed maturity hereof, all in the events, on the terms and in the manner as provided for in the Credit Agreement. The Borrower, for itself, its successors and assigns, hereby waives diligence, presentment, protest and demand and notice of protest, demand, dishonor and non-payment of this Note. -------------------------------------------------------------------------------- THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.   PEOPLES ENERGY CORPORATION       By: ________________________________       Name: ______________________________       Title: _______________________________ -------------------------------------------------------------------------------- EXHIBIT 6.1 FORM OF OPINION [LETTERHEAD OF BORROWER'S COUNSEL] June 13, 2006 The financial institutions party to that certain Credit Agreement dated as of June 13,2006 c/o Bank of America, N.A., as Administrative Agent 100 Federal Street, MA5-100-09-08 Boston, MA 02110 Re: Peoples Energy Corporation Ladies and Gentlemen: We have acted as legal counsel to Peoples Energy Corporation, an Illinois corporation (the "Borrower"), in connection with the transactions contemplated by the unsecured revolving credit facility established by that certain Credit Agreement dated as of the date hereof (the "Credit Agreement") among the Borrower, the financial institutions from time to time party thereto (each a "Bank," and collectively the "Banks"), Bank of America, N.A., in its capacity as administrative agent for the Banks, JPMorgan Chase Bank, N.A., in its capacity as syndication agent for the Banks, ABN AMRO Incorporated, U.S. Bank National Association, The Bank of Tokyo-Mitsubishi, Ltd. Chicago Branch, Banc of America Securities LLC, and J.P. Morgan Securities Inc. This opinion is furnished to you pursuant to Section 6.1(a) of the Credit Agreement. Unless otherwise defined herein, terms used herein have the meanings provided for in the Credit Agreement. I. Documents Reviewed In connection with this opinion letter, we have examined the following documents: (a) the Credit Agreement dated the date hereof, including the exhibits and schedules thereto; and (b) the Notes delivered pursuant to Section 6.1(d) of the Credit Agreement. The documents referred to in clauses (a) and (b) above are referred to collectively as the "Subject Documents". In addition, we have examined the following: (i) originals, or copies identified to our satisfaction as being true copies, of such records, documents and other instruments as we have deemed necessary for the purposes of this opinion letter; -------------------------------------------------------------------------------- (ii) a certificate from the secretary or other appropriate representative of the Borrower certifying in each instance as to true and correct copies of the Articles of Incorporation and By-Laws of the Borrower (the "Organizational Documents") and copies of the resolutions adopted by the Board of Directors, and as to the incumbency and specimen signatures of officers or other persons authorized to execute the Subject Documents on behalf of the Borrower; (iii) a certificate issued by the Secretary of State of the State of Illinois attesting to the continued existence and good standing of the Borrower in such state (the "Good Standing Certificate"); (iv) a certificate of the Chief Financial Officer of the Borrower delivered pursuant to Section 6.1(f) of the Credit Agreement; (v) a Compliance Certificate delivered pursuant to Section 6.1(i) of the Credit Agreement; and (vi) a Certificate of the Borrower, a copy of which is attached as Annex A hereto (the "Borrower's Certificate"), together with the agreements and instruments referred to therein (collectively, the "Reviewed Agreements"). II. Assumptions Underlying Our Opinions For all purposes of the opinions expressed herein, we have assumed, with your permission and without independent investigation, that: (a) Factual Matters. With regard to factual matters, to the extent that we have reviewed and relied upon (i) certificates of the Borrower, (ii) representations of the Borrower set forth in the Subject Documents and (iii) certificates and assurances from public officials, all of such certificates, representations and assurances are accurate; (b) Contrary Knowledge of Addressee. No addressee of this opinion letter has any actual knowledge that any of our factual assumptions or opinions is inaccurate; (c) Signatures. The signatures of individuals signing the Subject Documents (other than individuals signing on behalf of the Borrower) are genuine and authorized; (d) Authentic and Conforming Documents. All documents submitted to us as originals are authentic, complete and accurate and all documents submitted to us as copies conform to authentic original documents; (e) Capacity of Certain Parties. All parties to the Subject Documents (other than the Borrower) have the capacity and full power and authority to execute, deliver and perform the Subject Documents and the documents required or permitted to be delivered and performed thereunder; (f) Subject Documents Binding on Certain Parties. All of the Subject Documents and the documents required or permitted to be delivered thereunder have been duly authorized by all necessary corporate or other action on the part of the parties thereto (other than the Borrower), have been duly executed and delivered by such parties and are legal, valid and binding obligations enforceable against such parties in accordance with their terms; -------------------------------------------------------------------------------- (g) Consents for Certain Parties. All necessary consents, authorizations, approvals, permits or certificates (governmental and otherwise) which are required as a condition to the execution and delivery of the Subject Documents by the parties thereto (other than the Borrower) and to the consummation by such parties of the transactions contemplated thereby have been obtained; and (h) Accurate Description of Parties' Understanding. The Subject Documents accurately describe and contain the mutual understanding of the parties, and there are no oral or written statements or agreements that modify, amend or vary, or purport to modify, amend or vary, any of the terms thereof. III. Our Opinions Based on and subject to the foregoing and the other limitations, assumptions, qualifications and exclusions set forth in this opinion letter, we are of the opinion that: (a) Organizational Status. Based solely upon the Good Standing Certificate, the Borrower is validly existing and in good standing under the laws of the State of Illinois as of the date set forth in the Good Standing Certificate. (b) Power and Authority. The Borrower has the organizational power and authority to execute, deliver and perform the terms and provisions of each Subject Document and has taken all necessary organizational action to authorize the execution, delivery and performance thereof. (c) Execution, Validity and Enforceability. The Borrower has duly executed and delivered each Subject Document and each Subject Document constitutes its valid, binding and enforceable obligation. (d) Noncontravention. Neither the execution, delivery and performance by the Borrower of any Subject Document, nor the compliance by the Borrower with the terms and provisions thereof: (i) violates any present law, statute or regulation of the State of Illinois or the United States that, in each case, is applicable to the Borrower; (ii) violates any provision of the Organizational Documents of the Borrower; or (iii) results in any breach of any of the terms of, or constitutes a default under, any of the Reviewed Agreements or results in the creation or imposition of any lien, security interest or other encumbrance (except as contemplated by the Subject Documents) upon any assets of the Borrower pursuant to the terms of any of the Reviewed Agreements. (e) Governmental Approvals. No consent, approval or authorization of, or filing with, any governmental authority of the State of Illinois or the United States that, in each case, is applicable to the Borrower is required for (i) the due execution, delivery and performance by the Borrower of any Subject Document or (ii) the validity, binding effect or enforceability of any Subject Document, except for such consents, approvals, authorizations or filings (A) as have previously been obtained by the Borrower and (B) as may be required to be obtained or made by the Bank as a result of its involvement in the transactions contemplated by the Subject Documents. (f) The Borrower is not a public utility within the meaning of Section 3-105 of the Illinois Public Utilities Act (the "Act"), 220 ILCS 5/1-101 et seq., 220 ILCS 5/3-105. IV. Exclusions We call your attention to the following matters as to which we express no opinion: -------------------------------------------------------------------------------- (a) Indemnification. Any agreement of the Borrower in a Subject Document relating to indemnification, contribution or exculpation from costs, expenses or other liabilities that is contrary to public policy or applicable law; (b) Fraudulent Transfer. The effect, if applicable, of fraudulent conveyance, fraudulent transfer and preferential transfer laws and principles of equitable subordination; (c) Jurisdiction, Venue, etc. Any agreement by the Borrower in a Subject Document to waive trial by jury, to effect service of process in any particular manner or to establish evidentiary standards, and any agreement of the Borrower regarding the choice of law governing a Subject Document; (d) Trust Relationship. The creation of any trust relationship by the Borrower on behalf of any Bank; (e) Certain Laws. State securities and Blue Sky laws or regulations, federal and state banking laws and regulations, pension and employee benefit laws and regulations, federal and state environmental laws and regulations, federal and state tax laws and regulations, federal and state health and occupational safety laws and regulations, building code, zoning, subdivision and other laws and regulations governing the development, use and occupancy of real property, federal and state antitrust and unfair competition laws and regulations, and the effect of any of the foregoing on any of the opinions expressed herein; (f) Local Ordinances. The ordinances, statutes, administrative decisions, orders, rules and regulations of any municipality, county, special district or other political subdivision of the State of Illinois; (g) Certain Agreements of Borrower. Any agreement of the Borrower in a Subject Document providing for: (i) specific performance of the Borrower's obligations; (ii) establishment of a contractual rate of interest payable after judgment; (iii) the granting of any power of attorney; or (iv) survival of liabilities and obligations of any party under any of the Subject Documents arising after the effective date of termination of the Credit Agreement; or (h) Remedies. Any provision in any Subject Document to the effect that rights or remedies are not exclusive, that every right or remedy is cumulative and may be exercised in addition to any other right or remedy, that the election of some particular remedy does not preclude recourse to one or more others or that failure to exercise or delay in exercising rights or remedies will not operate as a waiver of any such right or remedy. V. Qualifications and Limitations The opinions set forth above are subject to the following qualifications and limitations: -------------------------------------------------------------------------------- (a) Applicable Law. Our opinions are limited to the federal law of the United States and the laws of the State of Illinois, and we do not express any opinion concerning any other law. (b) Bankruptcy. Our opinions are subject to the effect of any applicable bankruptcy, insolvency (including, without limitation, laws relating to preferences and fraudulent transfers or conveyances), reorganization, moratorium and other similar laws affecting creditors' rights generally. (c) Equitable Principles. Our opinions are subject to the effect of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing. In applying such principles, a court, among other things, might limit the availability of specific equitable remedies (such as injunctive relief and the remedy of specific performance), might not allow a creditor to accelerate maturity of debt or exercise other remedies upon the occurrence of a default deemed immaterial or for non-credit reasons or might decline to order a debtor to perform covenants in a Subject Document. Further, a court may refuse to enforce a covenant if and to the extent that it deems such covenant to be violative of applicable public policy, including, for example, provisions requiring indemnification of the Banks against liability for its own wrongful or negligent acts. (d) Noncontravention and Governmental Approvals. With respect to the opinions expressed in paragraphs III-(d)(i), III-(e) and III-(f), our opinions are limited (i) to our knowledge, if any, of the Borrower's specially regulated business activities and properties based solely upon the Borrower's Certificate in respect of such matters and without any independent investigation or verification on our part and (ii) to our review of only those laws and regulations that, in our experience, are normally applicable to transactions of the type contemplated by the Subject Documents. For this paragraph, "our knowledge" means the actual knowledge of the particular Ungaretti & Harris LLP attorneys who have represented the Borrower in connection with the Subject Documents and who have given substantive attention to the preparation and negotiation thereof - namely, John G. Nassos and Michael J. Winiger. Except as expressly set forth herein, we have not undertaken any independent investigation (including, without limitation, conducting any review, search or investigation of any public files or records or dockets or any review of our files) to determine the existence or absence of any facts, and no inference as to our knowledge concerning such facts should be drawn from our reliance on the same in connection with the preparation and delivery of this opinion letter. (e) Reviewed Agreements. With respect to our opinion in paragraph III-(d)(iii), we have assumed that the law governing each Reviewed Agreement would have the same effect as the law of the State of Illinois, and we express no opinion as to any violation not readily ascertainable from the face of any Reviewed Agreement or arising from any cross-default provision insofar as it relates to a default under an agreement that is not a Reviewed Agreement or arising under a covenant of a financial or numerical nature or requiring computation. (f) Material Changes to Terms. Provisions in the Subject Documents which provide that any obligations of the Borrower will not be affected by the action or failure to act on the part of the Banks or by an amendment or waiver of the provisions contained in the other Subject Documents might not be enforceable under circumstances in which such action, failure to act, amendment or waiver so materially changes the essential terms of the obligations that, in effect, a new contract has arisen between the Banks and the Borrower. (g) Incorporated Documents. This opinion does not relate to (and we have not reviewed) any documents or instruments other than the Subject Documents and the Reviewed Agreements, and we express no opinion as to such other documents or instruments (including, without limitation, any -------------------------------------------------------------------------------- documents or instruments referenced or incorporated in any of the Subject Documents) or as to the interplay between the Subject Documents and any such other documents and instruments. (h) Mathematical Calculations. We have made no independent verification of any of the numbers, schedules, formulae or calculations in the Subject Documents, and we render no opinion with regard to the accuracy, validity or enforceability of any of them. -------------------------------------------------------------------------------- VI. Reliance on Opinions The foregoing opinions are being furnished to the Administrative Agent and the Banks for the purpose referred to in the first paragraph of this opinion letter, and this opinion letter is not to be furnished to any other person or entity or used or relied upon for any other purpose without our prior written consent; provided, however, this opinion letter may be relied upon by any Eligible Assignee who becomes a Bank under the Credit Agreement. The opinions set forth herein are made as of the date hereof, and we assume no obligation to supplement this opinion letter if any applicable laws change after the date hereof or if we become aware after the date hereof of any facts that might change the opinions expressed herein.   Very truly yours,               UNGARETTI & HARRIS LLP -------------------------------------------------------------------------------- Annex A [To be attached] -------------------------------------------------------------------------------- EXHIBIT 7.3 FORM OF COMPLIANCE CERTIFICATE This Compliance Certificate is furnished to Bank of America, N.A., as Administrative Agent pursuant to the Credit Agreement (the "Credit Agreement") dated as of ________ ___, 2006, by and among Peoples Energy Corporation, the Banks from time to time party thereto, and Bank of America, N.A., as Administrative Agent. Unless otherwise defined herein, the terms used in this Compliance Certificate have the meanings ascribed thereto in the Credit Agreement. THE UNDERSIGNED HEREBY CERTIFIES THAT: 1. I am the duly elected or appointed __________ of Peoples Energy Corporation; 2. I have reviewed the terms of the Credit Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of Peoples Energy Corporation and its Subsidiaries during the accounting period covered by the attached financial statements; 3. The examinations described in paragraph 2 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Default or an Event of Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set forth below. Without limitation to the foregoing, except as noted below the Borrower is in compliance with Section 7.5 and Section 7.6 of the Credit Agreement; and 4. Schedule I attached hereto sets forth (i) financial data and computations evidencing compliance with certain covenants of the Credit Agreement, all of which data and computations are true, complete and correct, and are made in accordance with the terms of the Credit Agreement, and (ii) the list of Subsidiaries in existence as of the date hereof. Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which the Borrower has taken, is taking, or proposes to take with respect to each such condition or event: ________________________________________________________________________________________________________ ________________________________________________________________________________________________________ ________________________________________________________________________________________________________ The foregoing certifications, together with the list set forth in Schedule 1 hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this ______ day of _______, 20__. -------------------------------------------------------------------------------- SCHEDULE 1 TO COMPLIANCE CERTIFICATE Compliance Calculations for Credit Agreement CALCULATION AS OF __________ ___, 200__ A. Capital Ratio (Sec. 7.6)         1. Consolidated Indebtedness $____________     2. Consolidated Net Worth (excluding accumulated other comprehensive income and loss) $____________     3. Sum of Line A1 plus Line A2 $____________     4. Capital Ratio ____ :1.00 (ratio of (a) Line A1           to (b) Line A3 not to           exceed 0.65 to 1.00) [List of Subsidiaries] -------------------------------------------------------------------------------- EXHIBIT 11.12 FORM OF ASSIGNMENT AND ASSUMPTION This Assignment and Assumption (the "Assignment and Assumption") is dated as of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the "Assignor") and [Insert name of Assignee] (the "Assignee"). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the "Credit Agreement"), receipt of a copy of which is hereby acknowledged by the Assignee. Annex 1 attached hereto is hereby agreed to and incorporated herein by reference and made a part of this Assignment and Assumption as if set forth herein in full. For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with the Standards Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor's rights and obligations in its capacity as a Bank under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including without limitation any letters of credit, guarantees, and swingline loans included in such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Bank) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein collectively as, the "Assigned Interest"). Each such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.   1. Assignor: _____________________________   2. Assignee: _____________________________     [and is an Affilliate/Approved Fund of [identify Bank]1]   3. Borrower: Peoples Energy Corporation   4. Administrative Agent: Bank of America, N.A., as the administrative agent under the Credit Agreement   5. Credit Agreement: The Credit Agreement dated as of ________ ___, 2006, by and among Peoples Energy Corporation, the Banks party thereto, Bank of America, N.A., as Administrative Agent, and JPMorgan Chase Bank, N.A., as Syndication Agent.   6. Assigned Interest: __________________________ 1   Select as applicable. --------------------------------------------------------------------------------     Aggregate Amount of Percentage       Amount of Commitment/ Assigned of       Commitment/ Loans Commitment/ CUSIP Assignor[s]2 Assignee[s]3 Loans Assigned Loans5 Number     for all Banks4           $ _________ $ _________ __________%       $ _________ $ _________ __________%       $ _________ $ _________ __________%     [7. Trade Date: ________________]6 Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.] The terms set forth in this Assignment and Assumption are hereby agreed to:   ASSIGNOR   [NAME OF ASSIGNOR]       By: __________________________   Title:       ASSIGNEE   [NAME OF ASSIGNEE]       By: __________________________   Title: [Consented to and]7 Accepted: BANK OF AMERICA, N.A. as Agent By ________________________ Title: ______________________ __________________________ 2   List each Assignor, as appropriate. 3   List each Assignee, as appropriate. 4   Amounts in this column and in the column immediately to the right to be adjusted by the counterparties to take into account any payments or prepayments made between the Trade Date and the Effective Date. 5   Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Banks thereunder. 6   To be completed if the Assignor and the Assignee intend that the minimum assignment amount is to be determined as of the Trade Date. 7   To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement. -------------------------------------------------------------------------------- [Consented to:]8 [BANK OF AMERICA, N.A. as Administrative Agent and as L/C Issuer] By ______________________________ Name: ___________________________ Title: ____________________________ PEOPLES ENERGY CORPORATION By ______________________________ Name: ___________________________ Title: ____________________________ __________________________ 8   To be added only if the consent of the Borrowers and/or other parties (e.g. L/C Issuer) is required by the terms of the Credit Agreement. -------------------------------------------------------------------------------- ANNEX 1 to Assignment and Assumption STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT AND ASSUMPTION 1. Representations and Warranties. 1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Credit Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Credit Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Credit Document. 1.2 Assignee. The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Bank under the Credit Agreement, (ii) it meets all the requirements to be an Eligible Assignee under Section 11.12(b) of the Credit Agreement (subject to such consents, if any, as may be required under Section 11.12(b) of the Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Bank thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Bank thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 7.3 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or any other Bank and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest, and (vi) if it is a foreign lender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Bank, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Credit Documents are required to be performed by it as a Bank. 2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date. -------------------------------------------------------------------------------- 3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment and Assumption may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment and Assumption by facsimile shall be effective as delivery of a manually executed counterpart of this Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in accordance with, the law of the State of Illinois.

EXHIBIT 10.3 [COPY] THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OR OTHER COUNTRY AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS THIS SECURITY OR SUCH SECURITIES HAVE BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE AND FOREIGN SECURITIES LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS IS AVAILABLE. THIS SECURITY MAY NOT BE SOLD, ASSIGNED, PLEDGED, ENCUMBERED, DISPOSED OF OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 11 HEREOF. LAZARD FUNDING LIMITED LLC Amended and Restated Subordinated Convertible Promissory Note Due September 30, 2016   $150,000,000.00    New York, New York    As of May 15, 2006 FOR VALUE RECEIVED, the undersigned, Lazard Funding Limited LLC, a Delaware limited liability company (together with its successors, the “Company”), hereby promises to pay to the order of Banca Intesa S.p.A., a Società per Azioni organized under the laws of the Republic of Italy (together with its successors and permitted assigns, the “Holder”), the principal sum of $150,000,000.00 together with interest from the date hereof on the unpaid balance thereof. The Company shall pay interest at the rate set forth in Section 2: (i) annually in arrears on March 26 of each year following the date of issuance of this Note (each date of payment being an “Interest Payment Date”), (ii) upon conversion in accordance with Section 7 hereof, and (iii) on the date on which the principal amount hereof shall be due to the extent then accrued and unpaid. The principal amount of this Note and accrued and unpaid interest thereon shall be payable in full on September 30, 2016 (such date or any earlier date upon which the outstanding amount hereunder is due pursuant to Section 5 below, the “Maturity Date”). Payments of both principal and interest are to be made in accordance with Section 3 below. As used herein, the term “Note” includes this Note and any Note issued in exchange herefor or in replacement hereof. This Note has been unconditionally guaranteed by Lazard Group LLC (“Lazard” or the “Guarantor”) pursuant to the Guaranty. Section 1 . Certain Definitions. (a) The following terms, as used herein, have the following meanings: -------------------------------------------------------------------------------- “Business Day” means any day other than a Saturday, Sunday or a day on which banks are authorized or required to be closed for business in either New York City, New York, United States of America or Milan, Italy. “Change of Control” means: (i) the consummation of any transaction or series of transactions the result of which is the acquisition by any Person or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 40% of either (A) the then-outstanding shares of Lazard Ltd Stock (the “Outstanding Lazard Ltd Stock”) or (B) the combined voting power of the then-outstanding voting securities of Lazard Ltd entitled to vote generally in the election of directors (the “Outstanding Lazard Ltd Voting Securities”), in each case, assuming the full exchange of the Class II Interests of LAZ-MD Holdings LLC for shares of Lazard Ltd Stock; provided, however, that, for purposes of this clause (i), the following acquisitions shall not constitute a Change of Control: (1) any acquisition by Lazard Ltd or any of its controlled affiliates or by LAZ-MD Holdings LLC, a Delaware limited liability company, (2) any acquisition, through any form of transaction (including any Business Combination), by any group of executive officers or managing directors of Lazard or any of its Subsidiaries (“Lazard Partners”) who were serving in such capacity during the first to occur of the announcement of or the entry into the definitive agreement providing for such acquisition(any such acquisition, a “Management Buyout”), or (3) any acquisition pursuant to a transaction which complies with the proviso to clause (iii) of this definition; (ii) failure of Continuing Directors to constitute a majority of the board of directors of Lazard Ltd; or (iii) the consummation of any reorganization, merger, amalgamation, statutory share exchange or consolidation or similar corporate transaction involving Lazard Ltd or a sale or other disposition of all or substantially all of the assets of Lazard Ltd or the acquisition of all or substantially all of the assets or capital stock of another person by Lazard Ltd (a “Business Combination”); provided, however, that the following shall not constitute a Change of Control: (A) any Business Combination pursuant to which all or substantially all of the beneficial owners, respectively, of the Outstanding Lazard Ltd Common Stock and Outstanding Lazard Ltd Voting Securities immediately prior to the consummation of such Business Combination (assuming the full exchange of the Class II Interests of LAZ-MD Holdings LLC for shares of Lazard Ltd Stock) will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation or other entity resulting from such Business Combination (including, without limitation, a corporation which   -2- -------------------------------------------------------------------------------- as a result of such transaction owns Lazard Ltd or all or substantially all of Lazard Ltd’s assets either directly or through one or more Subsidiaries) (the “Continuing Company”) immediately after the consummation of such Business Combination and in any event in substantially the same proportions as their ownership, immediately prior to the consummation of such Business Combination, of the Outstanding Lazard Ltd Common Stock and Outstanding Lazard Ltd Voting Securities (assuming the full exchange of the Class II Interests of LAZ-MD Holdings LLC for shares of Lazard Ltd Stock), as the case may be, or (B) any Management Buyout. “Continuing Directors” means the directors constituting Lazard Ltd’s board of directors at the date of this Note, and each other director, if, in each case, such other director’s nomination for election to the board of directors of Lazard Ltd is recommended or approved by at least a majority of the then Continuing Directors. “Debt” means (without duplication), with respect to any Person, (i) any obligation of such Person to pay the principal of, premium of, if any, interest on (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company, whether or not a claim for such post-petition interest is allowed in such proceeding), penalties, reimbursement or indemnification amounts, fees, expenses or other amounts relating to any indebtedness, and any other liability, contingent or otherwise, of such Person (A) for borrowed money (including instances where the recourse of the lender is to the whole of the assets of such Person or to a portion thereof), (B) evidenced by a note, debenture or similar instrument (including any such instrument evidencing a purchase money obligation) including securities, (C) for any letter of credit or performance or surety bond obtained by such Person, (D) for the payment of money relating to a capitalized lease obligation, or (E) with respect to any sale and leaseback transaction; (ii) any obligation of other Persons of the kind described in the preceding clause (i), which the Person has guaranteed or which is otherwise its legal liability; (iii) any obligation of the type described in clauses (i) and (ii) secured by a lien to which the property or assets of such Person are subject, whether or not the obligations secured thereby shall have been assumed by or shall otherwise be such Person’s legal liability; and (iv) any and all deferrals, renewals, extensions and refunding of, or amendments, modifications or supplements to, any obligation of the kind described in any of the preceding clauses (i), (ii) or (iii). “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. “Guaranty” means that certain Amended and Restated Guaranty by Lazard in favor of the Holder, dated as of the date hereof, as from time to time amended or modified in accordance with its terms. “Lazard Ltd” means Lazard Ltd, a Bermuda exempted limited company. “Lazard Ltd Stock” means Class A Common Stock, par value $.01 per share, of Lazard Ltd.   -3- -------------------------------------------------------------------------------- “Lazard Operating Agreement” means the Operating Agreement of Lazard, dated as of May 10, 2005, as amended as of December 19, 2005, and as such may be further amended or supplemented from time to time. “Person” or “Persons” means natural persons, corporations, limited liability companies, S.p.A.’s (Società per Azioni), S.r.l.’s (Società a responsabilità limitata), trusts, joint ventures, associations, companies, partnerships, governments or agencies or political subdivisions thereof and other political or business entities. “Senior Debt” means all Debt of the Company other than the Debt hereunder, whether outstanding on the date of this Note or thereafter created, incurred or assumed; provided, however, that the term “Senior Debt” shall not include (A) any Debt or obligation owed to a Subsidiary, (B) any Debt or obligation which by the express terms of the instrument creating or evidencing the same is not superior in right of payment to the Debt outstanding hereunder, (C) any Debt or obligation which is subordinate in right of payment in any respect to any other Debt or obligation, unless such Debt or obligation by the express terms of the instrument creating or evidencing the same is senior to this Note and subordinated to another Debt or obligation, (D) for the avoidance of doubt, any Debt or obligation constituting a trade account payable, other account payable or similar liability, or (E) amendments, renewals, extensions, modifications and refundings of any such Debt or obligation referred to in clauses (A) through (D) hereof. “Subsidiary” or “Subsidiaries” means, with respect to any Person, any corporation, limited liability company, S.p.A. (Società per Azioni), S.r.l. (Società a responsabilità limitata), trust, joint venture, association, company, partnership or other legal entity of which a Person (either alone or through or together with any other Subsidiary of such Person) (A) owns, directly or indirectly, a majority of the stock or other equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity, or (B) is otherwise entitled to exercise (1) a majority of the voting power generally in the election of the board of directors or other governing body of such corporation or such other legal entity or (2) control of such corporation or other legal entity. (b) As used in this Note, the expressions “pay in full”, “paid in full” or “payment in full” means, with respect to any indebtedness, the final and indefeasible payment in full in cash of all such indebtedness in accordance with its terms. (c) “control”, used with respect to any person means the power to direct the management and policies of such person, directly or indirectly, by or through stock ownership, agency or otherwise, or pursuant to or in connection with an agreement, arrangement or understanding (written or oral) with one or more other persons; and the terms “controlling” and “controlled” shall have meanings correlative to the foregoing. “Termination Agreement” means the Termination Agreement, dated as of March 31, 2006, by and among Lazard, the Holder and Lazard & Co. S.r.l.   -4- -------------------------------------------------------------------------------- Section 2 . Payment of Interest. (a) Interest on the unpaid balance of the principal amount of this Note will accrue annually at a rate per annum equal to 3.25%. Interest will be calculated on the basis of a 360-day year of twelve 30-day months starting from March 26, 2006; provided, however, that from and after the date on which an Event of Default occurs, and until such Event of Default is either cured or waived, interest shall accrue at a rate 3.00% per annum above the rate otherwise applicable (the “Higher Interest Rate”). Interest shall be payable, in arrears, (1) on each Interest Payment Date as set forth in the first paragraph of this Note, (2) upon conversion pursuant to Section 7 hereof, and (3) on the Maturity Date. (b) The Company shall, upon no less than 5 Business Days’ notice to the Holder, have the option to defer payment of any interest due hereunder until the date that is 60 days after (i) the Interest Payment Date or (ii) any other date on which payment of interest would otherwise be due (each such date, a “Deferred Interest Payment Date”). The amount of interest so deferred (the “Deferred Interest”) shall accrue interest at the Higher Interest Rate, payable with the Deferred Interest on such Deferred Interest Payment Date. Section 3 . Method of Payment. (a) Notwithstanding anything to the contrary set forth herein, unless and until this Note is converted in full in accordance with Section 7 hereof, (i) payment of amounts due and payable hereunder, including amounts due and payable on the Maturity Date or in connection with prepayment under Section 3 hereof, shall be made in United States Dollars by wire transfer of immediately available funds to such bank account as the Holder may from time to time designate in writing and (ii) any payment, whether of interest, principal, or otherwise, due hereunder on a date which is not a Business Day shall be due and payable on the immediately following Business Day. (b) Taxes. Amounts due under this Note shall be paid free and clear of all United States federal, state or local taxes, assessments or governmental charges payable by deduction or withholding from payment of principal of or interest on this Note, except for any tax, assessment or governmental charge that would not have been imposed but for (i) the existence of any present or former connection between the Holder and the United States including, without limitation, the Holder being or having been a citizen or resident or treated as a resident thereof, or being or having been engaged in trade or business or present therein or having or having had a permanent establishment therein, (ii) the Holder’s failure to comply with any certification, identification or other reporting requirements concerning the Holder’s nationality, residence, identity or connection with the United States, if compliance is required as a precondition to exemption from such tax, assessment or other governmental charge, or (iii) a failure by the Holder to provide the form specified in Section 3(c) of this Note in the manner specified therein or a failure of the form provided by the Holder pursuant to Section 3(c) of this Note to be accurate and effective.   -5- -------------------------------------------------------------------------------- (c) Tax Forms. The Holder shall deliver to the Company prior to the first payment of interest on or principal of this Note an appropriate U.S. Internal Revenue Service Form W-8 (or the appropriate successor form), duly executed and completed in a manner acceptable to the Company, certifying that the Holder is a foreign person for United States federal income tax purposes. (d) Prepayment Option Upon Change in Tax Law. In the event that, on or after the date hereof any action is taken by any governmental agency or regulatory authority, or any statutory or regulatory amendment or change is enacted, promulgated or issued, or any interpretation or pronouncement is issued or adopted or any ruling is promulgated in any jurisdiction (collectively, a “Change in Tax Law”), the effect of which Change in Tax Law is to render this Note subject to any taxes, assessments or other governmental charges, other than any tax, assessment or governmental charge that would not have been imposed but for the existence of a condition set forth in clause (i), (ii) or (iii) of Section 3(b) hereof, the Company may, in its discretion, if this Note shall not have been previously converted in accordance with Section 7, prepay no later than 45 days after the Company shall have received notice of such Change in Tax Law the principal amount then outstanding hereunder, plus accrued and unpaid interest thereon through the date of prepayment, in accordance with Section 3(a), without penalty or premium. Section 4 . Events of Default. If any of the following events (“Events of Default”) occurs: (a) the Company fails to pay any amount due under this Note when the same becomes due and payable under the terms of this Note, and such failure continues for 30 days after notice thereof by the Holder to the Company; provided, however, that this Section 4(a) shall not apply to Deferred Interest; (b) the Company fails to pay any Deferred Interest under this Note when the same becomes due and payable on the applicable Deferred Interest Payment Date; (c) the Company shall have materially breached its covenants contained in this Note, and the Company shall not have cured such breach by the date 30 days after notice thereof by the Holder to the Company; provided that the Higher Interest Rate shall apply during the 30-day grace period referred to in this Section 4(c); (d) the Guarantor shall have materially breached its covenants to the Holder set forth in Section 7 of the Guaranty, and the Guarantor shall not have cured such breach by the date 30 days after notice thereof by the Holder to the Guarantor; provided that the Higher Interest Rate shall apply during the 30-day grace period referred to in this Section 4(d); (e) the Company shall be in default beyond any applicable grace or notice period in the payment of Debt for money borrowed in an amount in excess of $50,000,000,   -6- -------------------------------------------------------------------------------- and (i) the holders of such Debt shall have demanded accelerated repayment thereof, or (ii) the final maturity of such Debt shall have occurred; (f) the Company makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts as they become due, or files a voluntary petition in bankruptcy, or is adjudicated as bankrupt or insolvent, or files any petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation in the United States, or files any answer admitting or failing to deny the material allegations of a petition filed against the Company for any such relief, or seeks or consents to or acquiesces in the appointment of any trustee, receiver or liquidator of the Company or of all or any substantial part of the properties of the Company, or the Company or its directors or majority stockholders take any action for the purpose of effecting any of the foregoing; or (g) if, within 60 days after the commencement of any proceeding against the Company seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, in the United States, such proceeding has not been dismissed or if, within 60 days after the appointment, without the consent or acquiescence of the Company, of any trustee, receiver or liquidator of the Company or of all or any substantial part of the properties of the Company, such appointment has not been vacated; then, and in any such event, the Holder at its option may proceed to protect and enforce its rights in the manner set forth in Section 5 below. Section 5 . Remedies on Default, etc. If an Event of Default has occurred and is continuing, the Holder may (a) elect, by written notice to the Company, to declare the entire amount outstanding hereunder to be due and payable in full, whereupon the entire such amount shall be and become due and payable in full, provided, however, that no such notice shall be required in the event of occurrence of one of the events specified in clauses (f) or (g) of Section 4 and if any such event shall occur, this Note and all amounts outstanding hereunder shall immediately and automatically be and become due and payable in full without notice or declaration of any kind, and/or (b) proceed to protect and enforce its rights by a suit in equity, action at law or other appropriate proceeding, whether for the specific performance of any agreement contained in this Note, or for an injunction against a violation of any of the terms hereof or in aid of the exercise of any right, power or remedy granted hereby or by law, equity, statute or otherwise. No course of dealing and no delay on the part of the Holder in exercising any right, power or remedy will operate as a waiver thereof or otherwise prejudice the Holder’s rights, powers or remedies. No right, power or remedy conferred hereby is exclusive of any other right, power or remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise. Section 6 . Ranking and Priority of Note.   -7- -------------------------------------------------------------------------------- (a) Subordination. The Company, for itself, its successors and assigns, covenants and agrees, and the Holder, by its acceptance of this Note likewise covenants and agrees, that anything herein or in the Termination Agreement or any related agreement or instrument to the contrary notwithstanding, the indebtedness evidenced by or arising on account of this Note (or any renewal or extension thereof), including, without limitation, principal and interest, is and shall be subordinate and subject in right of payment to the prior payment in full of all Senior Debt of the Company, whether outstanding on the date hereof or incurred hereafter, to the extent and in the manner set forth herein. (b) Extent of Subordination. If any payment default has occurred and is continuing on any Senior Debt, or a non-payment default has occurred and is continuing on the Senior Debt and the Holder has received notice of such non-payment default, then the Company shall not make any direct or indirect payment or distribution of any kind or character, whether in cash, property or securities, to, or for the benefit of, the Holder pursuant to or in respect of this Note (whether for principal or interest or otherwise), and whether before, after or in connection with any dissolution, winding up, liquidation or reorganization or receivership proceeding or upon an assignment for the benefit of creditors or any other marshalling of the assets and liabilities of the Company). Notwithstanding the preceding sentence, if the Senior Debt has been paid in full or the relevant default has been cured or waived, the Company shall make payments in accordance with this Note. (c) Distributions in Bankruptcy. Upon any distribution in any bankruptcy or similar proceeding, any distribution to which the Holder is entitled shall be paid directly to the holders of Senior Debt to the extent necessary to make payment in full of all Senior Debt remaining unpaid after giving effect to all other distributions to or for the benefit of the holders of Senior Debt. (d) Priority in Bankruptcy. For avoidance of doubt, in the event of any liquidation, dissolution, reorganization or winding up of the Company, the Debt outstanding hereunder is senior and prior in right of payment to all limited liability company interests in the Company. (e) Application of Distributions. If any distribution, payment or deposit to redeem, defease or acquire the Debt outstanding hereunder shall have been received by the Holder at a time when such distribution was prohibited by the provisions of this Section 6, then, unless such distribution is no longer prohibited by this Section 6, such distribution shall be received and applied by the Holder for the benefit of the holders of Senior Debt, and shall be paid or delivered by the Holder to the holders of Senior Debt for application to the payment of all Senior Debt in compliance with applicable law. (f) Subrogation Rights. The Holder shall not have any subrogation or other rights of recourse to any security in respect of any Senior Debt until such time as all Senior Debt shall have been paid in full. Upon the payment in full of all Senior Debt and to the extent permitted by applicable law, the Holder shall be subrogated to the rights of the   -8- -------------------------------------------------------------------------------- holders of Senior Debt to receive distributions applicable to Senior Debt until all amounts owing in respect of the Debt outstanding hereunder shall be so paid. No distributions to the holders of Senior Debt which otherwise would have been made to the Holder shall, as between the Company and the Holder, be deemed to be payment by the Company to or on account of Senior Debt. If any distribution to which the Holder would otherwise have been entitled shall have been applied pursuant to the provisions of this Section 6 to the payment of Senior Debt, then the Holder shall be entitled to receive from the holders of such Senior Debt any distributions received by such holders of Senior Debt in excess of the amount sufficient to pay all amounts payable on such Senior Debt to the extent provided herein and under applicable law. (g) Reliance. Upon any distribution in a bankruptcy or similar proceeding, the Holder shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which the proceeding is pending, or a certificate of the liquidating trustee or agent or other Person making any distribution for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of Senior Debt and other Debt of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Section 6. (h) Ratable Distributions. Any distribution otherwise payable to the Holder made to holders of Senior Debt pursuant to this Section 6 shall be made to such holders of Senior Debt ratably according to the respective amount of Senior Debt held by each, taking into account any priorities which may be established among the holders of such Senior Debt pursuant to applicable law. (i) Obligations Not Impaired. Nothing contained in this Note is intended to or will impair as between the Company, its creditors, and the Holder, the obligation of the Company, which is absolute and unconditional, to pay to the Holder as and when amounts become due and payable in accordance with the terms of this Note or affect the relative rights of the Holder and the creditors of the Company. (j) Further Actions. The Holder, by its acceptance hereof, agrees to take such further action as may be reasonably requested by the Company in order to effectuate the subordination as provided herein. Section 7 . Conversion. (a) Conversion Right. Subject to and upon compliance with the terms and conditions of this Section 7, the Holder shall be entitled to convert (such entitlement, the “Conversion Right”) this Note, in whole or in part (in increments of principal amount of $10,000,000) (or, if less than $10,000,000 of principal shall be then outstanding, the entire remaining amount), at the times and in the amounts provided in Section 7(c)(ii), into fully paid and non-assessable shares of Lazard Ltd Stock at a conversion rate equal to 175,438 shares of Lazard Ltd Stock for each $10,000,000 of principal under this Note (such rate, as it may be adjusted pursuant to Section 7(g), the “Conversion Rate”) being converted in   -9- -------------------------------------------------------------------------------- accordance with this Section 7. Upon any conversion of this Note, whether in whole or in part, in accordance with this Section 7, the Holder shall be entitled, in addition to any Lazard Ltd Stock otherwise deliverable to such Holder, to receive from the Company any accrued but unpaid interest on the applicable portion of this Note being so converted in cash in accordance with Section 2(a). (b) The Holder is not entitled to any rights of a holder of Lazard Ltd Stock with respect to this Note until the Holder has converted any part of this Note for Lazard Ltd Stock and, in such case, only to the extent that this Note shall have been converted for Lazard Ltd Stock pursuant to this Section 7. The Company may satisfy its obligation to deliver shares of Lazard Ltd Stock to the Holder upon conversion of this Note in accordance with this Section 7 through direct issuance of fully paid and non-assessable shares of Lazard Ltd Stock by Lazard Ltd, the delivery of fully paid and non-assessable shares of Lazard Ltd Stock from an affiliate of Lazard Ltd or a combination thereof. (c) Conversion Procedures. (i) The conversion of this Note under this Section 7 shall be effected in accordance with this Section 7(c). Provisions that apply to the conversion of the entire principal amount of this Note shall also apply to an exchange of a portion of the principal amount of this Note. (ii) This Note shall only become convertible at the times, and in the amounts, set forth in this Section 7(c)(ii): (A) on and after July 1, 2008 (or, if such date is not a Business Day, on the next Business Day after such date), an aggregate amount of principal under this Note equal to one-third of the principal amount of this Note outstanding as of such date (such amount of principal, the “Applicable Amount”) shall become convertible (subject to reduction pursuant to clause (E) below); (B) on and after July 1, 2009 (or, if such date is not a Business Day, on the next Business Day after such date), an additional aggregate amount of principal under this Note equal to the Applicable Amount (or, if less, the remaining outstanding principal under this Note) shall become convertible (subject to reduction pursuant to clause (E) below); (C) on and after July 1, 2010 (or, if such date is not a Business Day, on the next Business Day after such date), the remaining outstanding principal under this Note shall become convertible (subject to reduction pursuant to clause (E) below); (D) upon any Change of Control, the entire principal amount of the Note outstanding on such date shall become convertible; and (E) in the event that the Holder shall elect to participate in any Partner Interest Offering (as defined in the Registration Rights Agreement) pursuant to and in accordance with the Registration Rights Agreement, the aggregate amount of principal that shall be convertible hereunder into the number of shares of Lazard Ltd Stock that the Holder shall elect to register in such Partner Interest Offering (subject to the Pro Rata Cap (as defined in the Registration Rights Agreement)) shall become convertible (provided that the aggregate amount of principal of the Note that shall become convertible pursuant to this clause (E) shall be deducted from, and shall reduce, any and   -10- -------------------------------------------------------------------------------- all amounts of principal under this Note that would otherwise become convertible, first, under clause (A) above, and, second, under clause (B) above, and, third, under clause (C) above); in the case of each of clauses (A), (B), (C), (D) and (E) of this Section 7(c)(ii), in accordance with and subject to the terms and conditions of this Section 7. (iii) (A) In the event that the Holder desires to exercise its Conversion Right pursuant to Sections 7(c)(ii)(A) – (C) , the Holder must notify the Company in writing of its election to exercise its Conversion Right no later than 30 days, and no sooner than 60 days, prior to the date (which shall be a Business Day) on which the Holder desires for the conversion to become effective (such date, the “Conversion Date”), provided that in the event that Lazard Ltd shall give notice of a Piggy-back Registration (as defined in the Registration Rights Agreement), the Holder shall be entitled to notify the Company in writing of its election to exercise its Conversion Right in order to participate in such Piggy-back Registration with respect to the shares of Lazard Ltd Stock issuable upon such conversion, which notice shall be delivered on the same day as its notice to Lazard Ltd of the Holder’s election to participate in the applicable Piggy-back Registration pursuant to the Registration Rights Agreement, in each case on the terms and subject to the conditions set forth in the Registration Rights Agreement, with such conversion to be effective on the 10th day after the date on which the Holder’s election to exercise its Conversion Right pursuant to this proviso is given (or, if such day is not a Business Day, the first Business Day immediately following such day). Such written notice shall be irrevocable unless otherwise agreed by the Company in writing and shall certify as to the Holder’s desire to exercise its Conversion Right, the aggregate principal amount of the Note that the Holder desires to convert in accordance with this Section 7 and the desired Conversion Date and shall be executed by an executive officer of the Holder. (B) In addition to the provisions of clause (A) above, in the event the Holder desires to exercise its Conversion Right pursuant to Section 7(c)(ii)(D), the Holder must notify the Company in writing of its election to exercise its Conversion Right no later than 30 days prior to the Change of Control, provided that notice of such Change of Control shall have been given to the Holder by the Company at least 45 days prior to such Change of Control. In the event notice of a Change of Control is given to Holder less than 45 days prior to, or is given after, such Change of Control, Holder shall have 15 days from the giving of such notice to notify the Company in writing of its election to exercise its Conversion Right and the desired Conversion Date (which date shall be a Business Day and shall be no sooner than the later of the Change of Control and 30 days after such notice and no later than the later of the Change of Control and 90 days after such notice). Such written notice shall be irrevocable unless otherwise agreed by the Company in writing and shall certify as to the Holder’s desire to exercise its Conversion Right and the desired Conversion Date and shall be executed by an executive officer of the Holder. For the avoidance of doubt, any conversion pursuant to Section 7(c)(ii)(D) shall be conditioned upon the   -11- -------------------------------------------------------------------------------- Change of Control actually occurring, and any notice delivered pursuant to this clause (iii) shall be cancelled and null and void in the event that the applicable Change of Control shall not occur. (C) In the event the Holder desires to exercise its Conversion Right pursuant to Section 7(c)(ii)(E), the Holder must notify the Company in writing of its election to exercise its Conversion Right on the same date that it notifies Lazard Ltd of its election to participate in such Partner Interest Offering in accordance with the Registration Rights Agreement. Such written notice shall be irrevocable unless otherwise agreed by the Company in writing and shall certify as to the Holder’s desire to exercise its Conversion Right and shall be executed by an executive officer of the Holder. For the avoidance of doubt, any conversion pursuant to Section 7(c)(ii)(E) shall be conditioned upon, and shall occur effective immediately prior to, the sale of the shares of Lazard Ltd Stock into which the Note is being converted in the applicable Partner Interest Offering. Any notice delivered pursuant to this clause (iii) shall be cancelled and null and void in the event that the applicable Partner Interest Offering shall not occur or shall be withdrawn for any reason, and the portion of any notice delivered pursuant to this clause (iii) that relates to shares of Lazard Ltd Stock that are not sold in the applicable Partner Interest Offering shall be deemed to be cancelled and null and void. (D) Notwithstanding anything in this Section 7 to the contrary; (i) this Section 7, including the Conversion Right, shall terminate in full and be of no further force and effect on June 30, 2011 (the “Conversion Termination Date”) other than with respect to any pending but unconsummated exercise of a Conversion Right as of such date, and (ii) any such pending but unconsummated exercise of a Conversion Right as of the Conversion Termination Date shall terminate, and be deemed to be revoked in full, as of the date that is six months after the Conversion Termination Date. (iv) Subject to satisfaction of the conditions set forth in Section 7(f) below, the closing of any Conversion Right shall occur at the offices of the Company on the applicable Conversion Date, or, in the event such conditions shall not have been satisfied in accordance with Section 7(f) below by such Conversion Date, as promptly as practicable after such conditions have been so satisfied. At each such closing, as a condition to the consummation of the applicable conversion, the Holder shall surrender and deliver this Note to the Company, duly endorsed or assigned to the Company (or in blank if so required by the Company), at the office of the Company, and the Company shall deliver a certificate evidencing the shares of Lazard Ltd Stock to be issued to the Holder (or other evidence of the transfer and registration of the applicable shares of Lazard Ltd Stock to be delivered to the Holder pursuant to such conversion) and, if applicable, a new Note reflecting the appropriate reduction in the principal amount under this Note as a result of such conversion.   -12- -------------------------------------------------------------------------------- (d) Fractional Shares. No fractional shares of Lazard Ltd Stock shall be required to be issued or delivered upon any exercise of the Conversion Right. In the event that the Holder shall otherwise be entitled to receive a fractional share of Lazard Ltd Stock, the Company shall pay to the Holder, in cash, an amount equal to the product of the applicable fractional share amount and the closing price per share of Lazard Ltd Stock on the principal stock exchange on which such shares are listed. (e) Reserve Lazard Ltd Stock. The Company shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Lazard Ltd Stock, for the purpose of effecting the conversion of this Note, the maximum number of shares of Lazard Ltd Stock then issuable upon the conversion of this Note. All shares of Lazard Ltd Stock which may be delivered upon conversion of this Note, upon such delivery, shall have been duly authorized and validly issued and shall be fully paid and nonassessable (and shall, subject to the second sentence of Section 7(b), be issued out of the Company’s authorized but unissued Lazard Ltd Stock). (f) Conditions. Notwithstanding anything to the contrary herein, the obligation of the Company to consummate any conversion under this Section 7 shall be subject to the satisfaction, or waiver by the Company, of each of the following conditions: (i) all approvals or authorizations of, filings and registrations with, and notifications to, all Governmental Authorities, if any, required to consummate such conversion (including the issuance and delivery of the Lazard Ltd Stock) shall be in full force and effect and all waiting periods required by law shall have expired or been terminated, and no Burdensome Condition shall have been imposed by any Governmental Authority in connection therewith; (ii) all approvals of shareholders of Lazard Ltd required by law or regulation (including, for the avoidance of doubt, the rules and regulations of the New York Stock Exchange, Inc.) to consummate such conversion (including the issuance and delivery of the Lazard Ltd Stock) shall have been obtained; and (iii) no statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) of any Governmental Authority that, in each case, prohibits consummation of such conversion (including the issuance and delivery of the Lazard Ltd Stock) shall have been enacted, issued, promulgated, enforced or entered. With respect to each of the foregoing conditions, the Company and the Holder hereby undertake to use commercially reasonable efforts to cause, and to assist the other in causing, each such condition to be satisfied as promptly as practicable after written notice of such conversion shall have been given by the Holder in accordance with Section 7(c)(iii), and, to the extent reasonable, to take such other actions as are necessary or advisable to consummate such conversion as of the desired Conversion Date or as promptly as practicable thereafter. Notwithstanding anything herein to the contrary, nothing in this Note shall be deemed to   -13- -------------------------------------------------------------------------------- require the Company or any of its affiliates to take any action, or commit to take any action, or agree to any condition or restriction, in connection with satisfying the conditions set forth in Section 7(g) or otherwise that, individually or in the aggregate, is, or would reasonably be expected to be, unduly burdensome on the Company or any of its affiliates, or requires, or would reasonably be expected to require, the making of any material expenditure (other than ordinary course legal fees and fees incurred in the filing of the registration statement and the registration of the shares under the Registration Rights Agreement), or incurrence of any liability on the part of, or the proffer, sale or holding separate of any assets, businesses or interest in any assets or businesses of, the Company or any of its affiliates, in each case as determined by the Company in good faith (a “Burdensome Condition”). As used in this Section 7(f), “Governmental Authority” means any national, local or foreign (including U.S. federal, state or local) or supranational (including European Union) governmental, judicial, administrative or regulatory (including self-regulatory) agency, commission, department, board, bureau, entity or authority of competent jurisdiction. (g) Adjustment of the Conversion Rate. (i) In case Lazard Ltd at any time on or after the date hereof shall (i) pay a dividend or make a distribution on shares of Lazard Ltd Stock in each case in the form of shares of Lazard Ltd Stock; (ii) subdivide the outstanding shares of Lazard Ltd Stock into a greater number of shares; (iii) combine the outstanding shares of Lazard Ltd Stock into a smaller number of shares; (iv) make a distribution on shares of Lazard Ltd Stock in shares of its share capital other than Lazard Ltd Stock; or (v) issue by reclassification of the outstanding shares of Lazard Ltd Stock any shares of its share capital, then the number of shares of Lazard Ltd Stock constituting the Conversion Rate in effect immediately prior to such action shall be adjusted so that the Holder, if it thereafter converts this Note in accordance with this Section 7, shall be entitled to receive such number of shares of Lazard Ltd Stock which the Holder would have owned immediately following such action had this Note been converted immediately prior thereto in accordance with this Section 7. An adjustment made pursuant to this paragraph (i) shall become effective immediately after the effective date of the particular action. The Conversion Rate in effect immediately prior to the consummation of any applicable conversion shall be the Conversion Rate for such conversion. In the event that any record date for any dividend or distribution that would require an adjustment under this paragraph (i) shall have occurred on or after the date on which the Holder gives proper notice of its exercise of the Conversion Right in accordance with Section 7(c)(iii) and the distribution date shall not have occurred as of the closing of the applicable conversion, the Holder shall be entitled to receive, immediately after such dividend or distribution shall have occurred, such number of additional shares of Lazard Ltd Stock that it would have received had the distribution date occurred simultaneously with the applicable record date. (ii) No adjustment in the Conversion Rate shall be required unless such adjustment would require an increase or decrease of at least 100 shares of Lazard Ltd   -14- -------------------------------------------------------------------------------- Stock in the Conversion Rate; provided, however, that any adjustments which by reason of this paragraph (ii) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. (iii) Whenever the Conversion Rate is adjusted as herein provided, the Company shall promptly give notice of such adjustment to the Holder. (iv) In the event of (A) any reclassification or change of shares of Lazard Ltd Stock issuable upon conversion of this Note (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination, or any other change for which an adjustment is provided in Section 7(g)(i)); (ii) any consolidation or merger or combination to which Lazard Ltd is a party other than a merger in which Lazard Ltd is the continuing corporation and which does not result in any reclassification of, or change (other than in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination) in, outstanding shares of Lazard Ltd Stock; or (iii) any sale, transfer or other disposition of all or substantially all of the assets of Lazard Ltd, directly or indirectly, to any person as a result of which holders of Lazard Ltd Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for Lazard Ltd Stock, then the Company, or its successor, shall take all necessary action such that this Note shall be convertible into the kind and amount of shares of stock and other securities and property (including cash) receivable upon such reclassification, change, combination, consolidation, merger, sale, transfer or other disposition by a holder of the number of shares of Lazard Ltd Stock deliverable upon exchange of this Note immediately prior to such reclassification, change, combination, consolidation, merger, sale, transfer or other disposition. Any such action shall take into account adjustments of the Conversion Rate which shall be reasonably equivalent to the adjustments to the Conversion Rate provided for in this Section 7(g). The provisions of this Section 7(g)(iv) shall similarly apply to successive reclassifications, changes, combinations, consolidations, mergers, sales or conveyances. (v) In the event that Lazard Ltd shall issue to all or substantially all holders of Lazard Ltd Stock any rights, options or warrants (other than pursuant to any dividend reinvestment, share purchase or similar plan) entitling the holders thereof to subscribe for or purchase shares of Lazard Ltd Stock (or securities exchangeable for or convertible into such shares) for a period expiring within 60 days from the date of issuance of such rights, options or warrants at a price per share less than the Current Market Price as of the Time of Determination, then the number of shares of Lazard Ltd Stock constituting the Conversion Rate in effect immediately prior to such action shall be adjusted by multiplying it by a fraction: (1) the numerator of which is the sum of (a) the number of shares of Lazard Ltd Stock outstanding on the record date fixed for the applicable   -15- -------------------------------------------------------------------------------- distribution plus (b) the total number of additional shares of Lazard Ltd Stock offered for subscription or purchase, and (2) the denominator of which is the sum of (a) the number of shares of Lazard Ltd Stock outstanding on the record date fixed for the applicable distribution plus (b) the total number of shares of Lazard Ltd Stock that the aggregate offering price of the total number of shares of Lazard Ltd Stock offered for subscription or purchase would purchase at the Current Market Price. The adjustment shall become effective immediately after the record date for the determination of shareholders entitled to receive the rights, warrants or options to which this Section 7(g)(v) applies. To the extent that such rights, warrants or options are not exercised prior to their expiration (and as a result no additional shares of Lazard Ltd Stock are delivered or issued pursuant to such rights, warrants or options), the number of shares of Lazard Ltd Stock constituting the Conversion Rate shall be readjusted to the number of shares of Lazard Ltd Stock constituting the Conversion Rate that would then be in effect had the adjustments made upon the issuance of such rights, warrants or options been made on the basis of delivery or issuance of only the number of shares of Lazard Ltd Stock actually delivered or issued. “Time of Determination” means the time and date of the earlier of (i) the determination of stockholders entitled to receive rights, warrants or options to which this Section 7(g)(v) applies and (ii) the time immediately prior to the commencement of “ex-dividend” trading for such rights, warrants or options on the New York Stock Exchange, Inc. or such other U.S. national or regional exchange or market on which the Lazard Ltd Stock are then listed or quoted. “Current Market Price” per share of Lazard Ltd Stock on any day means the average of the closing price per share of Lazard Ltd Stock on each of the 20 consecutive trading days ending on the earlier of the day in question and the day before the “ex date” with respect to the issuance requiring such computation. For purposes of this paragraph, the term “ex date,” when used with respect to any issuance, means the first date on which the shares of Lazard Ltd Stock trade without the right to receive the issuance. (vi) The Company shall pay all documentary, transfer and other stamp taxes, if any, due or payable as a result of the issuance or delivery of shares of Lazard Ltd Stock. The Holder shall pay any tax which may be payable in respect of any transfer involved in the issue and delivery or registration of stock in any name other than that of the converting Holder and all other taxes due or payable in connection with the conversion of this Note or, except as provided in the immediately preceding sentence, the issuance or delivery of shares of Lazard Ltd Stock, and the Company shall not be required to deliver any stock certificates unless and until the Holder shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid or is not payable. (vii) On or prior to the initial Conversion Date, the Company shall deliver the Registration Rights Agreement in the form attached hereto as Annex A (the   -16- -------------------------------------------------------------------------------- “Registration Rights Agreement”), duly executed by Lazard Ltd, and the Holder shall execute and deliver such agreement on or prior to such date. Section 8. Amendments and Waivers. Neither this Note nor any term hereof may be amended or waived orally or in writing, except that any term of this Note may be amended and the observance of any term of this Note may be waived (either generally or in a particular instance and either retroactively or prospectively) with (but only with) the written consent of the Company and the Holder. Section 9. Captions. The captions in this Note are included for convenience of reference only and do not form a part of this Note or in any way limit or affect its interpretation or construction. Section 10. Notices. All notices, consents, waivers and other communications required or permitted by this Note shall be in writing and shall be deemed given to a party when (a) delivered to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid); (b) sent by facsimile with confirmation of transmission by the transmitting equipment; or (c) received or rejected by the addressee, if sent by certified mail, return receipt requested, in each case to the following addresses and facsimile numbers and marked to the attention of the Person (by name or title) designated below (or to such other address, facsimile number or Person as a party may designate by notice to the other parties): If to the Company: Lazard Funding Limited LLC 30 Rockefeller Plaza New York, New York 10020 UNITED STATES OF AMERICA Attention:    General Counsel Facsimile:    001-212-332-5972 Telephone:    001-212-632-6000 with a copy (which shall not constitute notice) to each of: Gianni, Origoni, Grippo & Partners Studio Legale Via Delle Quatro Fontane, 20 00184 Roma ITALY Attention:    Francesco Gianni, Esq.    Raimondo Premonte, Esq. Facsimile:    +39 06 487 1101 Telephone:    +39 06 478 751 and   -17- -------------------------------------------------------------------------------- Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, New York 10019 UNITED STATES OF AMERICA Attention:    Adam D. Chinn, Esq.    Benjamin D. Fackler, Esq. Facsimile:    001-212- 403-2000 Telephone:    001-212-403-1000 If to the Holder: Banca Intesa S.p.A. Via Monte di Pietà n. 8 20121 Milano ITALY Attention:    Direzione Partecipazioni Facsimile:    +39 02 8796 2072 Telephone:    +39 02 8796 2376 and Banca Intesa S.p.A. Via Monte di Pietà n. 8 20121 Milano ITALY Attention:    Direzione Affari Legali Telephone:    +39 02 8796 3523 Facsimile:    +39 02 8796 2079 with a copy (which shall not constitute notice) to: Pedersoli e Associati Via Monte di Pietà, 15 20121 Milano ITALY Attention:    Alessandro Pedersoli, Esq. Facsimile:    +39 02 303051 Telephone:    +39 02 30305333 and Sullivan & Cromwell LLP 125 Broad Street New York, New York 10004   -18- -------------------------------------------------------------------------------- UNITED STATES OF AMERICA Attention:    George J. Sampas, Esq. Facsimile:    001-212-558-3588 Telephone:    001-212-558-4000 SECTION 11. Restrictions on Transfer. THE HOLDER MAY NOT DIRECTLY OR INDIRECTLY SELL, TRANSFER, ASSIGN, ENCUMBER OR OTHERWISE PLEDGE OR DISPOSE OF THIS NOTE AT ANY TIME WITHOUT THE PRIOR WRITTEN CONSENT OF LAZARD WHICH MAY WITHHOLD SUCH CONSENT FOR ANY REASON IN HIS SOLE DISCRETION; PROVIDED THAT IN THE EVENT THAT HOLDER DESIRES TO TRANSFER THIS NOTE TO A WHOLLY-OWNED SUBSIDIARY OF HOLDER AND EACH OF THE HOLDER AND SUCH WHOLLY-OWNED SUBSIDIARY AGREE THAT SUCH SUBSIDIARY SHALL TRANSFER THE NOTE TO HOLDER IMMEDIATELY UPON SUCH SUBSIDIARY CEASING TO BE WHOLLY-OWNED BY HOLDER, THEN THE CONSENT OF LAZARD TO SUCH TRANSFER SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED. Section 12. Setoff. THIS NOTE SHALL NOT BE USED TO SATISFY OR OFFSET ANY CLAIM BY THE HOLDER AGAINST THE COMPANY OR ANY OTHER OBLIGATION OWED BY THE HOLDER TO THE COMPANY WITHOUT THE PRIOR WRITTEN CONSENT OF LAZARD WHO MAY WITHHOLD SUCH CONSENT FOR ANY REASON IN ITS SOLE DISCRETION. Section 13. Governing Law; Forum; Construction. THIS NOTE IS GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. Each of the Company and the Holder agrees that all actions or proceedings arising out of or in connection with this Note, or for recognition and enforcement of any judgment arising out of or in connection with this Note, shall be tried and determined exclusively in the state or federal courts in the State of New York, and each of the Company and the Holder hereby irrevocably submits with regard to any such action or proceeding for itself and with respect to its property, generally and unconditionally, to the exclusive jurisdiction of the aforesaid courts. Each of the Company and the Holder hereby expressly waives any right it may have to assert, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any such action or proceeding: (a) any claim that it is not subject to personal jurisdiction in the aforesaid courts for any reason; (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts; and (c) that (i) any of the aforesaid courts is an inconvenient or inappropriate forum for such action or proceeding, (ii) venue is not proper in any of the aforesaid courts, and (iii) this Note, or the subject matter hereof, may not be enforced in or by any of the aforesaid courts. Section 14. Representations, Warranties and Agreements of Intesa. (a) The Holder hereby represents and warrants to the Company that this Note and the shares of Lazard Ltd Stock that the Holder shall receive upon conversion of   -19- -------------------------------------------------------------------------------- this Note (collectively, the “Securities”) in whole or in part were, as of the date of the Termination Agreement, and are being acquired for investment purposes only for the Holder’s own account or for the account of controlled Subsidiaries, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and the Holder had, as of the date of the Termination Agreement, and has no present intention of selling, granting any participation in or otherwise distributing the same, (ii) the Holder was not, as of the date of the Termination Agreement, and is not party to any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person with respect to any of the Securities, (iii) the Holder was not formed for the specific purpose of acquiring the Securities, (iv) the Holder received, as of the date of the Termination Agreement, and has received or had full access to all the information it considers necessary or appropriate for deciding whether to purchase the Securities and has had an opportunity to ask questions and receive answers regarding the terms and conditions of the Securities, and the Company’s, Lazard’s and Lazard Ltd’s business, properties, prospects and financial condition, (v) the Holder was, as of the date of the Termination Agreement, and is financially sophisticated and was and is able to fend for itself, could and can bear the economic risk of the investment, and had, as of the date of the Termination Agreement, and has such knowledge and experience in financial or business matters that the Holder was and is capable of evaluating the merits and risks of the investment in the Securities, (vi) the Holder was, as of the date of the Termination Agreement, and is, and will, upon any conversion of this Note, be, an “accredited investor” and a “qualified institutional buyer” within the meaning of current rules of the U.S. Securities and Exchange Commission (the “SEC”), and (vii) none of the Holder’s operations were, as of the date of the Termination Agreement, or are subject to the terms or limitations of the U.S. Bank Holding Company Act of 1956, as amended (nor did or does the Holder “control” (within the meaning of such act) any companies which are so subject). (b) The Holder hereby acknowledges and agrees, on behalf of itself and each Holder (as defined in the Registration Rights Agreement), as follows: (i) the Securities are “restricted securities” under U.S. federal securities laws inasmuch as they have been or will be acquired by the Holder directly or indirectly from the issuer(s) in a transaction not involving a public offering and that under such laws and applicable regulations such Securities may be resold without registration only in certain limited circumstances; (ii) in the absence of an effective registration statement covering the Securities, the Securities may only be resold in a transaction exempt from registration; (iii) the Holder will not directly or indirectly sell, transfer, pledge, hedge (including by way of short selling) or otherwise encumber (“Transfer”) all or any portion of the Securities unless (A) there is a registration statement declared effective by the SEC under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “Securities Act”) with respect to the Securities to be Transferred and no stop order suspending the effectiveness of such registration statement is then in effect under the Securities Act and no proceedings for that purpose have then been instituted or (B) the Transfer is made under a valid exemption to registration under the Securities Act (it being understood this clause (iii) shall not prevent Intesa from selling, transferring, pledging or hedging all or any portion of the shares of   -20- -------------------------------------------------------------------------------- Lazard Ltd Stock it shall receive upon conversion of the Note, so long as such sale, transfer, pledge or hedge, as the case may be, is conducted in compliance with the Securities Act as provided in this clause; provided however that this clause (iii) (including this parenthetical) shall not modify the provisions and requirements of Section 11 in any respect); and (iv) the certificates evidencing the Securities will bear an appropriate legend regarding these restrictions. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]   -21- -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the Company has caused this Note to be executed and delivered on the date first written above.   LAZARD FUNDING LIMITED LLC By:   /s/ Michael J. Castellano   Name:   Michael J. Castellano   Title:   Chief Financial Officer   Accepted and agreed as of the day and year first above written: BANCA INTESA S.P.A. By   /s/ Mario Marcangeli   Name:   Mario Marcangeli   Title:   FVP By   /s/ Anthony Giobbi   Name:   Anthony Giobbi   Title:   FVP [Amended $150 Million Note Signature Page] -------------------------------------------------------------------------------- ANNEX A REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement, dated as of [initial conversion date] (this “Agreement”), is made by and between Lazard Ltd, an exempted company organized under the laws of Bermuda (“Lazard Ltd”), and Banca Intesa S.p.A., a Società per azioni organized under the laws of the Republic of Italy (“Intesa”). W I T N E S S E T H : WHEREAS, Lazard Funding Limited LLC, a Delaware limited liability company, has issued that certain Amended and Restated $150,000,000 Subordinated Convertible Promissory Note Due September 30, 2016 (the “Note”) to Intesa; and WHEREAS, Intesa has the right to convert all or a portion of the Note into shares of Class A Common Stock, par value $.01 per share, of Lazard Ltd (“Lazard Ltd Shares”), in each case on the terms and subject to the conditions set forth in the Note; and WHEREAS, Lazard Ltd and Intesa desire to enter into this Agreement to set forth the terms and conditions of the registration rights and obligations of Lazard Ltd and Intesa and their respective Affiliates. NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained, it is agreed as follows: Article I Definitions Section 1.1 Definitions. As used in this Agreement, the following capitalized terms shall have the meanings ascribed to them below: “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. For the purposes of this definition, “control” with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, by or through stock ownership, agency or otherwise, or pursuant to or in connection with an agreement, arrangement or understanding (written or oral) with one or more other Person; and the terms “controlling” and “controlled” shall have meanings correlative to the foregoing; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. “Business Day” means any day other than a Saturday, Sunday or a day on which banks are authorized or required to be closed for business in either New York City, New York, United States of America or Milan, Italy. “Exchange Act” means the U.S. Securities Exchange Act of 1934, as from time to time amended, and the rules and regulations of the SEC promulgated thereunder.   -23- -------------------------------------------------------------------------------- “Existing Agreements” means the Stockholders’ Agreement, dated as of May 10, 2005, by and among LAZ-MD, Lazard Ltd and the individuals party thereto, and the Registration Rights Agreement, dated as of May 10, 2005, by and among Lazard Group Finance LLC, Lazard Ltd, Lazard Group LLC and IXIS-Corporate & Investment Bank. “Holder” shall mean Intesa and any Affiliate of Intesa, in each case so long as such Holder holds Registrable Securities. “LAZ-MD” means LAZ-MD Holdings LLC, a limited liability company organized under the laws of the state of Delaware. “Lazard Group” means Lazard Group LLC, a Delaware limited liability company. “Lazard Ltd Shares” has the meaning set forth in the preamble hereto. “Minimum Demand Number” means, as of any particular date, that number of Lazard Ltd Shares equal to the quotient obtained by dividing (i) US $50,000,000 by (ii) the Stock Price as of such date. “Note” has the meaning set forth in the preamble hereto. “Partners” means each holder of a Partners’ Interest and each other managing director or employee of Lazard Ltd or its subsidiaries or controlled Affiliates that receives any awards of LAZ-MD or Lazard Group LLC interests that are convertible or exchangeable into Lazard Ltd Shares. “Partner Interest” means an interest in LAZ-MD or Lazard Group that is exchangeable for Lazard Ltd Shares and the Lazard Ltd Shares issuable or deliverable upon exchange of such interest. “Person” means natural persons, corporations, limited liability companies, S.p.A.’s (Società per azioni), s.r.l.’s (Società a responsabilità limitata), trusts, joint ventures, associations, companies, partnerships, governments or agencies or political subdivisions thereof and other political or business entities. “Pro Rata Cap” means the number of Lazard Ltd Shares equal to the product of (a) the total number of Registrable Securities (assuming full conversion of the Note in accordance with its terms) and (b) a fraction, the numerator of which is the aggregate number of Lazard Ltd Shares consisting of Partner Interests to be sold in the applicable Partner Interest Offering, and the denominator of which is the aggregate number of Lazard Ltd Shares underlying all outstanding Partner Interests. “Prospectus” means the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement or any other amendments and supplements to such prospectus, including without limitation any preliminary prospectus, any pre-effective or post-effective amendment and all material incorporated by reference in any prospectus.   -24- -------------------------------------------------------------------------------- “Registrable Securities” means Lazard Ltd Shares which are issued or transferred to any Holder pursuant to and in accordance with Section 7 of the Note, and any Lazard Ltd Shares issued or issuable in respect of or in exchange for any such Lazard Ltd Shares. As to any particular Registrable Securities, once issued such securities shall cease to be Registrable Securities when (i) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such Registration Statement, (ii) such securities shall have been sold to the public pursuant to Rule 144 (or any successor provision) under the Securities Act, (iii) such securities shall have ceased to be outstanding, or (iv) such securities may be sold in the public market of the United States, in unlimited amounts, under Rule 144(k), without registration under the Securities Act. “Registration Expenses” has the meaning set forth in Article V. “Registration Statement” means any registration statement of Lazard Ltd which covers Registrable Securities pursuant to the provisions of this Agreement, all amendments and supplements to such registration statement, including post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement. “SEC” means the U.S. Securities and Exchange Commission. “Securities Act” means the U.S. Securities Act of 1933, as from time to time amended, and the rules and regulations of the SEC promulgated thereunder. “Stock Price” means, as of any particular date, the closing price as of such date of a Lazard Ltd Share on the primary national securities exchange on which the Lazard Ltd Shares are traded, as reported by Bloomberg L.P. or, if Bloomberg L.P. is not available, as determined by another reputable third-party information source selected by Lazard Ltd. Article II Demand Registrations Section 2.1 Requests for Registration. Subject to the provisions of this Article II, any Holder or group of Holders shall have the right to make a written request (a “Demand Request”) to have Lazard Ltd register under the Securities Act for offer and sale an amount of such Holders’ Registrable Securities that is not less than the Minimum Demand Number a “Demand Registration”), at any time on or after July 1, 2008 (the “Initial Conversion Date”) and prior to the termination of this Agreement. Such Demand Request shall specify the amount of Registrable Securities to be registered and the intended method or methods of disposition. Lazard Ltd shall, subject to the provisions of this Article II and to the Holders’ compliance with their obligations under the provisions of this Agreement, as promptly as practicable, but in no event later than 90 days after the date of the Demand Request, register under the Securities Act all Registrable Securities included in such Demand Request, for disposition in accordance with the intended method or methods set forth therein; provided that if the managing underwriter(s) for a Demand Registration in which Registrable Securities are proposed to be included pursuant to this Article II that involves an underwritten offering shall advise Lazard Ltd that in its opinion, the number of Registrable Securities to be sold is greater than the amount that can be offered without adversely affecting the success of the offering (taking into consideration the   -25- -------------------------------------------------------------------------------- interests of Lazard Ltd and the Holders), then Lazard Ltd will be entitled to reduce the number of Registrable Securities included in such registration to the number that, in the opinion of the managing underwriter(s), can be sold without having the adverse effect referred to above. The number of Registrable Securities that may be registered shall be allocated in the following priority: first, pro rata among the Holders participating in the Demand Registration, based on the number of Registrable Securities included by such Holder in the Demand Request, second, all Lazard Ltd Shares proposed to be registered for offer and sale by Lazard Ltd and third, to Lazard Ltd Shares proposed to be registered pursuant to any piggy-back registration rights of third parties. Lazard Ltd shall use its reasonable best efforts to cause such Registration Statement to be declared effective as soon as practicable after filing and to remain effective until the earlier of (i) 60 days following the date on which it was declared effective and (ii) the date on which all of the Registrable Securities covered thereby are disposed of in accordance with the method or methods of disposition stated therein. Each Demand Request shall be irrevocable except as otherwise expressly provided herein (including Section 2.4). Notwithstanding anything to the contrary in this Article II, no Holder shall have the right to require Lazard Ltd to register any Registrable Securities pursuant to this Article II during any period (not to exceed 180 days) following the closing of the completion of a distribution of securities offered by Lazard Ltd that would cause Lazard Ltd to breach a lock-up provision contained in the underwriting agreement for such distribution. Section 2.2 Number and Timing of Registrations. Notwithstanding anything in this Article II to the contrary: (a) the Holders shall be entitled to request no more than three (3) Demand Registrations on Lazard Ltd, (b) the Holders shall be entitled to make no more than one Demand Registration during any twelve-month period, and (c) Lazard Ltd shall not be obligated to make a Demand Registration in the event that a Piggy-back Registration had been available to any Holder within the 180 days preceding the date of the Demand Request. Section 2.3 Suspension of Registration. Notwithstanding the foregoing, if in the good faith judgment of the Board of Directors of Lazard Ltd it would be materially detrimental to Lazard Ltd and its stockholders for any Registration Statement to be filed or for any Registration Statement or Prospectus to be amended or supplemented because such filing, amendment or supplement would (i) require disclosure of material non-public information, the disclosure of which would be reasonably likely to materially and adversely affect Lazard Ltd and its subsidiaries (if any) taken as a whole, or (ii) materially interfere with any existing or prospective business situation, transaction or negotiation involving Lazard Ltd, Lazard Ltd shall have the right to suspend the use of the applicable Registration Statement or delay delivery or filing, but not the preparation, of the applicable Registration Statement or Prospectus or any document incorporated therein by reference, in each case for a reasonable period of time; provided, however, that Lazard Ltd shall not be able to exercise such suspension right more than twice in each 12-month period aggregating not more than 150 days in such 12-month period. In the event that the ability of the Holders to sell shall be suspended pursuant to the foregoing, the period of such suspension shall not count towards compliance with the 90-day period referred to in the third sentence, or the 60-day period referred to under clause (i), of Section 2.1 of this Agreement.   -26- -------------------------------------------------------------------------------- Section 2.4 Interrupted Registration. A registration requested pursuant to this Article II shall not be deemed to have been requested by the Holders of Registrable Securities for purposes of Section 2.2: (i) unless it has been declared effective by the SEC; (ii) if after it has become effective, such registration is interfered with by any stop order, injunction or other order or requirement of the SEC for any reason other than misrepresentation or an omission by the requesting Holders such that the Registration Statement shall not be effective until the earlier of (A) 60 days following the date on which it was declared effective (treating any suspension or interruption of registration as provided in Section 2.3) and (B) the date on which all of the Registrable Securities covered thereby are disposed of in accordance with the method or methods of disposition stated therein; (iii) if the conditions to closing specified in the underwriting agreement, if any, entered into in connection with such registration are not satisfied other than by reason of some wrongful act or omission, or act or omission in bad faith, by such Holders and are not otherwise waived; or (iv) if such request has been withdrawn by the requesting Holders and such Holders shall have elected to pay all Registration Expenses of Lazard Ltd in connection with such withdrawn request. Article III Piggy-back Registrations Section 3.1 Right to Include Registrable Securities. If at any time after the Initial Conversion Date Lazard Ltd proposes to register (including for this purpose a registration effected by Lazard Ltd for security holders of Lazard Ltd other than any Holder) any Lazard Ltd Shares and to file a Registration Statement with respect thereto under the Securities Act, whether or not for sale for its own account (other than pursuant to (i) Section 2.1, (ii) a registration statement on Form S-4, Form S-8 or any successor or similar forms, or (iii) a registration statement for the sales of Lazard Ltd Shares issuable or issued upon exchange, conversion or sale of any Partner Interests ), in a manner that would permit registration of Registrable Securities for sale to the public under the Securities Act (a “Public Offering”) or (b) at any time prior to the Initial Conversion Date Lazard Ltd proposes to register any Lazard Ltd Shares and to file a Registration Statement with respect thereto under the Securities Act for sale of Lazard Ltd Shares issuable or issued upon exchange, conversion or sale of any Partner Interests (other than pursuant to a registration statement on Form S-4, Form S-8 or any successor or similar forms), in a manner that would permit registration of Registrable Securities for sale to the public under the Securities Act (a “Partner Interest Offering”), Lazard Ltd will each such time promptly give written notice to the Holders (i) of its intention to do so, (ii) of the form of registration statement of the SEC that has been selected by Lazard Ltd and (iii) of rights of Holders under this Article III (the “Article III Notice”). Lazard Ltd will include (A) in the case of a proposed Public Offering all Registrable Securities that Lazard Ltd is requested in writing, within 15 days after the Article III Notice is given, to register by the Holders thereof or (B) in the case of a proposed Partner Interest Offering, all Registrable Securities that Lazard Ltd is requested in writing, within 5 days after the Article III Notice is given, to register by the Holders thereof up to, but not in excess of, the Pro Rata Cap as determined as of the date of filing of such registration statement (each, a “Piggy-back Registration”); provided, however, that (x) if, at any time after giving written notice of its intention to register any Lazard Ltd Shares and prior to the effective date of the Registration Statement filed in connection with such registration, Lazard Ltd shall determine that none of such Lazard Ltd Shares shall be registered, Lazard Ltd may, at its election, give written notice of such determination to all Holders who so   -27- -------------------------------------------------------------------------------- requested registration and, thereupon, shall be relieved of its obligation to register any Registrable Securities in connection with such abandoned registration, and (y) in case of a determination by Lazard Ltd to delay registration of Lazard Ltd Shares, Lazard Ltd shall be permitted to delay the registration of such Registrable Securities pursuant to this Article III for the same period as the delay in registering such other Lazard Ltd Shares by Lazard Ltd, as the case may be or may abandon the registration of Lazard Ltd Shares, in the sole discretion of Lazard Ltd. No registration effected under this Article III shall relieve Lazard Ltd of its obligations to effect registrations upon request under Article II. Section 3.2 Priority; Registration Form. If the managing underwriter(s) for a registration in which Registrable Securities are proposed to be included pursuant to this Article III that involves an underwritten offering shall advise Lazard Ltd in writing in good faith that in its opinion, the number of Lazard Ltd Shares to be sold for the account of persons other than Lazard Ltd (collectively, “Selling Stockholders” is greater than the amount that can be offered without adversely affecting the success of the offering (taking into consideration the interests of Lazard Ltd and the Holders), then the number of Lazard Ltd Shares to be sold for the account of Selling Stockholders (including Holders of Registrable Securities) may be reduced to a number that, in the opinion of the managing underwriter(s), may reasonably be sold without having the adverse effect referred to above. The reduced number of Lazard Ltd Shares that may be registered shall be allocated (a) in the case of a Public Offering, in the following priority: first, to Lazard Ltd Shares proposed to be registered for offer and sale by Lazard Ltd; second, to Lazard Ltd Shares proposed to be registered pursuant to any demand registration rights of third parties; third, to Lazard Ltd Shares proposed to be registered pursuant to any piggy-back registration rights under the Existing Agreements ; and, fourth, to Registrable Securities proposed to be registered by Holders as a Piggy-back Registration, and (b) in the case of a Partner Interest Offering, to the Lazard Ltd Shares consisting of Partnership Interests and to the Registrable Securities that the Holders requested to be so registered, on a pro rata basis based on the aggregate number of Lazard Ltd Shares requested to be registered; provided that Intesa’s participation shall be subject to reduction to permit any piggy-back registration rights under the Existing Agreements. The reduced number of Registrable Securities that may be registered pursuant to this Section 3.2 shall be allocated pro rata among the Holders participating in the Piggy-back Registration, based on the number of Registrable Securities beneficially owned by the respective Holders. If, as a result of the proration provisions of this Section 3.2, any Holder shall not be entitled to include all Registrable Securities in a registration pursuant to this Article III that such Holder has requested be included, such Holder may elect to withdraw its Registrable Securities from the registration. Section 3.3 Merger, Consolidation, etc. Notwithstanding anything in this Article III to the contrary, Holders shall not have any right to include their Registrable Securities in any distribution or registration of Lazard Ltd Shares by Lazard Ltd which is pursuant to a merger, amalgamation, consolidation, acquisition, exchange offer, sale of Lazard Ltd Shares issuable or issued upon exchange, conversion or sale of Partner Interests(other than any Partner Interest Offering), recapitalization, other reorganization, dividend reinvestment plan, stock option plan or other employee benefit plan, or any similar transaction having similar effect.   -28- -------------------------------------------------------------------------------- Article IV Registration Procedures Section 4.1 Use Reasonable Best Efforts. In connection with Lazard Ltd’s registration obligations pursuant to Article II and Article III hereof, Lazard Ltd shall use its reasonable best efforts to effect such registrations to permit the sale of such Registrable Securities in accordance with the intended method or methods of disposition thereof and: (a) to prepare and file with the SEC a Registration Statement relating to the registration on any appropriate form under the Securities Act, and to cause such Registration Statement to become effective as soon as reasonably practicable and to remain continuously effective for the time period required by this Agreement to the extent permitted under the Securities Act; (b) to prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period set forth in Section 2.1; and to cause the Registration Statement and the related Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed in accordance with the Securities Act and any rules and regulations promulgated thereunder; and otherwise to comply with the provisions of the Securities Act as may be necessary to facilitate the disposition of all Registrable Securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of disposition by the selling Holders thereof set forth in such Registration Statement or such Prospectus or Prospectus supplement; (c) to notify the selling Holders and the managing underwriter(s), if any, promptly if at any time (i) any Prospectus, Registration Statement or amendment or supplement thereto is filed, (ii) any Registration Statement, or any post-effective amendment thereto, becomes effective, (iii) the SEC requests any amendment or supplement to, or any additional information in respect of, any Registration Statement or Prospectus, (iv) the SEC issues any stop order suspending the effectiveness of a Registration Statement or initiates any proceedings for that purpose, (v) Lazard Ltd receives any notice that the qualification of any Registrable Securities for sale in any jurisdiction has been suspended or that any proceeding has been initiated for the purpose of suspending such qualification, or (vi) upon the discovery, or upon the occurrence of any event, which requires that any changes be made in such Registration Statement or any related Prospectus so that such Registration Statement or Prospectus will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, in light of the circumstances under which they were made; provided, however, that in the case of this subclause (vi), such notice need only state that an event of such nature has occurred, without describing such event; (d) to make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement, or the qualification of any Registrable Securities for sale in any jurisdiction, at the earliest reasonably practicable moment;   -29- -------------------------------------------------------------------------------- (e) if requested by the managing underwriter(s) or any Holder of Registrable Securities being sold in connection with an underwritten offering, to incorporate into a Prospectus supplement or a post-effective amendment to the Registration Statement any information which the managing underwriter(s) and such Holder reasonably agree is required to be included therein relating to such sale of Registrable Securities; and to file such supplement or post-effective amendment as soon as practicable in accordance with the Securities Act and the rules and regulations promulgated thereunder and the Companies Act 1981 of Bermuda; (f) to furnish to each selling Holder and each managing underwriter, if any, one signed copy of the Registration Statement and any post-effective amendment thereto, including all financial statements and schedules thereto, all documents incorporated therein by reference and all exhibits thereto (including exhibits incorporated by reference) as promptly as practicable after filing such documents with the SEC and the Registrar of Companies in Bermuda; (g) to deliver to each selling Holder and each underwriter, if any, as many copies of the Prospectus or Prospectuses (including each preliminary Prospectus) and any amendment, supplement or exhibit thereto as such Persons may reasonably request; and to consent to the use of such Prospectus or any amendment, supplement or exhibit thereto by each such selling Holder and underwriter, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus, amendment, supplement or exhibit in each case in accordance with the intended method or methods of disposition thereof; (h) prior to any public offering of Registrable Securities, to register or qualify, or to cooperate with the selling Holders, the underwriter(s), if any, and their respective counsel in connection with the registration or qualification of, such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions as may be requested by the Holders of a majority of the Registrable Securities included in such Registration Statement; to keep each such registration or qualification effective during the period set forth in Section 2.1 that the applicable Registration Statement is required to be kept effective; and to do any and all other acts or things necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by such Registration Statement; provided, however, that Lazard Ltd will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to general service in any jurisdiction where it is not then so subject; (i) to furnish to counsel selected by the Holders, prior to the filing of a Registration Statement or Prospectus or any supplement or post-effective amendment thereto with the SEC, copies of disclosure regarding the identity of and ownership of Lazard Ltd Shares by the Holders; (j) to cooperate with the selling Holders and the underwriter(s), if any, in the preparation and delivery of certificates representing the Registrable Securities to be sold, such certificates to be in such denominations and registered in such names as such selling Holders or managing underwriter(s) may request at least five (5) Business Days prior to any sale of Registrable Securities represented by such certificates;   -30- -------------------------------------------------------------------------------- (k) subject to Section 4.3 hereof, upon the occurrence of any event described in clause (vi) of Section 4.1(c) above, to prepare and file a supplement or post-effective amendment to the applicable Registration Statement or Prospectus or any document incorporated therein by reference, and any other required documents, so that such Registration Statement and Prospectus will not thereafter contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading, in light of the circumstances under which they were made, and to cause such supplement or post-effective amendment to become effective as soon as practicable; (l) to take all other actions in connection therewith as are reasonably necessary or desirable in order to expedite or facilitate the disposition of the Registrable Securities included in such Registration Statement and, in the case of an underwritten offering: (i) to enter into an underwriting agreement in customary form with the managing underwriter(s) (such agreement to contain standard and customary indemnities, representations, warranties and other agreements of or from Lazard Ltd, as the case may be); (ii) to obtain opinions of counsel to Lazard Ltd (which (if reasonably acceptable to the underwriter(s)) may be Lazard Ltd’s inside counsel) addressed to the underwriter(s), such opinions to be in customary form; and (iii) to obtain “comfort” letters from the Issuer’s or Lazard Ltd’s independent certified public accountants addressed to the underwriter(s), such letters to be in customary form; (m) to make available for inspection by any selling Holder of Registrable Securities in connection with a Demand Request, any underwriter(s) participating in any disposition pursuant to such Registration Statement, and any attorney, accountant or other agent retained by any such selling Holder or underwriter(s) all financial and other records, pertinent corporate documents and properties of Lazard Ltd and to cause Lazard Ltd’s officers, directors, employees, attorneys and independent accountants to supply all information reasonably requested by any such selling Holders, underwriter(s), attorneys, accountants or agents in connection with such Registration Statement (Each selling Holder of Registrable Securities agrees, on its own behalf and on behalf of all its underwriter(s), accountants, attorneys and agents, that the information obtained by it as a result of such inspections shall be kept confidential by it, used by it solely for the purposes of the applicable registration, and, except as required by law, not disclosed by it, in each case unless and until such information is made generally available to the public other than by such selling Holder; and each selling Holder of Registrable Securities further agrees, on its own behalf and on behalf of all its underwriter(s), accountants, attorneys and agents, that it will, upon learning that disclosure of such information is sought in a court of competent jurisdiction, promptly give notice to Lazard Ltd and allow Lazard Ltd at its expense, to undertake appropriate action to prevent disclosure of the information deemed confidential); (n) to consider in good faith any reasonable request of the selling Holders and underwriters for the participation of management of Lazard Ltd in “road shows” and similar sales events; and (o) reasonably cooperate with the selling Holders and each underwriter or agent participating in the disposition of such Registrable Securities and their respective counsel,   -31- -------------------------------------------------------------------------------- at the selling Holders’ expense, in connection with any filings required to be made by the National Association of Securities Dealers. Section 4.2 Holders’ Obligation to Furnish Information. Lazard Ltd may require each Holder of Registrable Securities as to which any registration is being effected to furnish to Lazard Ltd such information regarding the distribution of such Registrable Securities as Lazard Ltd may from time to time reasonably request in writing. Section 4.3 Suspension of Sales Pending Amendment of Prospectus. Each Holder shall, upon receipt of any notice from Lazard Ltd of the happening of any event of the kind described in clauses (iii)-(vi) of Section 4.1(c) above, suspend the disposition of any Registrable Securities covered by such Registration Statement or Prospectus until such Holder’s receipt of the copies of a supplemented or amended Prospectus or until it is advised in writing by Lazard Ltd that the use of the applicable Prospectus may be resumed, and, if so directed by Lazard Ltd such Holder will deliver to Lazard Ltd all copies, other than permanent file copies, then in such Holder’s possession of any Prospectus covering such Registrable Securities. If Lazard Ltd shall have given any such notice during a period when a Demand Registration is in effect, the 60-day period described in Section 2.1 shall be extended by the number of days of such suspension period. Article V Registration Expenses Section 5.1 Registration Expenses. Except as otherwise expressly provided herein to the contrary, all reasonable and documented expenses incident to Lazard Ltd’s performance of or compliance with its obligations under this Agreement, including without limitation all (i) registration and filing fees, (ii) fees and expenses of compliance with securities or blue sky laws, (iii) printing expenses, (iv) fees and disbursements of its counsel and its independent certified public accountants (including the expenses of any special audit or “comfort” letters required by or incident to such performance or compliance), (v) securities acts liability insurance (if Lazard Ltd elects to obtain such insurance) and (vi) the expenses and fees for listing securities to be registered on each securities exchange on which Securities are then listed, shall be borne by Intesa in the case of a Demand Registration, and Lazard Ltd otherwise (all such expenses being herein referred to as “Registration Expenses”); provided, however, that Registration Expenses shall not include any underwriting discounts, commissions or fees attributable to the sale of the Registrable Securities or the fees and expenses of counsel for the Holders of Registrable Securities covered by each Registration Statement, which underwriting discounts, commissions, fees and expenses of counsel shall in all cases be borne solely by the Holders. Article VI Indemnification Section 6.1 Indemnification by Lazard Ltd. In the event of any registration of any securities of Lazard Ltd under the Securities Act pursuant to Article II or Article III hereof, Lazard Ltd will, and hereby does, indemnify and hold harmless each selling Holder of any Registrable Securities covered by such Registration Statement, its directors, officers and agents and each other Person, if any, who controls such selling Holder within the meaning of Section 15 of the Securities Act (each such selling Holder and such other Persons, collectively, “Holder   -32- -------------------------------------------------------------------------------- Covered Persons”), against any and all out-of-pocket losses, claims, damages, liabilities and expenses (including reasonable attorneys’ fees and expenses) actually incurred by such Holder Covered Person under the Securities Act, common law or otherwise (collectively, “Damages”), to the extent that such Damages (or actions or proceedings in respect thereof) arise out of or result from (i) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement under which such securities were registered under the Securities Act or the omission or alleged omission to state therein 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, or (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary Prospectus, together with the documents incorporated by reference therein (as amended or supplemented if Lazard Ltd shall have filed with the SEC any amendment thereof or supplement thereto), if used prior to the effective date of such Registration Statement, or contained in the Prospectus, together with the documents incorporated by reference therein (as amended or supplemented if Lazard Ltd shall have filed with the SEC any amendment thereof or supplement thereto), or the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that Lazard Ltd shall not be liable to any Holder Covered Person in any such case to the extent that any such Damage (or action or proceeding in respect thereof) arises out of or relates to any untrue statement or alleged untrue statement or omission or alleged omission made in such Registration Statement or amendment thereof or supplement thereto or in any such preliminary, final or summary Prospectus in reliance upon and in conformity with written information furnished to Lazard Ltd by or on behalf of any such Holder Covered Person, specifically for use in the preparation thereof. Section 6.2 Indemnification by the Selling Holders. In consideration of Lazard Ltd’s including any Registrable Securities in any Registration Statement filed in accordance with Article II or Article III hereof, Intesa and each other Holder selling Registrable Securities under such Registration Statement shall be deemed to have agreed to indemnify and hold harmless, jointly and severally (in the same manner and to the same extent as set forth in Section 6.1 hereof) Lazard Ltd, its directors, officers, managing directors and agents and each Person controlling Lazard Ltd within the meaning of Section 15 of the Securities Act (each, a “Lazard Covered Person”) against any and all Damages, to the extent that such Damages (or actions or proceedings in respect thereof) arise out of or are related to any statement or alleged statement in or omission or alleged omission from such Registration Statement, any preliminary, final or summary Prospectus contained therein, or any amendment or supplement, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to Lazard Ltd or its representatives by or on behalf of Intesa or any selling Holder specifically for use in the preparation of such Registration Statement, preliminary, final or summary Prospectus or amendment or supplement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of Lazard Ltd or any of its directors, officers or controlling Persons. Lazard Ltd may require as a condition to its including Registrable Securities in any Registration Statement filed hereunder that Intesa and each such selling Holder acknowledge its agreement to be bound by the provisions of this Agreement (including Article VI) applicable to it.   -33- -------------------------------------------------------------------------------- Section 6.3 Notices of Claims. Promptly after receipt by a Holder Covered Person or a Lazard Covered Person (each, an “Indemnified Party”) of written notice of the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursuant to this Article VI, such Indemnified Party will, if a claim in respect thereof is to be made against, respectively, Lazard, on the one hand, or Intesa or any selling Holder, on the other hand (such Person or Persons, the “Indemnifying Party”), give written notice to the latter of the commencement of such action; provided, however, that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its or their obligations under this Article VI, except to the extent that the Indemnifying Party is actually materially prejudiced by such failure to give notice, and in no event shall such failure relieve the Indemnifying Party from any other liability which it may have to such Indemnified Party. If any such claim or action shall be brought against an Indemnified Party, and it shall notify the Indemnifying Party thereof, the Indemnifying Party shall be entitled to participate therein, and, to the extent that it wishes, to assume the defense thereof with counsel reasonably satisfactory to the Indemnified Party, and after notice from the Indemnifying Party to such Indemnified Party of its election to assume the defense thereof, the Indemnifying Party shall not be liable to such Indemnified Party under this Article VI for any legal or other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof, other than reasonable cost of investigation; provided, further, that if, in the Indemnified Party’s reasonable judgment, a conflict of interest between the Indemnified Party and the Indemnifying Party exists in respect of such claim, then such Indemnified Party shall have the right to participate in the defense of such claim and to employ one firm of attorneys at the Indemnifying Party’s expense to represent such Indemnified Party. No Indemnified Party will consent to entry of any judgment or enter into any settlement without the Indemnifying Party’s written consent to such judgment or settlement, which shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, consent to entry of any judgment or enter into any settlement in respect of which the Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such claim or proceeding. Section 6.4 Contribution. If the indemnification provided for in this Article VI is unavailable or insufficient to hold harmless an Indemnified Party under this Article VI, then each Indemnifying Party shall have a joint and several obligation to contribute to the amount paid or payable by such Indemnified Party as a result of the Damages referred to in this Article VI in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and the Indemnified Party on the other hand in connection with the offering which resulted in such Damages, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether an untrue or alleged untrue statement of a material fact or an omission or alleged omission to state a material fact relates to information supplied by the Indemnifying Party or the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statements or omission. Lazard Ltd and the Holders (in consideration of Lazard Ltd’s including any Registrable Securities in any Registration Statement filed in accordance with Article II or Article III hereof) shall be deemed to have agreed, that it would not be just and equitable if contributions pursuant to this Section 6.4 were to be determined by pro rata allocation or by any other method or allocation which does not take account of the equitable   -34- -------------------------------------------------------------------------------- considerations referred to in the first sentence of this Section 6.4. The amount paid by an Indemnified Party as a result of the Damages referred to in the first sentence of this Section 6.4 shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any action or claim (which shall be limited as provided in Section 6.3 if the Indemnifying Party has assumed the defense of any such action accordance with the provisions thereof) which is the subject of this Section 6.4. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. Promptly after receipt by an Indemnified Party under this Section 6.4 of notice of the commencement of any action against such party in respect of which a claim for contribution has been made against an Indemnifying Party under this Section 6.4, such Indemnified Party shall notify the Indemnifying Party in writing of the commencement thereof if the notice specified in Section 6.3 has not been given with respect to such action; provided, however, that the omission so to notify the Indemnifying Party shall not relieve the Indemnifying Party from any liability which it may have to any Indemnified Party otherwise under this Section 6.4, except to the extent that the Indemnifying Party is actually materially prejudiced by such failure to give notice, and in no event shall such failure relieve the Indemnifying Party from any other liability which it may have to such Indemnified Party. Article VII Rule 144 Section 7.1 Rule 144. Lazard Ltd shall file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder, so long as it is subject to such reporting requirements, all to the extent required from time to time to enable the Holders to sell Registrable Securities without registration under the Securities Act within the limits of the exemptions provided by Rule 144 of the Securities Act (“Rule 144”). Article VIII Underwritten Registrations Section 8.1 Selection of Underwriter(s). In each registration under Article II or Article III of this Agreement, the underwriter or underwriters and managing underwriter or managing underwriters that will administer the offering shall be selected by Lazard Ltd, as the case may be, provided, however, that, in the case of a registration under Article II of this Agreement, such underwriter(s) and managing underwriter(s) shall be subject to the approval of the Holders of a majority in aggregate amount of Registrable Securities included in such offering, which approval shall not be unreasonably withheld or delayed. Section 8.2 Agreements of Selling Holders. No Holder shall sell any of its Registrable Securities in any underwritten offering pursuant to a registration hereunder unless such Holder (i) agrees to sell such Registrable Securities on a basis provided in any underwriting agreement in customary form, including the making of customary representations, warranties and indemnities and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting agreements or as reasonably requested by Lazard Ltd (whether or not such offering is underwritten).   -35- -------------------------------------------------------------------------------- Article IX Holdback Agreements Section 9.1 Restrictions on Public Sales by Holders. To the extent not inconsistent with applicable law, each Holder that is timely notified in writing by the managing underwriter(s) or underwriter(s) shall not effect any public sale or distribution (including a sale pursuant to Rule 144) of any securities of the same class or issue being registered in an underwritten offering (other than pursuant to an employee stock option, stock purchase, stock bonus or similar plan, pursuant to a merger, an exchange offer or a transaction of the type specified in Rule 145(a) under the Securities Act) or any securities of Lazard Ltd convertible into or exchangeable or exercisable for securities of the same class or issue, during the 7-day period prior to the effective date of the applicable Registration Statement, if such date is known, or during the period beginning on such effective date and ending either (i) 180 days after such effective date or (ii) any such earlier date as may be requested by the managing underwriter(s) or underwriter(s) of such registration, except as part of such registration. Article X Representations and Warranties Section 10.1 Representations and Warranties of the Parties. Lazard Ltd hereby represents and warrants to Intesa, and Intesa hereby represents and warrants to Lazard Ltd, as follows: (a) The execution, delivery and performance by the representing party of this Agreement and the consummation by the representing party of the transactions contemplated by this Agreement are within its corporate powers and have been duly authorized by all necessary corporate action on its part. This Agreement constitutes a legal, valid and binding agreement of the representing party enforceable against it in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditor’s rights and to general equity principles (it being understood that such exception shall not in itself be construed to mean that the Agreement is not enforceable in accordance with its terms). (b) The execution, delivery or performance of this Agreement by the representing party and the consummation by it of the transactions contemplated hereby do not and will not contravene or conflict with the representing party’s certificate of incorporation, bylaws or similar governing documents or conflict with, result in a breach or constitute a default under any statute, loan agreement, mortgage, indenture, deed or other agreement to which it is a party or to which any of its properties is subject, except in each case as would not reasonably be expected to have a material adverse effect on such representing party. Article XI Effectiveness and Termination Section 11.1 Effectiveness. This Agreement shall take effect on the date hereof and shall remain in effect until it is terminated pursuant to Section 11.2 hereof.   -36- -------------------------------------------------------------------------------- Section 11.2 Termination. Other than the termination provisions applicable to particular Sections of this Agreement that are specifically provided elsewhere in this Agreement, this Agreement shall terminate upon the earliest to occur of the following: (a) June 30, 2011 (provided that in the event that the Holders shall not have exercised all of their Demand Registrations prior to such date, this Agreement shall survive until December 31, 2011; provided, further, that, in the event that on December 31, 2011 there shall be any pending but uncompleted Demand Registration or Piggyback Registration in which any Holder shall seek to register any Registrable Securities in accordance with this Agreement and any suspension period shall have been notified to the Holders with respect to such Demand Registration or Piggyback Registration pursuant to Section 4.3 above, the provisions of this Agreement shall survive the termination of this Agreement on December 31, 2011 solely with respect to such Demand Registration or Piggyback Registration for a period after December 31, 2011 equal to the total number of days which such Demand Registration or Piggyback Registration was suspended pursuant to Section 4.3), or (b) mutual written agreement of the parties hereto at any time to terminate this Agreement. Article XII Miscellaneous Section 12.1 Interpretation. Article, Section and clause references are to this Agreement, unless otherwise specified. All references to instruments, documents, contracts, and agreements are references to such instruments, documents, contracts, and agreements as the same may be amended, supplemented, and otherwise modified from time to time. The word “including” shall mean “including but not limited to.” Definitions in this Agreement apply equally to both the singular and plural forms of the defined terms. References to the masculine gender include the feminine gender. The section and article headings contained in this Agreement are inserted for convenience of reference only and will not affect the meaning or interpretation of this Agreement. The terms “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular article, section, paragraph, clause or subdivision. Section 12.2 Amendments and Waivers. This Agreement may be amended, and waivers or consents to departures from the provisions hereof may be given, only by a written instrument duly executed, in the case of an amendment, by all of the parties hereto, or in the case of a waiver or consent, by the party against whom the waiver or consent, as the case may be, is to be effective. Section 12.3 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of Lazard Ltd and the Holders and their respective successors, assigns and transferees; provided that this Agreement or any rights or obligations hereunder may not be assigned or transferred without the written consent of the other party hereto. Section 12.4 Integration. This Agreement and the documents referred to herein or delivered pursuant hereto that form a part hereof contain the entire understanding of Lazard   -37- -------------------------------------------------------------------------------- Ltd and Intesa with respect to its subject matter. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein. This Agreement supersedes all prior agreements and understandings between Lazard Ltd and the Holders with respect to its subject matter. Section 12.5 Notices. All notices, consents, waivers and other communications required or permitted by this Agreement shall be in writing and shall be deemed given to a party when (a) delivered to the appropriate address by hand or by nationally recognized overnight courier service (costs prepaid); (b) sent by facsimile with confirmation of transmission by the transmitting equipment; or (c) received or rejected by the addressee, if sent by certified mail, return receipt requested, in each case to the following addresses and facsimile numbers and marked to the attention of the Person (by name or title) designated below (or to such other address, facsimile number or Person as a party may designate by notice to the other parties): If to Lazard Ltd, to: Lazard Ltd Clarendon House 2 Church Street Hamilton HM 11 Bermuda Fax: (441) 292 4720 Attn: Secretary In each case, with a copy to: Gianni, Origoni, Grippo & Partners Studio Legale Via Delle Quattro Fontane, 20 00184 Roma ITALY Fax: 011 39 06 4871101 Attn: Francesco Gianni, Esq. and Raimondo Premonte, Esq. and Wachtell Lipton Rosen & Katz 51 W. 52nd Street New York, NY 10019 Fax: (212) 403-2000 Attn: Adam Chinn, Esq. and Benjamin D. Fackler, Esq.   -38- -------------------------------------------------------------------------------- If to Intesa or any other Holder, to: Banca Intesa S.p.A. Via Monte di Pietà n. 8 20121 Milano ITALY Fax: 011 39 02 8796 2072 Attn: Direzione Partecipazioni and Banca Intesa S.p.A. Via Monte di Pietà n. 8 20121 Milano ITALY Fax: 011 39 02 8796 2079 Attn: Direzione Affari Legali with a copy (which shall not constitute notice) to: Pedersoli e Associati Via Monte di Pietà, 15 20121 Milano ITALY Fax: 011 39 02 303051 Attn: Allessandro Pedersoli, Esq. and Sullivan & Cromwell LLP 125 Broad Street New York, New York 10004 UNITED STATES OF AMERICA Fax: (212) 558-3588 Attn: George J. Sampas, Esq. Section 12.6 Survival. The representations and warranties made herein shall survive through the term of this Agreement. Section 12.7 Descriptive Headings. The headings in this Agreement are for convenience of reference only and shall not limit, expand or otherwise affect the meaning of the terms contained herein. Section 12.8 Severability. In the event that any one or more of the provisions hereof is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision, in every other respect and of the remaining provisions hereof shall not be in any way impaired, it being intended that all rights, powers and privileges of Lazard Ltd and Intesa shall be enforceable to the fullest extent permitted by law. Section 12.9 Entire Agreement. This Agreement constitutes the entire agreement of the parties hereto and supersede all prior agreements and undertakings, both written and oral, among the parties hereto, or any of them, with respect to the subject matter hereof.   -39- -------------------------------------------------------------------------------- Section 12.10 No Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their permitted assigns, and nothing herein expressed or implied shall give or be construed to give to any Person, other than the parties hereto and such assigns, any legal or equitable rights hereunder. Section 12.11 Governing Law. THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF. Each of Lazard Ltd and Intesa agrees that all actions or proceedings arising out of or in connection with this Agreement, or for recognition and enforcement of any judgment arising out of or in connection with this Agreement, shall be tried and determined exclusively in the state or federal courts in the State of New York, and each of Lazard Ltd and Intesa hereby irrevocably submits with regard to any such action or proceeding for itself and with respect to its property, generally and unconditionally, to the exclusive jurisdiction of the aforesaid courts. Each of Lazard Ltd and Intesa hereby expressly waives any right it may have to assert, and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any such action or proceeding: (a) any claim that it is not subject to personal jurisdiction in the aforesaid courts for any reason; (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts; and (c) that (i) any of the aforesaid courts is an inconvenient or inappropriate forum for such action or proceeding, (ii) venue is not proper in any of the aforesaid courts, and (iii) this Agreement, or the subject matter hereof, may not be enforced in or by any of the aforesaid courts. Section 12.12 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties hereto and delivered to the other parties hereto. [Rest of Page Intentionally Blank; Signature Page Follows]   -40- -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date set forth above.   LAZARD LTD By:        Name:   Title: BANCA INTESA S.P.A. By:        Name:   Title:   -41-

Exhibit 10.35 Allin Corporation Annual Base Salaries for Executive Officers Effective January 1, 2006 On March 1, 2006, the Board of Directors of Allin Corporation implemented changes in annual base salary for its executive officers retroactive to an effective date of January 1, 2006 as follows:   Executive Officer    Position    Annual Base Salary Effective as of January 1, 2006 Richard W. Talarico    Chairman, Chief Executive Officer and President    $ 185,000 Dean C. Praskach    Chief Financial Officer, Vice President-Finance, Treasurer and Secretary    $ 150,000

  Exhibit 10.CC JOHNSON CONTROLS, INC. OPTION AWARD       Name: Employee Name   Number of Options: ####   Grant Date: mm/dd/yyyy   Expiration Date: mm/dd/yyyy   Exercisable Date: mm/dd/yyyy   Option Exercise Price: $$.$$ 2006 Stock Option Grant — Terms for Nonqualified Stock Options and Stock Appreciation Rights Johnson Controls, Inc., a Wisconsin corporation with its principal office in Milwaukee, Wisconsin, (the “Company”) has adopted the 2000 Stock Option Plan (the “Plan”) to permit options to purchase shares of the Company’s common stock (“Stock”) to be granted to certain key employees of the Company or any Subsidiary, as defined in Section 425(f) of the Internal Revenue Code of 1986, as amended (“Subsidiary”). The individual (the “Optionee”) is a key employee of the Company or a Subsidiary, and the Company desires the Optionee to remain in such employ by providing the Optionee with a means to acquire or to increase his/her proprietary interest in the Company’s success. NOW, THEREFORE, in consideration of the premises and of the covenants and agreements herein set forth, the parties hereby mutually covenant and agree as follows: 1. Subject to the terms and conditions of the Plan, a copy of which has been made available to the Optionee and made a part hereof, and this Agreement, the Company grants to the Optionee:      a) In the case of a Nonqualified Stock Option, right to purchase from the Company all or any part of an aggregate number of shares of Stock. (Hereinafter such shares of Stock are referred to as the “Optioned Shares” and the option to purchase the Optioned Shares is referred to as the “Option”). The Option is intended to constitute a “nonqualified stock option” or an option for “stock appreciation rights.”      b) The purchase price payable upon exercise of the Nonqualified Stock Option shall be the option exercise price per share indicated in the Optionee notification, subject to adjustment as described in the terms of the Plan.      c) An Option granted for Stock Appreciation Rights entitles the Optionee to receive the economic value of such stock appreciation rights determined in the manner prescribed in the Plan document, Paragraph 16, subparagraph (b), and in the form prescribed in Paragraph 16, subparagraph (c). 2. Subject to the terms and conditions of the Plan and this Agreement, the Option may be exercised by the Optionee while in the employ of the Company or any Subsidiary, in whole or in part in increments of 100 shares or more, from time to time, subject to the vesting dates and expiration date. The vesting schedule of the option is as follows:      (a) Fifty Percent (50%) of the Option shall vest on the two-year anniversary date of the Grant Date.      (b) Fifty Percent (50%) of the Option shall vest on the three-year anniversary date of the Grant Date.      The Option shall expire ten years from the Option Grant Date. 3. The Option may be exercised only by written notice, delivered, faxed or mailed to the Shareholder Services Department of the Company in Milwaukee, Wisconsin, specifying the number of Optioned Shares being purchased. Such notice shall be accompanied by payment of the entire option price of the Optioned Shares being purchased: (i) in cash or its equivalent; (ii) by tendering previously acquired shares of Stock valued at their fair market value at the time of 1 --------------------------------------------------------------------------------   exercise; or (iii) by any combination of (i) and (ii). For purposes of this paragraph, fair market value shall be determined in the same manner as the fair market value of the Stock on the Grant Date was determined pursuant to the Plan document.      An Optionee selected by the Compensation Committee to participate in the Deferral Plan may defer receipt of shares of Common Stock deliverable upon exercise by making a deferral election as set forth in the Johnson Controls Stock Option Deferral Policies and Procedures. 4. (a) It shall be a condition of the obligation of the Company to issue or transfer shares of Stock upon exercise of the Option, and that the Optionee pay to the Company upon its demand, such amount as may be requested by the Company for the purpose of satisfying its liability to withhold federal, state or local income or other taxes incurred by reason of the exercise of the Option. If the amount requested is not paid, the Company may refuse to issue or transfer shares of Stock upon exercise of the Option.      (b) The Optionee shall be permitted to satisfy the Company’s withholding tax requirements by electing (the “Election”) to have the Company withhold shares of Stock otherwise issuable to the Optionee or to deliver to the Company shares of Stock having a fair market value on the date income is recognized pursuant to the exercise of the Option (the “Tax Date”) equal to the minimum amount required to be withheld by the Optionee. If the number of shares of Stock determined pursuant to the preceding sentence shall include a fractional share, the number of shares withheld or delivered shall be reduced to the next lower whole number and the Optionee shall deliver to the Company cash in lieu of such fractional share, or otherwise make arrangements satisfactory to the Company for payment of such amount.   i.   The Election must be received by the Shareholder Services Department of the Company, at its principal office, prior to the Optionee’s Tax Date.     ii.   The Election shall be irrevocable, and shall be subject to disapproval, in whole or in part, by the Committee. The Election shall be made in writing and shall be made according to such rules and regulations and in such form as the Committee shall determine. 5. (a) In the event a Participant’s employment with the Company or any of its subsidiaries shall be terminated for any reason, except early or normal retirement, death or total and permanent disability, a Participant may exercise his or her Options or stock appreciation rights (to the extent vested and exercisable as of the date of the Participant’s termination of employment) for a period of thirty (30) days after the date of the Participant’s termination of employment, unless such Option or stock appreciation right expires earlier under the terms of the award agreement. Thereafter, all rights to exercise an Option or stock appreciation right shall terminate.      (b) If the Optionee ceases to be an employee of the Company or any Subsidiary by reason of early or normal retirement or total and permanent disability, the option or stock appreciation right: (i) shall be exercisable in full without regard to any vesting requirements; provided that an Option or stock appreciation right of a Participant who retires shall be exercisable in full only if the Participant retires on or after the last day of the calendar year following the calendar year in which such Option or stock appreciation right was granted, unless the Committee determines otherwise, and (ii) may be exercised by the Participant at any time within thirty-six months after the date of such early or normal retirement or termination due to total and permanent disability, as the case may be, unless such Option or stock appreciation right expires earlier under the terms of the award agreement.           In the event of the death of a retired Optionee or an Optionee on total and permanent disability, the Option may be exercised by the person to whom the Option is transferred, by will or by applicable laws of the descent and distribution, as if the Optionee had remained living.           For certain participants who are officers of the Company or who are selected by the Compensation Committee of the Board, nonqualified stock options and stock appreciation rights may be exercised, unless terminated earlier by its terms, in full without regard to any vesting requirements, at the date of the Optionee’s retirement or disability, for a period selected by the Compensation Committee of either five (5) or ten (10) years after early or normal retirement, or for five (5) years after the date of such total and permanent disability, as the case may be, and not thereafter. 2 --------------------------------------------------------------------------------             In the event of the Optionee’s death while actively employed by the company, the Option may be exercised to the extent otherwise exercisable under paragraph 3 at the date of the Optionee’s death, the Option may be exercised by the person to whom the Option is transferred by will or by applicable laws of the descent and distribution, unless terminated earlier by its terms, by giving notice, as provided in paragraph 4, at any time within twelve (12) months after the date of death, and not thereafter.           For purposes of this subparagraph, the Optionee’s employment shall be deemed to be terminated due to (i) early or normal retirement if the Optionee is then eligible to receive immediate early or normal retirement benefits under the provisions of the Company’s or its subsidiaries defined benefit pension plans; or, absent a defined pension plan, if the Optionee has worked at least ten continuous years for the Company and is at least 55 years old, or retires with five continuous years of service and is at least 65 years old and (ii) total and permanent disability if the Optionee is permanently and totally disabled within the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.      (c) Termination for cause or inimical conduct shall cause the cancellation and forfeiture of any Option, regardless of vesting; and any pending exercises shall be cancelled on that date. Any amount the Participant owes to the company may be offset from an amount payable or stock deliverable hereunder.      (d) Notwithstanding the foregoing, from and after a Change of Control, the Option shall continue to be exercisable for a sixty-day period after the Optionee’s termination of employment. 6. The Optionee shall not be deemed for any purposes to be a stockholder of the Company with respect to any shares which may be acquired hereunder except to the extent that the Option shall have been exercised with respect thereto and shares of Johnson Controls common stock issued therefor. 7. No Option granted hereunder shall be transferable other than options specifically designated by the Compensation Committee as such and meeting the following requirements of transfer:      a) by will or by the laws of descent and distribution; or      b) in the case of a nonqualified option:   (i)   pursuant to a “Qualified Domestic Relations Order” as defined in Section 414(p) of the Internal Revenue Code; or     (ii)   to (A) his or her spouse, children or grandchildren (“Immediate Family Members”), (B) a partnership in which the only partners are the Participant’s Immediate Family Members, or (C) a trust or trusts established solely for the benefit of one or more of the Participant’s Immediate Family Members (collectively, the Permitted Transferees), provided that there may be no consideration for any such transfer by a Participant.      Following transfer (if applicable), such Options shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, provided that such Options may be exercised during the life of the Participant only by the Participant or, if applicable, by the alternate payee designated under a Qualified Domestic Relations Order or the Participant’s Permitted Transferees. 8. The Optionee agrees for himself/herself and the Optionee’s heirs, legatees, and legal representatives, with respect to all shares of Stock acquired pursuant to the terms and conditions of this Agreement (or any shares of Stock issued pursuant to a stock dividend or stock split thereon or any securities issued in lieu thereof or in substitution or exchange therefor) that the Optionee and the Optionee’s heirs, legatees, and legal representatives will not sell or otherwise dispose of such shares except pursuant to an effective registration statement under the Securities Act of 1933, as amended (“Act”), or except in a transaction which, in the opinion of counsel for the Company, is exempt from registration under the Act. 9. The existence of the Option herein granted shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations, or other changes in the Company’s capital structure or its business, or any merger or consolidation of the Company, or any issuance of bonds, debentures, preferred, or prior preference stock ahead of or affecting the Stock or the rights thereof, or dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. 3 --------------------------------------------------------------------------------   10. As a condition of the granting of the Option, the Optionee agrees for himself/herself and his/her legal representatives, that any dispute or disagreement which may arise under or as a result of or pursuant to this Agreement shall be governed by the internal laws of the State of Wisconsin and settled by final binding arbitration in accordance with the rules of the American Arbitration Association and the provisions of the Plan. 11. Notwithstanding the provisions of paragraph 3 of this Agreement, in the event of a Change of Control of the Company, as defined in Paragraphs 20 and 21 of the Plan document, the Option shall immediately become exercisable with respect to all or any part of the Optioned Shares. Further, upon a Change of Control of the Company, Optionee may elect to surrender all or a part of the Option to the Company and receive a cash payment, as defined in Paragraph 21 of the Plan document. This Agreement, and any documents expressly incorporated herein, contain all of the provisions applicable to the Options and no other statements, documents or practices may modify, waive or alter such provisions unless expressly set forth in writing, signed by an authorized officer of the Company and delivered to the Optionee. IN WITNESS WHEREOF, the Company has caused this Option Agreement to be executed by one of its duly authorized officers as of the date of Grant. JOHNSON CONTROLS, INC. Jerome D. Okarma Vice President, Secretary and General Counsel 4

Exhibit 10.99.1 Amendment of the Lease Agreement between Catalyst Semiconductor International and Stars Microelectronics (Thailand) Public Company Limited This Amendment of the Lease Agreement (this “Amendment”) entered into effective February 24, 2006 between Catalyst Semiconductor International Inc. and Stars Microelectronics (Thailand) Public Company Limited is necessary since we have incorporated Catalyst Semiconductor (Thailand) Company Limited.  This Amendment is made and entered into on October 19, 2006.  This Amendment will cover the following sections.  All other sections remain unchanged. Section 1: Parties The Tenant name will be changed from Catalyst Semiconductor International, Inc. to Catalyst Semiconductor (Thailand) Company Limited. Section 2: Premises The effective dates of the three phases of the lease agreement will be revised to the following; Phase I: 1 November, 2006 Phase II: 1 March, 2007 Phase III: 1 December, 2007 Section 3: Term The term of the lease shall be for 5 years commencing on November 1st, 2006 and ending on November 1st, 2011 unless sooner terminated pursuant to any provisions hereof. Section 7: Insurance The insurance amount that Tenant shall maintain of public liability and property damage insurance will be revised to the amount of 5,000,000.00 Baht from 10,000,000.00 Baht. -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties hereto have caused this agreement to be duly executed, such parties acting by their representatives being thereunto duly authorized. Catalyst Semiconductor (Thailand)   Stars Microelectronics (Thailand) Company Limited   Public Company limited. Bangpa-in Industrial Estate (EPZ) 586 Moo2,   Bangpa-in Industrial Estate (EPZ) 586 Moo2, Tambol Klongjig, Amphur   Tambol Klongjig, Amphur Bangpa-in, Ayudthaya 13160, Thailand   Bangpa-in, Ayudthaya 13160, Thailand     /s/ Gelu Voicu     /s/ Pitak Sirivanasandha   By (Authorized Signature)   By (Authorized Signature)       Mr. Gelu Voicu     Mr. Pitak Sirivanasandha   Name (Type or Print)   Name (Type or Print)       Chairman     Chief Executive Officer   Title   Title       October 19, 2006     October 19, 2006   Date   Date             /s/ Pichest Boonchanya     /s/ Somsak Owatanapanich   By (Authorized Signature)   By (Authorized Signature)       Mr. Pichest Boonchanya     Mr. Somsak Owatanapanich   Name (Type or Print)   Name (Type or Print)       President     Executive Vice President      Title   Title       October 19, 2006     October 19, 2006   Date    Date   --------------------------------------------------------------------------------

EXHIBIT C      NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAS BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES. No. SDW-_____ Number of Shares Purchasable upon Issue Date: _____________ Exercise of the Warrant: ________ SERIES D COMMON STOCK PURCHASE WARRANT  GUARDIAN TECHNOLOGIES INTERNATIONAL, INC. THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, _____________ (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, (i) at any time on or after the date hereof (such date, the “First Initial Exercise Date”) in connection with 50% of the Warrant Shares (as defined below) (such 50% of the Warrant Shares, the “First Closing Warrant Shares”) and (ii) at any time on or after the later of the Second Closing Date and the Second Closing Payment Date (as defined in Section 2(d)(ii)) (the later of such dates, the “Second Initial Exercise Date”) in connection with the remaining portion of the Warrant Shares (such remaining portion of the Warrant Shares, the “Second Closing Warrant Shares”) and on or prior to the close of business on the 5 year anniversary of the First Initial Exercise Date (such date, the “First Termination Date”) in connection with the First Closing Warrant Shares or the 5 year anniversary of the Second Initial Exercise Date (such date, the “Second Termination Date”) in connection with the Second Closing Warrant Shares, but not thereafter, to subscribe for and purchase from Guardian Technologies International, Inc., a Delaware corporation (the “Company”), up to ______ shares (the “Warrant Shares” which shall include the First Closing Warrant Shares and the Second Closing Warrant Shares) of common stock, par value $0.001 per share, of the Company (the “Common Stock”).  The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).  This Warrant is being issued by the Company pursuant to the Purchase Agreement. 1 The term “Warrant” as defined herein shall hereafter include any warrant into which this Warrant may be divided, exchanged or combined and any Warrant as the same may be modified or amended from time to time. Section 1. Definitions.  Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “Purchase Agreement”), dated November __, 2006, among the Company and the purchasers signatory thereto. Section 2. Exercise. a) Exercise of Warrant.  Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the First Initial Exercise Date in connection with the First Closing Warrant Shares or on or after the Second Initial Exercise Date in connection with the Second Closing Warrant Shares and on or before the First Termination Date in connection with the First Closing Warrant Shares or on or before the Second Termination Date in connection with the Second Closing Warrant Shares by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company); and, within 3 Trading Days of the date said Notice of Exercise is delivered to the Company, the Holder shall deliver to the Company this Warrant together with payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank in immediately available United States dollars.  Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available herein and the Warrant has been exercised in full, in which case the Holder shall surrender this Warrant to the Company for cancellation within 3 Trading Days of the date the final Notice of Exercise is delivered to the Company.  Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases.  The Company shall deliver any objection to any Notice of Exercise Form within 1 Business Day of receipt of such notice.  The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof. b) Exercise Price.  The exercise price per share of the Common Stock under this Warrant shall be $1.15634, subject to adjustment hereunder (the “Exercise Price”). c) Cashless Exercise.  Subject to Section 2(d)(ii) herein, if (i) at any time after one year following the First Initial Exercise Date, there is no effective Registration 2 Statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder or (ii) at any time after four (4) years following the First Initial Exercise Date, regardless of the effectiveness of the Registration Statement, or availability of a prospectus, for the resale of the Warrant Shares by the Holder, this Warrant may also be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:  (A) = the VWAP on the Trading Day immediately preceding the date of such election; (B) =  the Exercise Price of this Warrant, as adjusted; and (X) = the number of Warrant Shares issuable upon exercise of this Warrant in accordance with the terms of this Warrant by means of a cash exercise rather than a cashless exercise. Notwithstanding anything herein to the contrary, on the First Termination Date in connection with First Closing Warrant Shares or, subject to Section 2(d)(ii) herein, on the Second Termination Date in connection with the Second Closing Warrant Shares, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c). d) Exercise Limitations. i. Holder’s Restrictions.  The Company shall not effect any exercise of this Warrant, and a  Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2(c) or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, such Holder (together with such Holder’s Affiliates, and any other person or entity acting as a group together with such Holder or any of such Holder’s Affiliates), as set forth on the applicable Notice of Exercise, would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by such Holder or any of its Affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other  Debentures or Warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by such Holder or any of its affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 2(d)(i), beneficial ownership shall be 3 calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by a Holder that the Company is not representing to such Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and such Holder is solely responsible for any schedules required to be filed in accordance therewith.   To the extent that the limitation contained in this Section 2(d)(i) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder together with any Affiliates) and of which a portion of this Warrant is exercisable shall be in the sole discretion of a Holder, and the submission of a Notice of Exercise shall be deemed to be each Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by such Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to such aggregate percentage limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination.   In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  For purposes of this Section 2(d)(i), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more recent public announcement by the Company or (z) any other notice by the Company or the Company’s Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written request of a Holder, the Company shall within two Trading Days confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by such Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported.  The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant.  The Beneficial Ownership Limitation provisions of this Section 2(d)(i) may be waived by such Holder, at the election of such Holder, upon not less than 61 days’ prior notice to the Company to change the Beneficial Ownership Limitation to 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant, and the provisions of this Section 2(d)(i) shall continue to apply.  Upon such a change by a Holder of the Beneficial Ownership Limitation from such 4.99% limitation to such 9.99% limitation, the Beneficial Ownership Limitation may not be further waived by such Holder.  The provisions of this paragraph shall be construed and implemented in a manner otherwise 4 than in strict conformity with the terms of this Section 2(d)(i) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant. ii. Payment of Subscription Amount at Second Closing.   Until such time as the full Subscription Amount for the Second Closing has been paid and delivered by the Holder to the Company pursuant to the Purchase Agreement (such date, the “Second Closing Payment Date”), the Warrants to purchase the Second Closing Warrant Shares shall not be exercisable.  If, within 15 Trading Days after the Company delivers to the Holder the Notice to Holders, the Holder has not paid and delivered the full Subscription Amount for the Second Closing as required by the Purchase Agreement, the Company shall send notice to the Holder requiring the Holder to deliver this Warrant to the Company and the Company shall cancel the Warrants to purchase the Second Closing Warrant Shares and shall reissue to the Holder a Warrant for the unexercised portion of the remaining Warrants not subject to cancellation hereunder. e) Mechanics of Exercise. i. Authorization of Warrant Shares.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and upon payment therefor, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).   ii. Delivery of Certificates Upon Exercise.  Certificates for shares purchased hereunder shall be transmitted by the transfer agent of the Company to the Holder by crediting the account of the Holder’s prime broker with the Depository Trust Company through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is a participant in such system, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise within 3 Trading Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant (if required) and payment of the aggregate Exercise Price as set forth above (“Warrant Share Delivery Date”).  This Warrant shall be deemed to have been exercised on the date the Exercise Price is received by the Company.  The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such 5 shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(e)(vii) prior to the issuance of such shares, have been paid.   iii. Delivery of New Warrants Upon Exercise.  If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant. iv. Rescission Rights.  If the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to this Section 2(e)(iv) by the second Trading Day following the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise. v. Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise.  In addition to any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder a certificate or certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder.  For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts 6 payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof. vi. No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share. vii. Charges, Taxes and Expenses.  Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. viii. Closing of Books.  The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof. f) Call Provision.  Subject to the provisions of Section 2(d) and this Section 2(f), if, after the Effective Date, (i) the Closing Price on each of 20 consecutive Trading Days (the “Measurement Period,” which 20 consecutive Trading Day period shall not have commenced until after the Effective Date) exceeds $2.89 (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like after the First Initial Exercise Date) (the “Threshold Price”), (ii) the daily trading volume for such Measurement Period exceeds 100,000 shares of Common Stock per Trading Day (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like after the First Initial Exercise Date) and (iii) the Holder is not in possession of any information that constitutes, or might constitute, material non-public information, then the Company may, within one Trading Day of the end of such Measurement Period, call for cancellation of up to 75% of this Warrant for which a Notice of Exercise has not yet been delivered (such right, a “Call”) for consideration equal to $.001 per Share.  To exercise this right, the Company must deliver to the Holder an irrevocable written notice 7 (a “Call Notice”), indicating therein the portion of unexercised portion of this Warrant to which such notice applies.  If the conditions set forth below for such Call are satisfied from the period from the date of the Call Notice through and including the Call Date (as defined below), then any portion of this Warrant subject to such Call Notice for which a Notice of Exercise shall not have been received by the Call Date will be cancelled at 6:30 p.m. (New York City time) on the thirtieth Trading Day after the date the Call Notice is received by the Holder (such date and time, the “Call Date”).  Any unexercised portion of this Warrant to which the Call Notice does not pertain will be unaffected by such Call Notice.  In furtherance thereof, the Company covenants and agrees that it will honor all Notices of Exercise with respect to Warrant Shares subject to a Call Notice that are tendered through 6:30 p.m. (New York City time) on the Call Date.  The parties agree that any Notice of Exercise delivered following a Call Notice which calls less than all the Warrants shall first reduce to zero the number of Warrant Shares subject to such Call Notice prior to reducing the remaining Warrant Shares available for purchase under this Warrant.  For example, if (x) this Warrant then permits the Holder to acquire 100 Warrant Shares, (y) a Call Notice pertains to 75 Warrant Shares, and (z) prior to 6:30 p.m. (New York City time) on the Call Date the Holder tenders a Notice of Exercise in respect of 50 Warrant Shares, then (1) on the Call Date the right under this Warrant to acquire 25 Warrant Shares will be automatically cancelled, (2) the Company, in the time and manner required under this Warrant, will have issued and delivered to the Holder 50 Warrant Shares in respect of the exercises following receipt of the Call Notice, and (3) the Holder may, until the First Termination Date or Second Termination Date, as applicable, exercise this Warrant for 25 Warrant Shares (subject to adjustment as herein provided and subject to subsequent Call Notices).  Subject again to the provisions of this Section 2(f), the Company may deliver subsequent Call Notices for any portion of this Warrant for which the Holder shall not have delivered a Notice of Exercise.  Notwithstanding anything to the contrary set forth in this Warrant, the Company may not deliver a Call Notice or require the cancellation of this Warrant (and any such Call Notice will be void), unless, from the beginning of the Measurement Period through the Call Date, (i) the Company shall have honored in accordance with the terms of this Warrant all Notices of Exercise delivered by  6:30 p.m. (New York City time) on the Call Date, and (ii) the Registration Statement shall be effective as to all Warrant Shares and the prospectus thereunder available for use by the Holder for the resale of all such Warrant Shares, and (iii) the Common Stock shall be listed or quoted for trading on the Trading Market, and (iv) there is a sufficient number of authorized shares of Common Stock for issuance of all Securities under the Transaction Documents, and (v) the issuance of the shares shall not cause a breach of any provision of 2(d) herein.  The Company’s right to call the Warrants under this Section 2(f) shall be exercised ratably among the Holders based on each Holder’s initial purchase of Warrants. Section 3. Certain Adjustments. a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (A) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this 8 Warrant), (B) subdivides outstanding shares of Common Stock into a larger number of shares, (C) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted.  Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification. b) Subsequent Equity Sales. If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice its securities, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock, at an effective price per share less than the then Exercise Price (such lower price, the “Base Share Price” and such issuances collectively, a “Dilutive Issuance”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share which is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance), then the Exercise Price shall be reduced and only reduced to equal the Base Share Price and the number of Warrant Shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment.  Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.  Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 3(b) in respect of an Exempt Issuance.  The Company shall promptly notify the Holder in writing of any issuance of Common Stock or Common Stock Equivalents subject to this Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice the “Dilutive Issuance Notice”).  For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, after the date of such Dilutive Issuance the Holder is entitled, upon the subsequent exercise thereof, to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. c) Subsequent Rights Offerings.  Unless Holders holding at least 51% of the Warrant Shares underlying the then outstanding Warrants shall otherwise consent in 9 writing, if the Company, at any time while the Warrant is outstanding, shall issue rights, options or warrants to all holders of Common Stock (and not to Holders) entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the VWAP at the record date mentioned below, then the Exercise Price shall be multiplied by a fraction, of which the denominator shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase, and of which the numerator shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered (assuming receipt by the Company in full of all consideration payable upon exercise of such rights, options or warrants) would purchase at such VWAP.  Such adjustment shall be made whenever such rights or warrants are issued, and shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights, options or warrants. d) Pro Rata Distributions.  Unless Holders holding at least 51% of the Warrant Shares underlying the then outstanding Warrants shall otherwise consent in writing, if the Company, at any time prior to the First Termination Date (or, if applicable, the Second Termination Date) shall distribute to all holders of Common Stock (and not to Holders of the Warrants) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security other than the Common Stock (which shall be subject to Section 3(b)), then in each such case the Exercise Price shall be adjusted by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record date of the portion of such assets or evidence of indebtedness so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors in good faith.  In either case the adjustments shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock.  Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above. e) Fundamental Transaction. If, at any time while this Warrant is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another Person, (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (D) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental 10 Transaction (and in lieu thereof), at the option of the Holder, (a) upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event or (b) if the Company is acquired in an all cash transaction, cash equal to the value of this Warrant as determined in accordance with the Black-Scholes option pricing formula.  For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction.  To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder’s right to exercise such warrant into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 3(e) and insuring that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. f) Milestone-Related Adjustment.  The Exercise Price shall be permanently and cumulatively reduced, and only reduced, upon the occurrence of any of the following events as follows: (i) if, for the six month period commencing on October 1, 2006 and ending on March 31, 2007 (such period, the “Six Month Period”), the Company shall fail to have achieved any of the following: (A) reported Revenue during the Six Month Period of at least $1,000,000, as reported in the Company’s Form 10-K for the fiscal quarter ending on December 31, 2006 and in the Company’s Form 10-Q for the fiscal quarter ending on March 31, 2007, each as filed with the Commission, (B) obtained authorization for the use and sale of PinPoint in the Russian Federation, as reported by the Company in a widely-disseminated press release or in a current or periodic report filed with the Commission, or (C) prepared and filed an application for grant funding under the Howard University-NCMS Technology Transfer Initiative-Proposed Project for Commercialization to expand the current database of mammography with additional radiologist reviews and images produced to enhance the visibility of tissue types in the original image with the objective to provide a better resource for radiologists studying breast cancer and as a methodology for radiological training of mammography, as reported by the Company in a widely-disseminated press release or in a current or 11 periodic report filed with the Commission, the Exercise Price shall be the lesser of (Y) the then Exercise Price and (Z) 85% of the volume weighted average price for the 5 Trading Days immediately prior to the date that the Company’s Form 10-Q for the fiscal quarter ending on March 31, 2007 is filed with the Commission, provided that if such filing is made after May 15, 2007, 85% of the lesser of (1) the volume weighted average price for the 5 Trading Days immediately prior to May 16, 2007 and (2) the volume weighted average price for the 5 Trading Days immediately prior to the date such filing is actually made, provided that if the Company fails to make a widely-disseminated press release or to file a current or periodic report with the Commission by March 31, 2007 to report the milestone set forth in clause 3(f)(i)(B) or clause 3(f)(i)(C) herein, such milestone shall be irrevocably deemed to have not occurred; (ii) if, by April 30, 2007, the Company has failed to receive an affirmative final report and evaluation of PinPoint from the Transportation Security Laboratory of the Science and Technology Directorate of the Department of Homeland Security, as reported by the Company in a widely-disseminated press release or in a current or periodic report filed with the Commission, the Exercise Price shall be the lesser of (Y) the then Exercise Price and (Z) 85% of the volume weighted average price for the 5 Trading Days immediately prior to April 30, 2007, provided that if the Company fails to make a widely-disseminated press release or to file a current or periodic report with the Commission by April 30, 2007 to report the milestone set forth in this Section 3(f)(ii), such milestone shall be irrevocably deemed to have not occurred; (iii) if, for the twelve month period commencing on October 1, 2006 and ending on September 30, 2007 (such period, the “Twelve Month Period”), the Company shall fail to have achieved any of the following: (A) reported Revenue during the Twelve Month Period of at least $15,000,000 as reported in the Company’s Form 10-K for the fiscal quarter ending on December 31, 2006, the Company’s Form 10-Q for the fiscal quarter ending on March 31, 2007, the Company’s Form 10-Q for the fiscal quarter ending on June 30, 2007 and the Company’s Form 10-Q for the fiscal quarter ending on September 30, 2007, each as filed with the Commission, (B) submitted an application to the General Administration of Civil Aviation of China for review and approval of the Company’s licensing, sale and/or distribution of PinPoint in China, as reported by the Company in a widely-disseminated press release or in a current or periodic report filed with the Commission, or (C) received a grant in connection with the application referred to in Section 5(f)(i)(C) above, as reported by the Company in a widely-disseminated press release or in a current or periodic report filed with the Commission, the Exercise Price shall be the lesser of (Y) the then Exercise Price and (Z) 85% of the volume weighted average price for the 5 Trading Days immediately prior to the date that the Company’s Form 10-Q for the fiscal quarter ending on September 30, 2007 is filed with the Commission, provided that if such filing is made after November 15, 2007, 85% of the lesser of (1) the volume weighted average price for the 5 Trading Days immediately prior to November 12 16, 2007 and (2) the volume weighted average price for the 5 Trading Days immediately prior to the date such filing is actually made, provided that if the Company fails to make a widely-disseminated press release or to file a current or periodic report with the Commission by September 30, 2007 to report the milestone set forth in clause 3(f)(iii)(B) or clause 3(f)(iii)(C) herein, such milestone shall be irrevocably deemed to have not occurred; or (iv) if, for the eighteen month period commencing on October 1, 2006 and ending on March 31, 2008 (such period, the “Eighteen Month Period”), the Company shall fail to have achieved any of the following: (A) reported Revenue during such Eighteen Month Period of at least $30,000,000 as reported in the Company’s Form 10-K for the fiscal quarter ending on December 31, 2006, the Company’s Form 10-Q for the fiscal quarter ending on March 31, 2007, the Company’s Form 10-Q for the fiscal quarter ending on June 30, 2007, the Company’s Form 10-Q for the fiscal quarter ending on September 30, 2007, the Company’s Form 10-K for the fiscal quarter ending on December 31, 2007 and the Company’s Form 10-Q for the fiscal quarter ending on March 31, 2008, each as filed with the Commission, or (B) submitted a pre-market notification application with the United States Food and Drug Administration pursuant to Section 510(k) of the United States Food, Drug and Cosmetic Act, as amended, and the related rules promulgated thereunder, with regard to the process for computer aided detection utilizing the Company’s 3i and/or related technology, as reported by the Company in a widely-disseminated press release or in a current or periodic report filed with the Commission, the Exercise Price shall be the lesser of (Y) the then Exercise Price and (Z) 85% of the volume weighted average price for the 5 Trading Days immediately prior to the date that the Company’s Form 10-Q for the fiscal quarter ending on March 31, 2008 is filed with the Commission, provided that if such filing is made after May 15, 2008, 85% of the lesser of (1) the volume weighted average price for the 5 Trading Days immediately prior to May 16, 2008 and (2) the volume weighted average price for the 5 Trading Days immediately prior to the date such filing is actually made, provided that if Company fails to file a Form 8-K by March 31, 2008 to report the milestone set forth in clause 3(f)(iv)(B) herein, such milestone shall be irrevocably deemed to have not occurred, provided that if Company fails to make a widely-disseminated press release or to file a current or periodic report with the Commission by March 31, 2008 to report the milestone set forth in clause 3(f)(iv)(B) herein, such milestone shall be irrevocably deemed to have not occurred. Each such adjustment shall be effective as of the first day of the following period (by way of example, if Revenue requirement is not met for the Six Month Period ending March 31, 2007, the reduction is effective immediately on April 1, 2007).  As to any exercises by the Holder that occurred following the end of a quarter but prior to the date the Company’s periodic report was filed (“Interim Period”), the Company shall retroactively send the Holder additional Warrant Shares within 3 Trading Days of the date of the applicable filing if an adjustment is required hereunder.  The number of additional Warrant Shares issued shall be equal to the number of Warrant Shares 13 receivable from such exercises based on the adjusted Exercise Price less any Warrant Shares previously received on account of such exercises.  Any subsequent restatements of the Company’s financials shall require similar retroactive issuances if the aforementioned events are subsequently deemed to have occurred.  The Company shall provide written notice to the Holder no later than 1 Business Day following the Company’s filing of the applicable periodic report with the Commission, indicating therein the new Exercise Price and the Revenue for the applicable quarter.  In the event that there is an adjustment to the Exercise Price pursuant to any other provision under this Section 5 during the Interim Period, the Exercise Price shall be the lower of (i) the Exercise Price as adjusted pursuant to the other provisions of this Section 5 and (ii) the new Exercise Price as determined hereunder.  Notwithstanding anything herein to the contrary, (i) the provision shall only have the effect of reducing the Exercise Price and (ii) each adjustment shall be permanent notwithstanding future Revenue or the achievement of any other milestones and cumulative with any other adjustments hereunder.   g) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding. h) Voluntary Adjustment By Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company. i) Notice to Holder.   i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. If the Company issues a variable rate security, despite the prohibition thereon in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may be converted or exercised in the case of a Variable Rate Transaction (as defined in the Purchase Agreement). ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock; (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock; (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a 14 party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property; (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company; then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.  The Holder is entitled to exercise this Warrant during the 20-day period commencing on the date of such notice to the effective date of the event triggering such notice. Section 4. Transfer of Warrant. a) Transferability.  Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer; provided, however, that the Second Closing Warrant Shares shall not be transferable until the Second Initial Exercise Date.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.   b) New Warrants. This Warrant may be divided or combined with other Warrants (which carry identical rights) upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in 15 which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary. d) Transfer Restrictions. If , at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the Holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company, (iii) that the transferee be an “accredited investor” as defined in Rule 501(a) under the Securities Act or a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act and (iv) that the transferee agrees in writing to be bound to the terms of the Purchase Agreement. Section 5. Miscellaneous. a) No Rights as Shareholder Until Exercise.  This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof as set forth in Section 2(e)(ii).   b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate. c) Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a 16 Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day. d) Authorized Shares.   The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.   Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant. Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof. e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement. 17 f) Restrictions.  The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws. g) Nonwaiver and Expenses.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the First Termination Date or Second Termination Date, as applicable.  If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder. h) Notices.  Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement. i) Limitation of Liability.  No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. j) Remedies.  Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate. k) Successors and Assigns.  Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares. l) Amendment.  This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder. m) Severability.  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant. 18 n) Headings.  The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant. ******************** 19 IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized. Dated: November 7, 2006   GUARDIAN TECHNOLOGIES INTERNATIONAL, INC. By:__________________________________________      Name:      Title: 20 NOTICE OF EXERCISE TO: GUARDIAN TECHNOLOGIES INTERNATIONAL, INC. (1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any. (2) Payment shall take the form of (check applicable box): [  ] in lawful money of the United States; or [ ] [if permitted] the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c). (3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below: _______________________________ The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to: _______________________________ _______________________________ _______________________________ (4)  Accredited Investor.  The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended. [SIGNATURE OF HOLDER] Name of Investing Entity: ________________________________________________________________________ Signature of Authorized Signatory of Investing Entity: _________________________________________________ Name of Authorized Signatory: ___________________________________________________________________ Title of Authorized Signatory: ____________________________________________________________________ Date: ________________________________________________________________________________________ ASSIGNMENT FORM (To assign the foregoing warrant, execute this form and supply required information. Do not use this form to exercise the warrant.) FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to _______________________________________________ whose address is _______________________________________________________________. _______________________________________________________________ Dated:  ______________, _______ Holder’s Signature: _____________________________ Holder’s Address: _____________________________ _____________________________ Signature Guaranteed:  ___________________________________________ NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company.  Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

EXHIBIT 10.3   EXECUTIVE COMPENSATION PLAN Plan Year 2006 Randal Tofteland   I.              Annual Base Salary $350,000   (Effective January 1, 2006)   II.            Performance Incentive Bonus (IB): $325,000 annually.  Your 2006 Incentive Bonus will be paid quarterly based on the following criteria:   •      100% of the Performance Incentive bonus is based on the achievement of the annual operating profit targets for SoftBrands, Inc.       Operating Profits   Payment Eligibility   YTD Q1 (Oct – Dec 05)   1st Quarter Target   25 % YTD Q2 (Jan – Mar 06)   2nd Quarter Target   50 % YTD Q3 (Apr – Jun 06)   3rd Quarter Target   75 % YTD Q4 (Jul – Sep 06)   Annual Target   100 %   Performance Incentive Payments – 12.5% of your annual bonus will be paid quarterly based on the attainment of the annual operating profit metric.   Payments from prior quarters that were not achieved will be paid if YTD targets are achieved.   Threshold for Operating Profit Goal – SoftBrands must achieve 90% of the targeted operating profit goal to be eligible for the bonus payments.  If SoftBrands achieves 90% of the targeted goal, you will be eligible for 50% of your targeted incentive bonus.   For achievement of each percentage above 90%, you will receive an additional 5% of your target to a maximum of 100%.  For each percentage achieved in excess of 100% of the annual target, you will receive an additional 1% of your targeted incentive.   III.           Should you leave the company for any reason; any bonus “not yet received” will be forfeited.   --------------------------------------------------------------------------------

EXHIBIT 10.3 PROMISSORY NOTE   Albany, New York  February 6, 2006 $10,000,000.00     BALCHEM CORPORATION, a Maryland corporation having an address of P. O. Box 600, 52 Sunrise Park Road, New Hampton, New York 10958 (herein called the “Company”), hereby promises to pay to the order of BANK OF AMERICA, N.A. (successor by merger to Fleet National Bank) a national banking association having an office at 69 State Street, Albany, New York 12201 (the “Bank” or the “Holder”), or its successors or assigns, the principal sum of TEN MILLION AND NO/100 DOLLARS ($10,000,000.00), with interest thereon as set forth below. SECTION 1. DEFINITION OF TERMS. The following words and terms as used in this Note shall have the following meanings unless the context or use indicates another or different meaning or intent: “Adjusted Libor Rate” - Means a rate per annum subject to adjustment approximately each one month, two months, three months or six months, as applicable equal to the Libor Rate plus one percent (1.00%). “Business Day” - In respect of any date that is specified in this Note to be subject to adjustment in accordance with applicable Following Business Day Convention, a day which commercial banks settle payment in London if the payment obligation is calculated by reference to any Libor Rate. “Default Rate” - A per annum rate to two percent (2%) above the rate of interest otherwise applicable to the Note. “Election Notice” - The Libor Interest Rate Period notice to be delivered by the Company to the Bank from time to time in the form of Exhibit “A” attached hereto, in which the Company shall irrevocably indicate a Libor Interest Rate Period. “Event of Default” - Any of those events defined as an Event of Default under the Loan Agreement. “Following Business Day Convention” - The convention for adjusting any relevant date if it would otherwise fall on a day that is not a Business Day. The term “Business Day” when used in conjunction with the term “Following Business Day Convention” and a date, shall mean that an adjustment will be made if that date would otherwise fall on a day that is not a Business Day so that the date will be the first following day that is a Business Day. “Libor Interest Rate Period” - The one month, two month or three month, as applicable, (or slightly longer or shorter) period during which the Adjusted Libor Rate is in effect provided, however, that in no event shall any Interest Rate Election Period extend beyond the Maturity Date of this Loan. “Libor Rate” - Means, the interest rate determined by the following formula (all amounts in the calculation will be determined by the Bank as of the first day of the Libor Interest Rate Period): Libor Rate=     London Inter-Bank Offered Rate        (1.00-Reserve Percentage) -------------------------------------------------------------------------------- “Loan” - The loan of $10,000,000.00 by the Lender to the Company that is the subject of this Note. “Loan Agreement” - Means the amended and restated loan agreement dated the date hereof by and between the Company and the Bank, as such may be further amended or supplemented from time to time. “London Inter-Bank Offered Rate” Means, for any applicable Libor Interest Rate Period, the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or other commercially available source providing quotations of BBA LIBOR as selected by the Bank from time to time) at approximately 11:00 a.m. London time two (2) London Banking Days before the commencement of the applicable Libor Rate Interest Period, for U.S. Dollar deposits (for delivery on the first day of such interest period) with a term equivalent to such Libor Rate Interest Period. If such rate is not available at such time for any reason, then the rate for that Libor Rate Interest Period will be determined by such alternate method as reasonably selected by the Bank. A "London Banking Day" is a day on which banks in London are open for business and dealing in offshore dollars. “Maturity Date” - March 1, 2009. “Prime Rate” - Means the rate of interest publicly announced from time to time by the Bank as its Prime Rate. The Prime Rate is set by the Bank based on various factors, including the Bank’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans. The Bank may price loans to its customers at, above, or below the Prime Rate. Any change in the Prime Rate shall take effect at the opening of business on the day specified in the public announcement of a change in the Bank’s Prime Rate. “Reserve Percentage” - Means the total of the maximum reserve percentages for determining the reserves to be maintained by member banks of the Federal Reserve System for Eurocurrency Liabilities, as defined in the Federal Reserve Board Regulation D, rounded upward to the nearest 1/100 of one percent. The percentage will be expressed as a decimal, and will include, but not be limited to, marginal, emergency, supplemental, special and other reserve percentages. All other capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Loan Agreement (as hereinafter defined). SECTION 2. INTEREST; PAYMENTS. (A) Subject to the provisions of Section 6 of this Note, commencing on the Closing Date and continuing thereafter up to and including the Maturity Date, interest (calculated on the Principal Balance hereof and based upon the actual number of days elapsed over a 360 day year) shall accrue at a rate per annum equal to the Adjusted Libor Rate and shall be payable monthly as set forth in Section 2(B) hereof. In the event the Principal Balance remains outstanding after the Maturity Date, interest (calculated on the Principal Balance hereof and based upon the actual number of days elapsed over a 360-day year) shall accrue at a rate per annum equal to the Default Rate. (B)     Commencing April 1, 2006 and continuing on the first calendar day of each calendar month thereafter during the term hereof up to but not including the Maturity Date, monthly payments of accrued interest hereunder together with equal monthly payments of principal in an amount equal to $250,000.00 shall be due and owing. (C)     In the event that any portion of any payment due hereunder is not made within ten (10) days of the date such payment became due, the Company shall pay to the Holder on demand a late payment charge equal to five percent (5%) of the portion of any such payment not paid within such ten (10) day 2 -------------------------------------------------------------------------------- period provided, however, that such late payment charge shall not exceed $10,000.00 in the aggregate per incident and shall not exceed $10,000 in the aggregate upon the maturity or acceleration of the Principal Balance. (D)     Notwithstanding anything to the contrary herein contained, on the Maturity Date, the entire outstanding principal amount hereof and all accumulated, accrued and unpaid interest thereon shall be due and payable. (E)     All payments received pursuant to this Note shall be applied first to the payment of all fees, expenses, and other amounts due to the Holder (excluding principal and interest), then to accrued, accumulated and unpaid interest, and the balance in reduction of the Principal Balance hereof, provided that should an Event of Default have occurred and be continuing, payments received hereunder shall be applied at the discretion of the Holder. (F)     All payments of interest and principal are to be made for the account of Bank of America, N.A., Peter D, Kiernan Plaza, Albany, New York 12207 or at such other place as the Holder may direct the Company by written notice. All payments shall be in lawful money of the United States in immediately available funds and are subject to the Following Business Day Convention with respect to date of payment. SECTION 3. PREPAYMENT, MANDATORY REDEMPTION. (A) The Company may upon at least three (3) prior Business Days’ notice to the Holder (which notice shall be irrevocable) prepay the Principal Balance, and any such prepayment shall occur only on the last day of the Libor Interest Rate Period. Each prepayment of a LIBOR Rate Portion, whether voluntary, by reason of acceleration or otherwise, will be accompanied by the amount of accrued interest on the amount prepaid and a prepayment fee as described below. A “prepayment” is a payment of an amount on a date earlier than the scheduled payment date for such amounts as required by this Note. The prepayment fee will be the sum of fees calculated separately for each Prepaid Installment, as follows: (i)     The Bank will first determine the amount of interest which would have accrued each month for the Prepaid Installment had it remained outstanding until the applicable Original Payment Date, using the interest rate applicable to the Prepaid Installment under this Note. (ii)            The Bank will then subtract from each monthly interest amount determined in (i) above, the amount of interest which would accrue for that Prepaid Installment if it were reinvested from the date of prepayment through the Original Payment Date, using the Treasury Rate. (iii)      If (i) minus (ii) for the Prepaid Installment is greater than zero, the Bank will discount the monthly differences to the date of prepayment by the Treasury Rate. The Bank will then add together all of the discounted monthly differences for the Prepaid Installment. The following definitions will apply to the calculation of the prepayment fee: (i)             “Original Payment Dates” mean the dates on which the prepaid principal would have been paid if there had been no prepayment. If any of the principal would have been paid later than the end of the fixed rate interest period in effect at the time of prepayment, then the Original Payment Date for that amount will be the last day of the interest period. 3 --------------------------------------------------------------------------------   (ii)     “Prepayment Installment” means the amount of the prepaid principal which would have been paid on a single Original Payment Date.   (iii)     “Treasury Rate” means the interest rate yield for U.S. Government Treasury Securities which the Bank determines could be obtained by reinvesting a specified Prepaid Installment in such securities from the date of prepayment through the Original Payment Date. The Bank may adjust the Treasury Rate to reflect the compounding, accrual basis, or other costs of the prepaid amount. Each of the rates is the Bank’s estimate only and the Bank is under no obligation to actually reinvest any prepayment. The rates will be based on information from either the Telerate or Reuters information services, The Wall Street Journal, or other information sources the Bank deems appropriate. If by reason of an Event of Default the Bank elects to declare this Note to be immediately due and payable, then any prepayment fee with respect to the resulting prepayment shall become due and payable in the same manner as though the Company had exercised a right of prepayment. SECTION 4. LOAN AGREEMENT. The loan evidenced by this Note is being made pursuant to the terms, provisions and conditions of a certain amended and restated loan agreement dated the date hereof (as amended or supplemented from time to time, the “Loan Agreement”) by and between the Company and the Holder. SECTION 5. DOCUMENTS. Reference is hereby made to the Loan Agreement and to all amendments and supplements thereto for the provisions, among others, with respect to the nature and extent of the rights, duties and obligations of the Company and the Holder and the terms upon which this Note is or may be secured. SECTION 6. DEFAULT; ACCELERATION. The entire unpaid Principal Balance of this Note, together with all accrued and unpaid interest due hereon, may be declared immediately due and payable by the Holder upon the occurrence and during the continuance of an “Event of Default” as defined in the Loan Agreement provided, however, that from and after the date of any such declaration, the outstanding Principal Balance hereof and all accrued and unpaid interest thereon shall be due and payable, interest shall continue to accrue on the unpaid Principal Balance to the date of payment at a rate per annum equal to the Default Rate. SECTION 7. COVENANT AGAINST USURY. All agreements between the Company and the Holder are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of maturity of the indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to be paid to the Holder for the use or the forbearance of the indebtedness evidenced hereby exceed the maximum permissible under applicable law. As used herein, the term “applicable law” shall mean the law in effect as of the date hereof provided, however that in the event there is a change in the law which results in a higher permissible rate of interest, then this Note shall be governed by such law as of its effective date. In this regard, it is expressly agreed that it is the intent of the Company and the Holder in the execution, delivery and acceptance of this Note to contract in strict compliance with the laws of the State of New York from time to time in effect. If, under or from any circumstances whatsoever, fulfillment of any provision hereof or of any law of the Financing Documents at the time of performance of such provision shall be due, shall involve transcending the limit of such validity prescribed by applicable law, then the obligation to be fulfilled shall automatically be reduced to the limits of such validity, and if under or from circumstances whatsoever the Holder should ever receive as interest an amount which would exceed the highest lawful 4 -------------------------------------------------------------------------------- rate, such amount which would be excessive interest shall be applied to the reduction of the principal balance evidenced hereby and not to the payment of interest. This provision shall control every other provision of all agreements between the Company and the Guarantors and the Holder. SECTION 8. WAIVER OF DILIGENCE, PRESENTMENT, DEMAND, ETC. The Company hereby waives with respect to this Note: diligence, presentment, demand for payment, filing of claims with a court in the event of bankruptcy of the Company or any other person or entity liable in respect to this Note, any right to require a proceeding first against the Company or any other such Person; protest, notice of dishonor or nonpayment of any such liabilities and any other notice and all demands whatsoever except as specifically set forth in this Note or any of the other Financing Documents. SECTION 9. WAIVER, CHANGE, MODIFICATION OR DISCHARGE. The provisions of this Note may not be waived, changed, modified or discharged orally, but only by agreement in writing, signed by the party against whom any enforcement of any waiver, change, modification or discharge is sought. SECTION 10. TRANSFER AND ASSIGNMENT OF NOTE; PLEDGE OF RIGHTS; PARTICIPATION. (A) The Holder may at any time pledge all or any portion of its rights under this Note and the other Financing Documents to any of the twelve (12) Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No such pledge or enforcement thereof shall release the Holder from its obligations under any of the Financing Documents. (B)     The Holder shall have the unrestricted right at any time and from time to time, to grant to one or more banks or other financial institutions (each, a “Participant”) participating interests in the Holder’s obligation to lend hereunder and/or any or all of the loans held by the Holder hereunder. In the event of any such grant by the Holder of a participating interest to a Participant, whether or not upon notice to the Company, the Holder shall remain responsible for the performance of its obligations hereunder and the Company shall continue to deal solely and directly with the Holder in connection with the Holder’s rights and obligations hereunder. The Holder shall have the unrestricted right at any time or from time to time, to assign all or any portion of its rights and obligations hereunder and under the other Financing Documents to one or more banks or other financial institutions (each, an “Assignee”), and the Company agrees that it shall execute, or cause to be executed, such documents, including without limitation, amendments to this Loan Agreement and to the other Financing Documents as the Holder shall deem necessary to effect the foregoing. In addition, at the request of the Holder and any such Assignee, the Company shall issue one or more new promissory notes, as applicable, to any such Assignee and, if the Holder has retained any of its rights and obligations hereunder following such assignment, to the Holder, which new promissory notes shall be issued in replacement of, but not in discharge of, the liability evidenced by the promissory note held by the Holder prior to such assignment and shall reflect the amount of the respective commitments and loans held by such Assignee and the Holder after giving effect to such assignment. Upon the execution and delivery of appropriate assignment documentation, amendments and any other documentation required by the Holder in connection with such assignment, and the payment by Assignee of the purchase price agreed to by the Holder, and such Assignee, such Assignee shall be a party to this Loan Agreement and shall have all of the rights and obligations of the Holder hereunder and under the other Financing Documents to the extent that such rights and obligations have been assigned by the Holder pursuant hereto and to the assignment documentation between the Holder and such Assignee, and the Holder shall be released from its obligations hereunder and thereunder to a corresponding extent. Provided no Event of Default has occurred and is continuing and except with respect to an assignment or transfer of the Loans mandated by a Governmental Authority, the Company shall have the 5 -------------------------------------------------------------------------------- right to approve the identity of any Participant or Assignee pursuant to this subsection (B), which approval shall not be unreasonably withheld, delayed or conditioned. Except as aforesaid, the right of the Holder to assign or grant a participation interest shall not require notice to or consent of the Company. The Holder may furnish any information concerning the Company in its possession from time to time to prospective Assignees and Participants, provided that the Holder shall require any such prospective Assignee or Participant to agree in writing for the benefit of the Company to maintain the confidentiality of such information. SECTION 11. JURY TRIAL WAIVER. THE COMPANY AND THE HOLDER (BY ACCEPTANCE OF THIS NOTE) MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF THE HOLDER RELATING TO THE ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THIS NOTE, AND AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT AS PROHIBITED BY LAW, THE COMPANY HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE COMPANY CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE HOLDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE HOLDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR THE HOLDER TO ACCEPT THIS NOTE AND MAKE THE LOAN. SECTION 12. RIGHT OF SET OFF. The Company hereby grants to the Holder, a continuing lien, security interest and right of setoff as security for all liabilities and obligations to the Holder, whether now existing or hereafter arising, upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of the Holder or any entity under the control of Bank of America Corporation and its successors and assigns, or in transit to any of them. At any time, without demand or notice (any such notice being expressly waived by the Company), the Holder may set off the same or any part thereof and apply the same to any liability or obligation of the Company even though unmatured and regardless of the adequacy of any other collateral securing this Note. ANY AND ALL RIGHTS TO REQUIRE THE HOLDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THIS NOTE, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE COMPANY, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED. SECTION 13. EXPENSES INCURRED IN CONNECTION WITH ENFORCEMENT. The Company shall pay on demand all reasonable expenses of the Holder in connection with the preparation, administration, default, collection, waiver or amendment of loan terms, or in connection with the Holder’s exercise, preservation or enforcement of any of its rights, remedies or options hereunder, including, without limitation, reasonable fees of outside legal counsel or the allocated costs of in-house legal counsel, accounting, consulting, brokerage or other similar professional fees or expenses, and any reasonable fees or expenses associated with travel or other costs relating to any appraisals or examinations conducted in connection with the loan or any collateral therefor, and the amount of all such expenses shall, until paid, bear interest at the rate applicable to principal hereunder (including any default rate) and be an obligation secured by any collateral. 6 -------------------------------------------------------------------------------- SECTION 14. CHOICE OF LAW. This Note and the rights and obligations of the parties hereunder shall be construed and interpreted in accordance with the laws of the State of New York (the “Governing State”) (excluding the laws applicable to conflicts or choice of law). THE COMPANY AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE MAY BE BROUGHT IN THE COURTS OF THE GOVERNING STATE OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE COMPANY BY MAIL AT THE ADDRESS SET FORTH HEREIN. THE COMPANY HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT FORUM. SECTION 15. MERGER. This Note is intended by the parties as the final, complete and exclusive statement of the transactions evidenced by this Note. All prior contemporaneous promises, agreements and understandings, whether oral or written, are deemed to be superceded by this Note, and no party is relying on any promise, agreement or understanding not set forth in this Note. This Note may not be amended or modified except by a written instrument describing such amendment or modification executed by the Company and the Holder. SECTION 16. USE OR PROCEEDS. No portion of the proceeds of this Note shall be used, in whole or in part, for the purpose of purchasing or carrying any “margin stock” as such term is defined in Regulation U of the Board of Governors of the Federal Reserve System. SECTION 17. LOST OR DAMAGED NOTE. Upon receipt of an affidavit of an officer of the Holder as to the loss, theft, destruction or mutilation of this Note or any other security document which is not of public record, and, in the case of any such loss, theft, destruction or mutilation, upon surrender and cancellation of such Note or other security document, the Holder will issue, in lieu thereof, a replacement Note or other security document in the same principal amount thereof and otherwise of like tenor. 7 -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the Company has executed this instrument as of the day and year first above written.   BALCHEM CORPORATION               By: /s/ Frank Fitzpatrick     Frank Fitzpatrick, Chief Financial     Officer    STATE OF NEW YORK  )   )ss.:  COUNTY OF ORANGE ) On the 6th day of February, in the year 2006 before me personally came FRANK FITZPATRICK, to me known, who, being by me duly sworn, did depose and say that he/she/they reside(s) in New York; that he/she/they is(are) the CHIEF FINANCIAL OFFICER of BALCHEM CORPORATION, the corporation described in and which executed the above instrument; and that he/she/they signed his/her/their name(s) thereto by authority of the board of directors of said corporation.   /s/ Matthew D. Houston   Notary Public, State of New York A-1 -------------------------------------------------------------------------------- EXHIBIT “A” FORM OF ELECTION NOTICE BORROWER: BALCHEM CORPORATION DATE: _________________ All Capitalized terms carry the meanings as defined in the Promissory Note dated February ___, 2006 (the “Note”). This Notice serves as an irrevocable Election Notice required under the Note for the purpose of selecting a Libor Interest Rate Period for said Loan Portion. Interest Rate Election ADJUSTED LIBOR RATE**       ___One Month       ___Two Month       ___Three Month       ___Six Month   Adjusted Libor Rate (if chosen):       _____________% Date of next Interest Rate Election Period:     _____________________ Subject to confirmation and verification by Bank. Authorized by: BALCHEM CORPORATION             By:         Authorized Representative   _____________________ **Libor Rate Election must be received no later than 12:00 noon (eastern standard time) on the London Banking Day preceding the first day of the end of the current Libor Interest Rate Period. A-2

Exhibit 10.1 AMENDMENT TO EMPLOYMENT AGREEMENT This Amendment to the Employment Agreement (the Amendment”), by and between Mr. Hugo Castro, a resident of the State of Florida (the “Executive”), and Sun American Bancorp, a Delaware corporation and Sun American Bank, a Florida corporation (collectively, the “Company”) is effective as of September 20, 2006. WHEREAS, reference is made to the Employment Agreement, effective as of June 5, 2006 (the “Agreement”), by and between the Company and the Executive.   WHEREAS, the Company and the Executive mutually agree to amend the Agreement as set forth below. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties, hereby amend the Agreement as follows: 1. Section 2(a) of the Agreement shall be deleted in its entirety and shall be replaced by the following Section 2(a) provision. “2. Position and Duties (a) The Bank shall employ the Executive, and the Executive shall serve, under the title of Managing Director of Sun American Bank. The Executive shall be responsible for overseeing and managing as directed by its President, Chairman and CEO Michael Golden. Executive will be responsible for developing loans, deposits and anything that will result in new business development.” 2. Section 2(c) of the Agreement shall be amended by deleting the title “Chief Executive Officer” in last line of the section and inserting the title “Managing Director.” 3. Section 3 of the Agreement shall be amended by adding the following Section 3(b) provision below Section 3(a): “(b) The financial terms of Executive’s employment with the bank under the Agreement will continue, for the remainder of the initial term of the Agreement ending December 31, 2006.” 4. Section 6 of the Agreement shall be amended by changing the reference “three (3) years” to “one (1) year” in the last sentence of the section. 5. All references in the Agreement to the title of “President” shall be deleted and shall be replaced with the title “Managing Director.” 6. Capitalized terms used and not otherwise defined herein have the respective meanings assigned thereto in the Agreement. 7. Except as expressly modified herein, all other terms and conditions of the Agreement will remain in full force and effect and unaffected by the Amendment. -------------------------------------------------------------------------------- IN WITNESS WHEREOF, the parties have duly executed the Amendment  as of September 20, 2006.   EXECUTIVE                                                                                     By: /s/ HUGO CASTRO    Hugo Castro           SUN AMERICAN BANK       By: /s/ MICHAEL GOLDEN   Name: Michael Golden   Title: Chairman & CEO

  Exhibit 10.8 WINDSTREAM PERFORMANCE INCENTIVE COMPENSATION PLAN RECITALS      Pursuant to Section 7.01(a)(2) of the Employee Benefits Agreement by and between ALLTEL Corporation and ALLTEL Holding Corp. (the “Company”) dated as of December 8, 2005 (the “Employee Benefits Agreement”), the Company agreed to establish, or cause to be established, a plan, the provisions of which are substantially identical to the provisions of the ALLTEL Corporation Performance Incentive Compensation Plan, which such plan shall apply to the performance period beginning the day after the Distribution Date (as defined in the Employee Benefits Agreement) and ending December 31, 2006. The Company has adopted this Windstream Performance Incentive Compensation Plan (the “Plan”) pursuant to the terms of the Employee Benefits Agreement. I. PURPOSE      The purpose of the Plan is to advance the interests of the Company by strengthening, through the payment of incentive awards, the linkage between executives of the Company and stockholders of the Company, the decision-making focus of executives of the Company upon improving stockholder wealth, and the ability of the Company to attract and retain those key employees upon whose judgment, initiative, and efforts the successful growth and profitability of the Company depends. II. DEFINITIONS      a. “Award” shall mean a cash award granted under the Plan to a Participant by the Committee pursuant to such terms, conditions, restrictions and/or limitations, if any, as the Committee may establish.      b. “Beneficiary” shall mean the beneficiary or beneficiaries designated in accordance with Section XII to receive any amount payable under the Plan after the death of a Participant.      c. “Board” shall mean the Board of Directors of the Company.      d. “CEO” shall mean the Chief Executive Officer of the Company.      e. “Code” shall mean the Internal Revenue Code of 1986, as amended.      f. “Committee” shall mean the Compensation Committee of the Board (or subcommittee thereof), consisting of not less than two Board members each of whom shall be (i) A-1 --------------------------------------------------------------------------------   a “non-employee director” as defined in Rule 16b-3 of the Securities Exchange Act of 1934, as amended, and (ii) an “outside director” as defined in the regulations under Section 162(m) of the Code.      g. “Company” shall mean ALLTEL Holding Corp., a Delaware corporation, its successors and survivors resulting from any merger or acquisition of ALLTEL Holding Corp. with or by any other corporation or other entity or enterprise including, without limitation, the surviving corporation resulting from the proposed merger between the Company and Valor Communications Group, Inc. pursuant to the terms of the Agreement and Plan of Merger dated as of December 8, 2005, among ALLTEL Corporation, ALLTEL Holding Corp., and Valor Communications Group, Inc. (which merged corporation is to be known as Windstream Corporation).      h. “Covered Employee” shall mean a Participant who the Committee deems likely to have compensation for the Plan Year which would be non-deductible by the Company under Section 162(m) of the Code if the Company did not comply with the provisions of Section 162(m) of the Code and the regulations thereunder with respect to such compensation.      i. “Disability” shall mean incapacity resulting in the Participant’s being unable to engage in gainful employment at his usual occupation by reason of any medically demonstrable physical or mental condition, excluding, however, incapacity contracted, suffered or incurred while the Participant was engaged in, or which resulted from having engaged in, a felonious enterprise; incapacity resulting from or consisting of chronic alcoholism or addiction to drugs or abuse; and incapacity resulting from an intentionally self-inflicted injury or illness.      j. “Effective Date” shall mean the day after the Distribution Date as defined in the Employee Benefits Agreement.      k. “Eligible Employee” shall mean any officer or key management employee of the Company or a Subsidiary who is a regular full-time employee of the Company or a Subsidiary. A director of the Company or a Subsidiary is not an Eligible Employee unless he is also a regular full-time salaried employee of the Company or a Subsidiary. A “full-time” employee means any employee who is customarily employed more than 20 hours per week and at least six months per year.      l. “Participant” shall mean any Eligible Employee who is approved by the Committee for participation in the Plan for the Plan Year with respect to which an Award may be made and which has not been paid, forfeited or otherwise terminated or satisfied under the Plan.      m. “Payout Formula” shall mean the formula established by the Committee for determining Awards for a Plan Year based on the level of achievement of the Performance Objectives for the Plan Year.      n. “Performance Objectives” means the measurable performance objective or objectives established pursuant to the Plan for Participants. Performance Objectives may be described in terms of Company-wide objectives or objectives that are related to the performance of the individual Participant or of the Subsidiary, division, department, region or function within the Company or Subsidiary in which the Participant is employed. The Performance Objectives   --------------------------------------------------------------------------------   may be made relative to the performance of other corporations. The Performance Objectives applicable to any Award to a Covered Employee that is intended to qualify for the performance-based compensation exception to Section 162(m) of the Code shall be based on specified levels of growth in one or more of the following criteria: revenues, weighted average revenue per unit, earnings from operations, operating income, earnings before or after interest and taxes, operating income before or after interest and taxes, net income, cash flow, earnings per share, debt to capital ratio, economic value added, return on total capital, return on invested capital, return on equity, return on assets, total return to stockholders, earnings before or after interest, taxes, depreciation, amortization or extraordinary or special items, operating income before or after interest, taxes, depreciation, amortization or extraordinary or special items, return on investment, free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations, cash flow in excess of cost of capital, operating margin, profit margin, contribution margin, stock price and/or strategic business criteria consisting of one or more objectives based on meeting specified product development, strategic partnering, research and development, market penetration, geographic business expansion goals, cost targets, customer satisfaction, gross or net additional customers, average customer life, employee satisfaction, management of employment practices and employee benefits, supervision of litigation and information technology, and goals relating to acquisitions or divestitures of subsidiaries, affiliates and joint ventures. Performance Objectives may be stated as a combination of the listed factors.      o. “Plan” shall mean the Windstream Performance Incentive Compensation Plan, as set forth in this instrument, as amended from time to time.      p. “Plan Year” shall mean (i) the period beginning on the Effective Date and ending on December 31, 2006 and (ii) for each period beginning after December 31, 2006, the Company’s fiscal year for tax and financial reporting purposes, or such other period as determined by the Committee in its discretion, to be used to measure actual performance against Performance Objectives and to determine the amount of Awards for Participants.      q. “Retirement” shall mean the Participant’s termination of employment with the Company and/or all Subsidiaries for any reason other than death after either: (i) attaining age fifty-five and completing twenty (20) or more “Vesting Years of Service”; (ii) attaining age sixty (60) and completing fifteen (15) or more “Vesting Years of Service”; or (iii) satisfying the conditions specified for eligibility for “retirement” under a written employment contract between the Participant and the Company and/or a Subsidiary. For purposes of the immediately preceding sentence, “Vesting Years of Service” shall have the meaning given it under the terms of the Windstream Pension Plan.      r. “Subsidiary” shall mean a corporation of which fifty percent (50%) or more of the issued and outstanding voting stock is owned (directly or indirectly) by the Company. III. ADMINISTRATION      a. Administration of the Plan shall be by the Committee, which shall, in applying and interpreting the provisions of the Plan, have full power and authority to construe, interpret and carry out the provisions of the Plan. All decisions, interpretations and actions of the   --------------------------------------------------------------------------------   Committee under the Plan shall be at the Committee’s sole and absolute discretion and shall be final, conclusive and binding upon all parties. The generality of the provisions of the immediately preceding sentence shall not be deemed to be limited by any reference to the Committee’s discretion in any other provision of the Plan. The Committee may delegate to the CEO or other officers, subject to such terms as the Committee shall determine, authority to perform certain functions, including administrative functions, except that the Committee shall retain exclusive authority to determine matters relating to Awards to the CEO and other individuals who are Covered Employees. In the event of such delegation, all references to the Committee in this Plan shall be deemed references to such officers as it relates to those aspects of the Plan that have been delegated.      b. No member of the Committee shall be jointly or severally liable by reason of any contract or other instrument executed by him or on his behalf in his capacity as a member of the Committee, nor for any mistake of judgment made in good faith, and the Company shall indemnify and hold harmless each member of the Committee and each other officer, employee and director of the Company to whom any duty or act relating to the administration of the Plan may be allocated or delegated, against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of the claim with the approval of the Board) arising out of any act or omission to act in connection with the Plan, unless arising out of such person’s or persons’ own fraud or bad faith.      c. The existence of this Plan or any Award or other right granted hereunder will not affect the authority of the Company or the Committee to take any other action, including in respect of the grant or award of any annual or long-term bonus or other right or benefit, whether or not authorized by this Plan, subject only to limitations imposed by applicable law. IV. ELIGIBILITY FOR PARTICIPATION      a. As soon as practicable after the beginning of each Plan Year, the Committee shall designate those Eligible Employees who shall participate in the Plan for the current Plan Year (or, if a person becomes an Eligible Employee after the beginning of the Plan Year, he shall be designated as a Participant as soon as practicable after he becomes an Eligible Employee). In determining which Eligible Employees shall participate for any given Plan Year, the Committee shall consider the recommendations of the CEO. Each Eligible Employee shall be notified of his participation in the Plan as soon as practicable after approval of his participation for any Plan Year (or portion thereof) for which his participation has been approved. An Eligible Employee who is a Participant for a given Plan Year is neither guaranteed nor assured of being selected for participation in any subsequent Plan Year.      b. Notwithstanding anything contained in Section IV(a) to the contrary, individuals who are Covered Employees shall be designated by the Committee to participate in the Plan no later than 90 days following the beginning of the Plan Year or before 25% of the Plan Year has elapsed, whichever is earlier.      c. Notwithstanding anything contained in this Section IV to the contrary, the individuals listed on Exhibit A, and such other individuals as may be designated pursuant to this   --------------------------------------------------------------------------------   Section IV, shall participate in the Plan for the Plan Year beginning on the day after the Effective Date and ending on December 31, 2006. V. DETERMINATION OF AWARDS      a. The Committee shall establish the Performance Objectives and Payout Formulas for each Participant during the first quarter of each Plan Year and notify each Participant in writing of his or her Payout Formulas and Performance Objectives. In determining the applicable Payout Formulas or Performance Objectives other than for the CEO, the Committee shall consider the recommendations of the CEO. The Performance Objectives and Payout Formulas established by the Committee need not be uniform with respect to any or all Participants. The Committee may also make Awards to newly hired or newly promoted executives without compliance with such timing and other limitations as provided herein, which Awards may be based on performance during less than the full Plan Year and may be pro rated in the discretion of the Committee.      b. Participants must achieve the Performance Objectives established by the Committee in order to receive an Award under the Plan. However, the Committee may determine that only the threshold level relating to a Performance Objective must be achieved for Awards to be paid under the Plan. Similarly, the Committee may establish a minimum threshold performance level, a maximum performance level, and one or more intermediate performance levels or ranges, with target award levels or ranges that will correspond to the respective performance levels or ranges included in the Payout Formula.      c. The Committee may establish multiple Performance Objectives with respect to a single Participant. If more than one Performance Objective is selected by the Committee for a Plan Year, the Performance Objectives will be weighted by the Committee to reflect their relative importance to the Company in the applicable Plan Year. If the Committee establishes a threshold level of achievement with respect to multiple Performance Objectives, Awards will be paid under the Plan upon achievement of threshold levels of one or more of the specified Performance Objectives.      d. The Committee may in its sole discretion modify such Payout Formulas, Performance Objectives or the related minimum acceptable level of achievement, in whole or in part, as the Committee deems appropriate and equitable (i) to reflect a change in the business, operations, corporate structure or capital structure of the Company or its Subsidiaries, the manner in which it conducts its business, or other events or circumstances or (ii) in the event that a Participant’s responsibilities materially change during a Plan Year or the Participant is transferred to a position that is not designated or eligible to participate in the Plan.      e. Notwithstanding anything contained in this Section IV to the contrary, the Committee shall establish the Performance Objectives (including the relative weight of multiple Performance Objectives) and Payout Formulas for each Covered Employee not later than 90 days following the beginning of the Plan Year or before 25% of the Plan Year has elapsed, whichever is earlier. Furthermore, the Committee shall not modify the Performance Objectives (including the relative weight of multiple Performance Objectives) and Payout Formulas   --------------------------------------------------------------------------------   applicable to a Covered Employee to the extent that such action would result in the loss of the otherwise available exemption of the Award under Section 162(m) of the Code.      f. Notwithstanding any other provision of the Plan to the contrary, in no event shall an Award paid to any Participant for a Plan Year exceed $7,000,000. VI. CERTIFICATION OF ACHIEVEMENT      a. Promptly following the end of each Plan Year, the Committee shall meet to certify achievement of the Performance Objectives for the applicable Plan Year and, if such Performance Objectives have been achieved, to review management recommendations and approve actual Awards under the Plan pursuant to the applicable Payout Formulas. Such certification of achievement of the Performance Objectives of a Covered Employee shall be documented in writing (and otherwise conform to the requirements of applicable regulations under Section 162(m) of the Code) prior to the payout of such Award to a Covered Employee.      b. If a Participant’s employment with the Company and its Subsidiaries is terminated before the last day of a Plan Year due to Disability, death, or Retirement, the Participant’s Award shall be pro rated on the basis of the ratio of the number of days of participation during the Plan Year to which the Award relates to the aggregate number of days in such Plan Year. If a Participant’s employment with the Company and its Subsidiaries is terminated before the last day of a Plan Year for any other reason, then, unless otherwise determined by the Committee, such Participant shall become ineligible to participate in the Plan and shall not receive payment of any Award for any Plan Year that has not ended prior to the Participant’s termination of employment.      c. Notwithstanding any contrary provision of this Plan, the Committee in its sole discretion may (i) eliminate or reduce the amount of any Award payable to any Participant below that which otherwise would be payable under the Payout Formula, and (ii) except in the case of a Covered Employee, increase the amount of any Award payable to any Participant above that which otherwise would be payable under the Payout Formula to recognize a Participant’s individual performance or in other circumstances deemed appropriate by the Committee. VII. PAYMENT OF AWARDS           Subject to Section VI hereof, Awards shall be paid as soon as practicable after the close of the Plan Year, but in no event later than 75 days after the end of the Plan Year to which the Awards relate. Notwithstanding the foregoing, the Committee may, in its sole discretion and upon such terms and conditions as it may establish, direct that payments to the Participants (other than Covered Employees) be made during December of the Plan Year in the amount of all or any portion specified by the Committee of the estimated Award for that Plan Year, subject to adjustment as soon as practicable after the end of the Plan Year and the determination of the exact amount of the Award therefore.   --------------------------------------------------------------------------------   VIII. AMENDMENT AND TERMINATION OF PLAN      a. The Board reserves the right, at any time, to amend, suspend or terminate the Plan, in whole or in part, in any manner, and for any reason, and without the consent of any Participant, Eligible Employee or Beneficiary or other person; provided, that no such amendment, suspension or termination shall adversely affect the payment of any amount for a Plan Year ending prior to the action of the Board amending, suspending or terminating the Plan.      b. It is the intention of the Company that the Plan qualify for the performance-based compensation exception of Section 162(m) of the Code and the short-term deferral exception of Section 409A of the Code. The Plan and any Awards hereunder shall be administrated in a manner consistent with this intent, and any provision that would cause the Plan or any Awards hereunder to fail to satisfy either such exception shall have no force and effect until amended to so comply (which amendment may be retroactive and may be made by the Company without the consent of any Participant, Eligible Employee or Beneficiary or other person). IX. GOVERNING LAW      The provisions of the Plan shall be governed and construed in accordance with the laws of the State of Delaware. X. MISCELLANEOUS PROVISIONS      Nothing contained in the Plan shall give any employee the right to be retained in the employment of the Company or a Subsidiary or affect the right of the Company or a Subsidiary to dismiss any employee. The Plan shall not constitute a contract between the Company or a Subsidiary and any employee. No Participant shall receive any right to be granted an Award hereunder. No Award shall be considered as compensation under any employee benefit plan of the Company or a Subsidiary, except as may be otherwise provided in such employee benefit plan. No reference in the Plan to any other plan or program maintained by the Company shall be deemed to give any Participant or other person a right to benefits under such other plan or program. The Company and its Subsidiaries shall have the right to deduct from all payments made to any person under the Plan any federal, state, local, foreign or other taxes which, in the opinion of the Company and its Subsidiaries are required to be withheld with respect to such payments. XI. NO ALIENATION OF BENEFITS      Except insofar as may otherwise be required by law, no amount payable at any time under the Plan shall be subject in any manner to alienation by anticipation, sale, transfer, assignment, bankruptcy, pledge, attachment, charge or encumbrance of any kind, nor in any   --------------------------------------------------------------------------------   manner be subject to the debts or liabilities of a Participant or Beneficiary, and any attempt to so alienate or subject any such amount, whether presently or thereafter payable, shall be void. XII. DESIGNATION OF BENEFICIARIES      a. Each Participant shall file with the Company a written designation of one or more persons as the Beneficiary who shall be entitled to receive any Award payable under the Plan after his death. A Participant may from time to time, revoke or change his Beneficiary designation without the consent of any prior Beneficiary by filing a new designation with the Company.      b. The last such designation received by the Company shall be controlling; except that no designation, or change or revocation thereof, shall be effective unless received by the Company prior to the Participant’s death, and in no event shall it be effective as of the date prior to such receipt.      c. If no designation is in effect at the time of a Participant’s death, or if no designated Beneficiary survives the Participant, or if such designation, in the Company’s discretion, conflicts with applicable law, the Participant’s estate shall be deemed to have been designated his Beneficiary and shall receive any Award payable under the Plan after his death.      d. A Participant’s Beneficiary designation made by the Participant in accordance with the terms of the ALLTEL Corporation Performance Incentive Compensation Plan prior to the Effective Date shall constitute a proper Beneficiary designation under the Plan and shall remain in effect after the Effective Date until revoked or otherwise modified by the Participant in accordance with this Article XII. XIII. PAYMENTS TO PERSON OTHER THAN PARTICIPANT      If the Committee shall find that a Participant or his Beneficiary to whom an Award is payable under the Plan is unable to care for his affairs because of illness or accident, or is a minor, or has died, then any payment due him or his estate (unless a prior claim therefore has been made by a duly appointed representative) may, if the Committee so directs, be paid to his spouse, child, a relative, an institution maintaining custody of such person or any other person deemed by the Committee to be a proper recipient on behalf of such person otherwise entitled to payment. Any such payment shall be a complete discharge of the liability of the Plan, the Company and the Committee therefore. XIV. NO RIGHT, TITLE OR INTEREST IN COMPANY’S ASSETS      No Participant or Beneficiary shall have any right, title or interest whatsoever in or to any investments which the Company or a Subsidiary may make to aid it in meeting its obligations   --------------------------------------------------------------------------------   under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create, or be construed to create, a trust of any kind, or fiduciary relationship between the Company or a Subsidiary and any Participant or Beneficiary or any other person. To the extent that any person acquires a right to receive payments from the Company under the Plan, such rights shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company, and no special or separate funds shall be established, and no segregation of assets shall be made, to assure payment thereof. XV. SUCCESSORS      The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business and/or assets of the Company expressly to assume this Plan. This Plan shall be binding upon and inure to the benefit of the Company and any successor of or to the Company, including without limitation any persons acquiring directly or indirectly all or substantially all of the business and/or assets of the Company whether by sale, merger, consolidation, reorganization or otherwise (and such successor shall thereafter be deemed the “Company” for the purposes of this Plan), and the heirs, beneficiaries, executors and administrators of each Participant; provided that any successor to this Plan shall not assume any obligation with respect to any Participant for services performed or related compensation earned by the Participant prior the Effective Date or any obligation of Alltel Corporation to such Participant under the Alltel Corporation Incentive Compensation.  

EXHIBIT 10.1   Amendment Number 1 to the AmSouth Bancorporation 1996 Long Term Incentive Compensation Plan   AmSouth Bancorporation hereby amends the 1996 Long Term Incentive Compensation Plan as Amended Effective January 1, 2004 (the “Plan”) as follows:   1.    Effective January 1, 2006, by deleting section 8.7 and substituting in lieu thereof the following:   “8.7. TERMINATION OF EMPLOYMENT. Upon termination of a Participant’s employment, more than one year after the date on which the Participant was granted Shares of Restricted Stock (or such shorter period after that date as may be set forth in the Restricted Stock Award Agreement), by reason of death, Disability, or Retirement, all of such Restricted Shares shall vest immediately subject to any limitations under Code Section 162(m). Each Restricted Stock Award Agreement shall set forth the extent to which the Participant shall have the right to retain unvested Restricted Shares following termination of the Participant’s employment with the Company in all other circumstances. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Shares of Restricted Stock issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of employment; provided, however, that, except in the cases of terminations connected with a Change in Control and terminations by reason of death or Disability, the vesting of Shares of Restricted Stock which qualify for the Performance-Based Exception and which are held by Covered Employees shall occur at the time they otherwise would have, but for the employment termination.”   2.    Effective January 1, 2006, by deleting section 8x.7 and substituting in lieu thereof the following:   “8x.7. TERMINATION OF EMPLOYMENT. Upon termination of a Participant’s employment, more than one year after the date on which the Participant was granted Restricted Stock Units (or such shorter period after that date as may be set forth in the Restricted Stock Unit Award Agreement), by reason of death, Disability, or Retirement, all of such Restricted Stock Units shall vest immediately subject to any limitations under Code Section 162(m) and any contrary provisions set forth in the Restricted Stock Unit Award Agreement. Each Restricted Stock Unit Award Agreement shall set forth the extent to which the Participant shall have the right to retain unvested Restricted Stock Units following termination of the Participant’s employment with the Company in all other circumstances. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Restricted Stock Unit Award Agreement entered into with each Participant, need not be uniform among all Restricted Stock Units issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of employment; provided, however, that, except in the cases of terminations connected with a Change in Control and terminations by reason of death or Disability, the vesting of Restricted Stock Units which qualify for the Performance-Based Exception and which are held by Covered Employees shall occur at the time they otherwise would have, but for the employment termination.”   3.    All of the other terms, provisions and conditions of the Plan not herein amended shall remain in full force and effect.   IN WITNESS WHEREOF, AmSouth Bancorporation on behalf of itself and all participating Employers, has executed this Amendment Number 1 on this 24th day of March, 2006, effective as of January 1, 2006.   AMSOUTH BANCORPORATION By:   /S/    C. DOWD RITTER Its:   Chairman, President, and Chief Executive Officer   ATTEST:   By: /s/ CARL L. GORDAY Its: Assistant Secretary

Exhibit 10.17 KLA-TENCOR CORPORATION EXECUTIVE SEVERANCE PLAN           1.          Introduction           The KLA-Tencor Corporation Executive Severance Plan (the “Plan”) is designed to assure the Company that it will have the continued dedication and availability of, and objective advice and counsel from the Participants and to provide Participants with the compensation and benefits described in the Plan in the event of their termination of employment with the Company under the circumstances described in the Plan.  This document constitutes the written instrument under which the Plan is maintained and supersedes any prior plan or practice of the Company that provides severance benefits  to Participants.           Participants shall be those Employees selected at the sole discretion of the Committee.           2.          Definitions           For purposes of this Plan, the following terms shall have the meanings set forth below:                        (a)         “Average Annual Incentive” shall mean the average annual incentive earned and paid or payable under the Company’s annual incentive plans (including the Executive Performance Bonus Plan and Outstanding Corporate Performance Bonus Plan) for the last three full Company fiscal years, including any portion earned but deferred; provided, however that if a Participant has not been employed by the Company for the last three full fiscal years, the Average Annual Incentive shall mean the Executive’s target bonus.                        (b)         “Base Salary” shall mean the Participant’s annual base salary in effect as of the date of termination but prior to any reduction to such Base Salary that would qualify as a Good Reason termination event.                        (c)         “Board” means the Board of Directors of the Company.                        (d)         “Cause” shall mean (A) outside of a Change of Control Period, the occurrence of any of the following events: (i) the Participant’s conviction of, or plea of nolo contendre to, a felony; (ii) the Participant’s gross misconduct; (iii) any material act of personal dishonesty taken by the Participant in connection with his or her responsibilities as an employee of the Company, or (iv) the Participant’s willful and continued failure to perform the duties and responsibilities of his or her position after there has been delivered to the Participant a written demand for performance from the Board which describes the basis for the Board’s belief that the Participant has not substantially performed his or her duties and provides the Participant with thirty (30) days to take corrective action, and (B) within a Change of Control Period, the occurrence of any of the following events: (i) the Participant’s conviction of, or plea of nolo contendre to, a felony that the Board reasonably believes has had or will have a material detrimental effect on the Company’s reputation or business; (ii) the Participant’s willful gross misconduct with regard to the Company that is materially injurious to the Company; (iii) any act of personal dishonesty taken by the Participant in connection with his or her responsibilities as an employee of the Company with the intention or reasonable expectation that such action may result in substantial personal enrichment of the Participant or (iv) the Participant’s willful and continued failure to perform the duties and responsibilities of his or her position after there has been delivered to the Participant a written demand for performance from the Board which describes the basis for the Board’s belief that the Participant has not substantially performed his or her duties and provides the Participant with thirty (30) days to take corrective action.                        (e)         “Change of Control” shall mean the occurrence of any of the following events: (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becoming the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities; (ii) the sale or disposition by the Company of all or substantially all of the Company’s assets; (iii) the consummation by the Company of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) a change in the composition of the Board, as a result of which fewer than a majority of the directors are Incumbent Directors.  “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the date hereof or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of those directors whose election or nomination was not in connection with any transactions described in subsections (i), (ii) or (iii) or in connection with an actual or threatened proxy contest relating to the election of directors of the Company.                        (f)          “Change in Control Period” shall mean the two (2) year period commencing upon the occurrence of a Change in Control.                        (g)         “Code” shall mean the Internal Revenue Code of 1986, as amended.                        (h)         “Committee” shall mean the Board or such committee appointed by the Board to act as the committee for purposes of administering the Plan.                        (i)         “Company” shall mean KLA-Tencor Corporation, any subsidiary corporations, any successor entities and any parent or subsidiaries of such successor entities.                        (j)         “Effective Date” shall mean January 1, 2006.                        (k)         “Employee” shall mean a full-time regular employee of the Company.                        (l)         “Good Reason” shall mean (A) outside of a Change of Control Period, the occurrence of any of the following events: (i) a material reduction of the Participant’s duties, title, authority or responsibilities; (ii) a reduction in the Participant’s Base Salary, other than a reduction that applies to other executives generally; (iii) a material reduction in the aggregate level of the Participant’s employee benefits, or overall compensation, other than a reduction that applies to other executives generally; or (iv) the relocation of the Participant’s office more than thirty-five (35) miles from its then present location, unless such relocated office is closer to the Participant’s then principal residence, and (B) within a Change of Control Period, the occurrence of any of the events listed above in this paragraph except that any reduction in Participant’s Base Salary shall constitute Good Reason even if such reduction applies to other executives generally;  provided however, that in no event shall Good Reason exist unless the Participant provides the Company with thirty (30) days written notice specifying in detail the grounds for a purported Good Reason resignation and the Company fails to cure the purported grounds for the Good Reason within such thirty (30) day notice period.                        (m)        “Participant” shall mean an Employee who meets the eligibility requirements of Section 3.                        (n)         “Plan” shall mean this KLA-Tencor Corporation Executive Severance Plan.                        (o)         “Plan Year” shall mean the Company’s fiscal year.                        (p)         “Prorated Annual Incentive” shall mean the annual incentive paid to the Participant under the Company’s annual incentive plans (including the Executive Performance Bonus Plan and Outstanding Corporate Performance Bonus Plan) for the most recently completed year, including any portion earned but deferred, multiplied by a fraction, the numerator of which is the number of days in the then current calendar year through the date of the Participant’s termination, and the denominator of which is equal to 365.                        (q)         “Severance Multiple” shall mean the Participant’s Severance Period, expressed in years or fractions thereof (e.g., a Severance Period of two years results in a Severance Multiple of two).  The Severance Multiple may be different for periods outside of the Change in Control Period and within the Change of Control Period.                        (r)         “Severance Payment” shall mean the payment of severance compensation as provided in Section 4 hereof.                        (s)         “Severance Period” shall mean the number of years (which may include fractional years) established by the Committee for an individual Participant.   The Severance Period may be different for periods outside of the Change in Control Period and within the Change of Control Period.           3.          Eligibility                        (a)         Waiver. As a condition of receiving benefits under the Plan, a Participant must sign a general waiver and release (the “Release”) on a form provided by (and in favor of) the Company and not revoke the Release within the time permitted under applicable state or federal law.                        (b)         Participation in Plan.  Each Employee designated by the Committee shall be a Participant in the Plan.  The Committee may designate that a Participant only participate with respect to certain terminations of employment during or related to the Change of Control Period as set forth in Sections 4(c) and 4(d) hereof and not with respect to certain terminations of employment outside of and unrelated to the Change of Control Period, as set forth in Section 4(b) hereof.  A Participant shall cease to be a Participant in the Plan when he or she ceases to be an Employee of the Company (unless such Participant is then entitled to a Severance Payment under the Plan) or when the Plan expires.  A Participant entitled to a Severance Payment shall remain a Participant in the Plan until the full amount of the benefits has been delivered to the Participant, notwithstanding the prior expiration of the Plan.  Upon receipt of all the Severance Payments, the Participant releases the Company from any and all further obligations under the Plan.           4.          Severance Benefits                        (a)          Termination of Employment.  In the event that the Participant’s employment with the Company terminates for any reason, the Participant shall be entitled to any (i) unpaid Base Salary accrued up to the effective date of termination; (ii) unreimbursed business expenses required to be reimbursed to the Participant in accordance with the Company’s business expense reimbursement policy, and (iii) pay for accrued but unused vacation that the Company is legally obligated to pay the Participant.  In addition, if the termination is by the Company other than for Cause or if the Participant resigns for Good Reason, the Participant shall be entitled to the amounts and benefits specified below.                        (b)          Termination by the Company Without Cause or the Participant Terminates for Good Reason.  If the Participant’s employment is terminated by the Company without Cause or if the Participant resigns for Good Reason, and such termination is not during the Change of Control Period, then, subject to Sections 3(a) and 5, the Participant shall receive: (i) an amount equal to the Participant’s Severance Multiple multiplied by the Participant’s Base Salary, payable in equal installments over the Severance Period and in accordance with the Company’s normal payroll policies; (ii) the Participant’s Prorated Annual Incentive, and (iii) accelerated vesting with respect to the Participant’s then outstanding unvested equity awards with the Participant to receive additional vesting credit  to be calculated based on the ratio of the number of months (with such number rounded up to include any fractional months) from the date of grant of any such awards to the number of months (with such number rounded up to include any fractional months) in the total vesting period of any such awards, and (iv) with respect to any of the Participant’s then outstanding options or stock appreciation rights granted on or after the Effective Date (“New Options/SARs”), any New Option/SAR shall have an extended post-termination exercise period equal to the earlier of (A) twelve (12) months from the date of termination, or (B) the original term of such New Option/SAR.                        (c)          Termination Without Cause or Resignation for Good Reason During the Change of Control Period.  If the Participant’s employment is terminated by the Company without Cause or by the Participant for Good Reason, and the termination is within the Change in Control Period, then, subject to Sections 3(a) and 5, Participant shall receive: (i) an amount equal to the Participant’s Severance Multiple multiplied by the sum of the Participant’s Base Salary and Average Annual Incentive, payable in equal installments over the Severance Period and in accordance with the Company’s normal payroll policies; (ii) the Participant’s Prorated Annual Incentive; (iii) 100% accelerated vesting with respect to the Participant’s then outstanding unvested equity awards, (iv)  any New Option/SAR shall have an extended post-termination exercise period equal to the earlier of (A) twelve (12) months from the date of termination, or (B) the original term of such New Option/SAR, and (v) $2000 per month for the duration of the Severance Period.                        (d)          Certain Terminations Prior to a Change of Control.  If a Change in Control occurs, and if the Participant’s employment is terminated within six (6) months prior to the Change in Control and the Participant can prove to the Committee’s satisfaction (as determined by the Committee in its sole discretion) that such termination arose in connection with or anticipation of a Change in Control, then for purposes of the Plan, such termination shall be deemed to have occurred during the Change in Control Period.                        (e)          Golden Parachute Excise Taxes.                                                   (i)          Parachute Payments of Less than 3x Base Amount Plus Fifty Thousand Dollars.  In the event that the benefits provided for in this agreement or otherwise payable to Participant (a) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), (b) would be subject to the excise tax imposed by Section 4999 of the Code, and (c) the aggregate value of such parachute payments, as determined in accordance with Section 280G of the Code and the proposed Treasury Regulations thereunder (or the final Treasury Regulations, if they have then been adopted) is less than the product obtained by multiplying three by Participant’s “base amount” within the meaning of Code Section 280G(b)(3) and adding to such product fifty thousand dollars, then such benefits shall be reduced to the extent necessary (but only to that extent) so that no portion of such benefits will be subject to excise tax under Section 4999 of the Code.                                                   (ii)         Parachute Payments Equal to or Greater than 3x Base Amount Plus Fifty Thousand Dollars.  In the event that the benefits provided for in this agreement or otherwise payable to Participant (a) constitute “parachute payments” within the meaning of Section 280G of the Code, (b) would be subject to the excise tax imposed by Section 4999 of the Code, and (c) the aggregate value of such parachute payments, as determined in accordance with Section 280G of the Code and the proposed Treasury Regulations thereunder (or the final Treasury Regulations, if they have then been adopted) is equal to or greater than the product obtained by multiplying three by Participant’s “base amount” within the meaning of Code Section 280G(b)(3) and adding to such product fifty thousand dollars, then (A) the benefits shall be delivered in full, and (B) the Participant shall receive (1) a payment from the Company sufficient to pay such excise tax and (2) an additional payment from the Company sufficient to pay the federal and state income and employment taxes and additional excise taxes arising from the payments made to the Participant by the Company pursuant to this clause (B).                                                   (iii)        280G Determinations.  Unless the Company and the Participant otherwise agree in writing, the determination of Participant’s excise tax liability and the amount required to be paid or reduced under this Section 4(e) shall be made in writing by the Company’s independent auditors who are primarily used by the Company immediately prior to the Change of Control (the “Accountants”).  For purposes of making the calculations required by this Section 4(e), the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code.  The Company and the Participant shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section.  The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section 5.                        (f)          Internal Revenue Code Section 409A.   Notwithstanding any other provision of this Plan, if the Participant is a “key employee” under Code Section 409A and a delay in making any payment or providing any benefit under this Plan is required by Code Section 409A, such payments shall not be made until the end of six (6) months following the date of the Participant’s separation from service as required by Code Section 409A.                        (g)          Mitigation Required.  Payments and benefits provided for under the Plan shall be reduced by any compensation or benefits earned by the Participant as a result of any earnings or benefits that the Participant may receive from any other source following his or her termination of employment.  Moreover, payments and benefits provided for under the Plan shall be reduced by any payments or benefits received by Participant pursuant to any other plan, policy, agreement or arrangement with the Company.           5.          Covenants not to Compete and not to Solicit.                        (a)          Remedies for Breach.  The Company’s obligations to provide Severance Payments as provided in Section 4 are expressly conditioned upon the Participant’s covenants not to compete and not to solicit as provided herein. In the event the Participant breaches his or her obligations to the Company as provided herein, the Company’s obligations to make Severance Payments to the Participant pursuant to Section 4 shall cease, without prejudice to any other remedies that may be available to the Company.                        (b)          Covenant Not to Compete.  If  a Participant is receiving Severance Payments pursuant to 4 hereof, then for the duration of the Severance Period, the Participant shall not directly engage in (whether as an employee, consultant, proprietor, partner, director or otherwise), or have any ownership interest in, or participate in the financing, operation, management or control of, any person, firm, corporation or business that engages or participates anywhere in the world in providing goods and services similar to those provided by the Company upon the date of the Participant’s termination of employment.  Ownership of less than 3% of the outstanding voting stock of a publicly-held corporation or other entity shall not constitute a violation of this provision.                        (c)          Covenant Not to Solicit.  If a Participant is receiving Severance Payments pursuant to Section 4 hereof, he or she shall not, at any time during the Severance Period, directly or indirectly solicit any individuals to leave the Company’s employ for any reason or interfere in any other manner with the employment relationships at the time existing between the Company and its current or prospective employees.                        (d)          Representations.  The covenants contained in this Section 5 shall be construed as a series of separate covenants, one for each county, city and state (or analogous entity) and country of the world.  If, in any judicial proceeding, a court shall refuse to enforce any of the separate covenants, or any part thereof, then such unenforceable covenant, or such part thereof, shall be deemed eliminated from this Plan for the purpose of those proceedings to the extent necessary to permit the remaining separate covenants, or portions thereof, to be enforced.                        (e)           Reformation.  In the event that the provisions of this Section 5 should ever be deemed to exceed the time or geographic limitations, or scope of this covenant, permitted by applicable law, then such provisions shall be reformed to the maximum time or geographic limitations, as the case may be, permitted by applicable laws.           6.          Employment Status; Withholding                        (a)          Employment Status. This Plan does not constitute a contract of employment or impose on the Participant or the Company any obligation to retain the Participant as an Employee, to change the status of the Participant’s employment, or to change the Company’s policies regarding termination of employment.  The Participant’s employment is and shall continue to be at-will, as defined under applicable law.  If the Participant’s employment with the Company or a successor entity terminates for any reason, the Participant shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Plan or available in accordance with the Company’s established employee plans and practices or other agreements with the Company at the time of termination.                        (b)          Taxation of Plan Payments.  All amounts paid pursuant to this Plan shall be subject to all applicable payroll and withholding taxes.           7.          Arbitration.  Any dispute or controversy that shall arise out of the terms and conditions of the Plan and that cannot be resolved within thirty (30) days of the dispute or controversy through good-faith negotiation or non-binding mediation between the Participant and the Company, shall be subject to binding arbitration in Santa Clara, California before the American Arbitration Association under its National Rules for the Resolution of Employment Disputes, supplemented by the California Rules of Civil Procedure.  The prevailing party in any arbitration shall be entitled to injunctive relief in any court of competent jurisdiction to enforce the arbitration award.           8.          Successors to Company and Participants.                        (a)          Company’s Successors.  Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the obligations under this Plan and agree expressly to perform the obligations under this Plan by executing a written agreement.  For all purposes under this Plan, the term “Company” shall include any successor to the Company’s business and/or assets which executes and delivers the assumption agreement described in this subsection or which becomes bound by the terms of this Plan by operation of law.                        (b)          Participant’s Successors.  All rights of the Participant hereunder shall inure to the benefit of, and be enforceable by, the Participant’s personal or legal representatives, executors, administrators, successors, heirs, devisees and legatees.           9.          Duration, Amendment and Termination                        (a)          Duration.  The initial term of this Plan shall be three (3) years from the Effective Date.  At the end of the initial three (3) year term and any subsequent annual terms, the Plan shall be automatically extended for a one (1) year period unless terminated by the Committee prior to the end of such term, provided that any such termination shall be effective only with respect to future Plan Years.  Participants shall be given notice of a Plan termination within sixty (60) days of the Board’s decision.  A termination of this Plan pursuant to the preceding sentence shall be effective for all purposes, except that such termination shall not affect the right of a Participant whose employment termination date occurred prior to the termination date of the Plan to receive any Severance Payment to which such Participant is then entitled under the terms of the Plan.                        (b)          Change in Control.  In the event of a Change in Control during the term of the Plan, the term of the Plan shall be the Change in Control Period.                        (c)          Amendment and Termination.  The Committee, shall have the discretionary authority to amend the Plan at any time, except no such amendment or termination shall affect the right of a Participant whose employment termination date occurred prior to the termination date of the Plan to receive any Severance Payment to which such Participant is then entitled under the terms of the Plan without the written consent of the Participant.            10.          Plan Administration                        (a)          Plan Administrator.  The Plan shall be administered by the Committee and the Committee shall be responsible for the general administration and interpretation of the Plan and for carrying out its provisions. The Committee shall have such powers as may be necessary to discharge its duties hereunder.                        (b)          Procedures.  The Committee may adopt such rules, regulations and bylaws and shall have the discretionary authority make such decisions as it deems necessary or desirable for the proper administration of the Plan.   Any rule or decision by the Committee shall be conclusive and binding upon all Participants.           11.         Miscellaneous Provisions.                        (a)          Notices and all other communications contemplated by this Plan shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid.  In the case of the Participant, mailed notices shall be addressed to him or her at the home address which he or she most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to the Company’s Vice-President, Human Resources, 160 Rio Robles, San Jose, CA 95134.                        (b)          The invalidity or unenforceability of any provision or provisions of this Plan shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.                        (c)          The rights of any person to payments or benefits under this Plan shall not be made subject to option or assignment, either by voluntary or involuntary assignment or by operation of law, including (without limitation) bankruptcy, garnishment, attachment or other creditor’s process, and any action in violation of this subsection shall be void. However, payments and benefits under the Plan may be reduced or offset by any amount a Participant may owe the Company, to the extent permitted by applicable law.                        (d)          Company may assign its rights under this Plan to an affiliate, and an affiliate may assign its rights under this Plan to another affiliate of the Company or to the Company; provided, however, that no assignment shall be made if the net worth of the assignee is less than the net worth of the Company at the time of assignment; provided, further, that the Company shall guarantee all benefits payable hereunder. In the case of any such assignment, the term “Company” when used in this Plan shall mean the corporation that actually employs the Participant.

LOGO [g33905img2.jpg]   Exhibit 10.ii.w SALE CONTRACT This Sale Contract is made this 24th day of February, 2006 by and between the Salt Business Unit of Cargill, Incorporated with principal offices at 12800 Whitewater Drive #21, Minnetonka, MN 55343 (“Buyer”) and Mosaic USA LLC with its principal offices located at Atria Corporate Center, Suite E490, 3033 Campus Drive, Plymouth, MN 55441 (“Seller”). 1. Seller agrees to sell to Buyer Untreated White Muriate of Potash (the “Commodity”) at the terms and conditions set forth below and as further set forth in Exhibit A, attached hereto and by this reference made a part hereof. 2. This Contract shall be governed by the laws of the State of Florida. Any controversy or claim arising out of or relating to this Contract or the breach thereof shall be settled by arbitration conducted in Tampa, Florida in accordance with the Commercial Arbitration Rules of the American Arbitration Association now in effect. Any determination made by the arbitrator(s) shall be final and binding. Judgment on any award may be entered in any court of competent jurisdiction. The arbitrators shall have no authority to award punitive or exemplary damages. 3. Seller’s weights, taken at shipping points, shall be conclusive. No allowances shall be made for waste, leakage, loss or damage after loading and delivery to carrier. 4. All claims on account of weight, quality, deviation from specifications, loss or damage to the Commodity or otherwise are waived by Buyer unless made in writing and delivered to Seller within fifteen (15) days after shipment of the Commodity. All claims must state with particularity the claim made, the basis thereof and include the support therefor. BUYER FURTHER AGREES THAT SELLER SHALL NOT BE LIABLE FOR SPECIAL, CONSEQUENTIAL, INCIDENTAL, INDIRECT, EXEMPLARY OR PUNITIVE DAMAGES OF ANY KIND, WHETHER GROWING OUT OF THE NON-DELIVERY, USE, INABILITY TO USE, STORAGE, TRANSPORTATION OR HANDLING OF SAID COMMODITY, OR ANY OTHER CAUSE AND WHETHER THE CLAIM IS BASED ON CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER TORT. 5. Buyer represents that it is familiar with the characteristics, qualities and potentialities of the Commodity. Seller shall not be liable for the results obtained in using the Commodity sold hereunder, either along or in combination with other substances, and shall not in any case be liable for injury to or death of persons, damages to property or economic loss resulting from or connected with the use, treatment, storage, transportation or handling of the Commodity, whether alone or in combination with any other substances; and Buyer fully agrees to indemnify Seller with respect to any and all of the foregoing unless damages, injury or death are due to Seller’s negligence or willful misconduct. 6. If Buyer (1) fails to furnish shipping instructions within the time specified, (2) fails to order any shipment hereunder within the time specified, (3) fails to supply adequate credit within the time specified, (4) refuses to accept any shipment properly tendered hereunder, (5) fails to tender any payment hereunder when due, or (6) fails to perform in any other respect according to its obligations set out herein, Seller may, in its sole option, and in addition to any other remedies which Seller may have at law or in equity, (i) extend the time of shipment, if applicable; (ii) cancel this Contract, (iii) terminate this Contract as to the portion thereof in default or as to any unshipped balance, or both; or (iv) resell, after 10 days notice to Buyer, any of the Commodity which has been shipped and which Buyer has wrongfully failed or refused to accept, and receive from the Buyer the difference between the Contract price obtained on resale if the latter be less than the former, as well as any and all indirect, consequential, incidental and special damages. 7. Any payment term requiring Buyer to establish a bank guarantee or a letter of credit shall be a precondition to Seller’s obligation to perform hereunder and any failure to timely establish a bank guarantee or a letter of credit shall constitute a default hereunder. The acceptance by Seller of bank drafts, checks or other media of payment will be subject to immediate collection of the full face value thereof. If, in Seller’s judgment, Buyer’s credit shall become impaired at any time, Seller shall have the right to decline to make shipment hereunder except against a letter of credit, cash advance or other terms acceptable to Seller, in its sole discretion, until such time as Buyer’s credit has been re-established to Seller’s satisfaction. 8. Any and all taxes, assessments, duties, inspection fees or other charges now or hereafter imposed by any government, governmental agency or governmental authority in respect to the sale, delivery, shipment, procurement, manufacture, importation, exportation, possession, ownership or use of the Commodity shall be paid by Buyer. Seller shall be under no obligation to contest   Page 1 of 3 -------------------------------------------------------------------------------- the validity of any tax, assessment, duty, inspection fee or other charge. Buyer shall obtain, at its own cost and expense, any and allocations, franchises, permits, fertilizer registrations, licenses and other grants required by any governmental agency or governmental authority with respect to the Commodity. 9. All demurrage, detention charges, pump charges and special equipment charges are for Buyer’s account. 10. If this Contract provides for deliveries over a period exceeding one month, Seller shall not be obligated to deliver in any 30-day period more than approximately equal monthly quantities, in relation to the total amount of this Contract, and Seller may make shipments of the total amount in such equal monthly quantities. 11. Risk of loss of the Commodity shall shift to Buyer upon delivery of the Commodity upon unload of the Commodity at Buyer’s facility. 12. Buyer represents and warrants that it is solvent as of the date of this Contract. Acceptance of any delivery under this Contract shall constitute a representation of solvency on the delivery date. 13. Seller warrants only that it has good title to the Commodity covered hereby and that the Commodity conforms to the specifications stated herein. SELLER MAKES NO OTHER WARRANTY OF ANY KIND WHATEVER, EXPRESS, IMPLIED OR ARISING FROM COURSE OF DEALING OR USAGE OF TRADE; AND ALL IMPLIED WARRANTIES, INCLUDING WARRANTIES OF QUALITY, MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY DISCLAIMED BY SELLER, THERE ARE NO ORAL AGREEMENTS OR WARRANTIES COLLATERAL TO OR AFFECTING THIS CONTRACT. 14. Neither party shall be liable to the other party in any respect for failure or delay in the fulfillment or performance of this Contract, including but not limited to the obligation to make or accept deliveries, if performance is hindered or prevented, directly or indirectly, by war; riots; embargo; national emergency; inadequate transportation facilities; plant breakdowns; inability to secure fuel, power, material or labor, fire, flood, windstorm or other acts of God; strikes, lockouts or other labor disturbances (whether among employees of Seller, Buyer or others); orders or acts of any government, governmental agency or governmental authority; or any other cause of like or different kind beyond either party’s reasonable control. 15. Unless this sale is made basis Seller’s weight and/or analysis, in the event of a dispute as to weight or analysis of any shipment, an independent determination of weight and/or analysis by a mutually agreed surveyor or laboratory shall be binding upon the parties. If the Commodity meets or exceeds the specification, the cost of such determination shall be for Buyer’s account, in all other cases, the cost shall be for Seller’s account.   16. The Commodity shall be loaded and discharged subject to the rules of the respective mode of transport employed. 17. No terms or conditions in Buyer’s purchase order, acknowledgment form, or other document issued by Buyer which conflict with the terms and conditions hereof, or which increase or modify Seller’s obligations hereunder, shall be binding on Seller unless specifically identified and accepted in writing by Seller. None of the terms and conditions contained in this Contract may be added to, modified, superseded or otherwise altered except with the written consent of the other party. Buyer represents and warrants to Seller that Buyer is a merchant with respect to the purchase of the Commodity. 18. Seller is an equal opportunity employer and is a United States government contractor. Therefore, this Contract is subject to the rules and regulations imposed upon contractors and subcontractors pursuant to 41 C.F.R. Chapters 60 and 61. Unless this Contract is exempt by regulations issued by the Secretary of Labor, there is incorporated herein by reference the following: 41 C.F.R. 60-1.4; 41 C.F.R. 60-250.4 and 61-250.10 and 41 C.F.R. 60-741.4. 19. After thirty days written notice to Buyer, Seller expressly reserves the right to cause the liquidation or cancellation of this Contract because of: (a) the insolvency or financial condition of the Buyer; (b) the commencement of a case or the appointment of or a taking of possession by trustee or custodian under 11 U.S.C. Sections 101 et seq. or successor legislation in effect as of the date hereof; (c) any and all other defaults of the terms and conditions specified herein, either directly or by reference; or (d) the institution or price of quantity controls by any governmental agency or governmental authority which are lower than the price or less than the quality under this Contract. 20. Without limiting Seller’s pursuit of any and all other rights and remedies available to it, it is expressly agreed that this Contract is subject to Seller’s right to set off its obligations hereunder against any debts, claims or obligations owed by Buyer under or in connection with this Contract, or any other contracts between the parties, including but not limited to the right to set off provided in 11 U.S.C. Section 362(b)(6).   Page 2 of 3 -------------------------------------------------------------------------------- 21. Neither party shall have the right to assign this Agreement without the prior written consent of the other party. If any part of this Contract is found to be void or unenforceable, the provisions hereof shall be severable and those provisions which are lawful shall remain in full force and effect.   Additional terms and conditions are set forth in Exhibit A. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the dates set forth after their signatures.   Cargill, Incorporated Salt Business Unit      Mosaic USA LLC By:                                                                                                                         By:                                                                                                               Its:                                                                                                                          Its:                                                                                                                Date:                                                                                                                     Date:                                                                                                              Page 3 of 3

  Exhibit 10.14 SEVERANCE AND GENERAL RELEASE AGREEMENT      This Severance and General Release Agreement (“Agreement”) is made and entered into by and between Charles Bearchell (“Employee”), an individual, and Youbet.com, Inc. (“Youbet”), upon the following terms and conditions: RECITALS      WHEREAS, Employee gave notice to Youbet on July 29, 2005 (the “Resignation Date”) of his decision to resign from employment with Youbet as of a date no later than August 1, 2005 (the “Separation Date”);      WHEREAS, Youbet has accepted Employee’s resignation and agreed to his separation of employment on or before the Separation Date, upon the terms and conditions set forth in this Agreement;      WHEREAS, Youbet will provide Employee with severance pay and certain other consideration, upon the terms and conditions set forth in this Agreement;      WHEREAS, Employee has had the opportunity to consult with legal counsel before signing this Agreement, has read this Agreement and understood its contents, and has signed this Agreement voluntarily.      NOW, THEREFORE, in consideration of the mutual promises, consideration, covenants, and conditions provided for in this Agreement, the adequacy and sufficiency of which are hereby acknowledged, and intending to be legally bound, Youbet and Employee agree as follows: COVENANTS      1. Effective Date. Once signed by both parties, this Agreement shall become binding upon Youbet and Employee on the later to occur of (a) the date upon which this Agreement has been signed by Youbet, or (b) eight (8) days after this Agreement has been signed by Employee (the “Effective Date”).      2. Confidential Information. Employee shall return to Youbet, and shall not take or copy in any form or manner, customer lists, operations manuals, budgets and business plans, strategic plans, financial statements and other financial information concerning Youbet or its customers, and other confidential or proprietary materials or information which are governed by the terms of that certain agreement (the “Confidentiality Agreement”) between Employee and Youbet, a copy of which is attached hereto as Exhibit A, which agreement is hereby ratified by the parties and shall remain in full force and effect.      3. Payments. In consideration for Employee entering into this Agreement and the release contained herein, Youbet agrees as follows:      A. Youbet shall provide Employee with a severance payment in a lump sum equal to 12 months   --------------------------------------------------------------------------------   of his annual base salary ($180,000), less all applicable withholdings, deductions and taxes, to be paid to Employee on the next regularly scheduled pay date following the Effective Date.      B. Youbet shall reimburse Employee for customary outplacement services, up to a maximum amount of $5,000. In order to be eligible for reimbursement, Employee must obtain authorization from Youbet prior to engaging or utilizing any outplacement services (including approval of the costs or expenses to be incurred by Employee) and must submit appropriate documentation of the actual expenses incurred by Employee.      C. Nothing in this Agreement shall be deemed to terminate Youbet’s obligation to reimburse Employee for all reasonable and documented business expenses incurred by him prior to the Separation Date within 30 days after submission of a written expense report (provided that (a) Youbet receives the same within 90 days after the Separation Date, and (b) such expenses were incurred, and the request for reimbursement was submitted, in accordance with Youbet’s policies and procedures, including attaching all receipts and customary documentation).      D. Subject to paragraphs 3A and 3B above, (a) all fringe benefits (such as, if applicable, participation in the 401(k) plan and the continuation of group health and disability insurance and group life insurance benefits) will cease as of the Separation Date, and (b) Employee acknowledges that he has been informed that he may elect the existing group health benefits, effective as of the Separation Date, under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).      E. If Employee elects existing group health benefits under COBRA, Youbet will pay for Employee’s COBRA premiums on a monthly basis through December 31, 2005, or until Employee becomes eligible for group medical insurance with another employer, whichever comes first.      F. Reimbursement for customary outplacement services and payment of Employee’s COBRA premiums, in accordance with paragraphs 3B and 3E above, are further contingent upon Employee providing Youbet with reasonable cooperation, if so requested, with respect to any of Youbet’s business or legal affairs, including but not limited to providing Youbet with information, documents, records and reasonable assistance, and being available upon reasonable notice to meet with Youbet representatives.      4. Release.      A. Except for the obligations set forth in this Agreement, Employee, on behalf of himself, his descendants, ancestors, dependents, heirs, executors, administrators, assigns and successors, and each of them, hereby covenants not to sue, and hereby fully releases and discharges, Youbet, its subsidiaries and affiliates, past and present, and each of them, as well as its and their respective partners, directors, officers, members, agents, attorneys, insurers, employees, stockholders, representatives, assigns and successors, past and present, and each of them (hereinafter collectively referred to as the “Releasees”), with respect to and from any and all claims, wages, demands, rights, liens, agreements, contracts, covenants, actions, suits, causes of action, obligations, debts, costs, expenses, attorneys’ fees, damages, judgments, orders and liabilities of whatever kind or nature in law, equity or otherwise, whether now known or unknown, suspected or unsuspected, which he now owns or holds or he has at any time heretofore owned or held or may in the future hold as against said Releasees, arising out of or in any way connected with his employment relationship with Youbet, or any other transactions, occurrences, acts or - 2 - --------------------------------------------------------------------------------   omissions or any loss, damage or injury whatever, known or unknown, suspected or unsuspected, resulting from any act or omission by or on the part of said Releasees, or any of them, committed or omitted on or before the Effective Date of this Agreement including, without limitation, any claim under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000(e), et. seq.; the Age Discrimination in Employment Act, 29 U.S.C. § 623, et. seq. (“ADEA”); the Americans with Disabilities Act, 42 U.S.C. § 12101(e), et. seq.; the California Fair Employment and Housing Act, California Government Code § 12940, et. seq.; the Employment Retirement Income Security Act of 1974, 29 U.S.C. § 100, et. seq.; the Fair Labor Standards Act, including the Equal Pay Act, 29 U.S.C. § 206 (d) and interpretive regulations; the Family and Medical Leave Act, 29 U.S.C. § 2601, et. seq.; the Worker Adjustment and Retraining Notification Act, 29 U.S.C § 2101, et. seq.; the Pregnancy Discrimination Act, 42 U.S.C. § 2000e (k); the California Family Rights Act, California Government Code §12945.2; the California Labor Code (expressly including § § 203, 206, 218.5 and the Equal Pay Act, § 1197.5); the United States and California Constitutions; and any other federal or state law, severance pay, bonus, retention payment, sick leave, holiday pay, vacation pay, paid time off, life insurance, health or medical insurance or any other employee or fringe benefit, breach of contract, breach of the implied covenant of fair dealing, defamation, slander, workers’ compensation, disability, personal injury, negligence, discrimination, harassment, retaliation, negligent or intentional infliction of emotional distress, fraud, misrepresentation or invasion of privacy; provided, however, that nothing contained herein shall affect Employee’s rights (i) under Youbet’s Stock Option Plan and the 200,000 options granted to Employee there under (including, without limitation, the right to exercise Employee’s 62,500 vested options prior to the 90-day anniversary of the Separation Date), and (ii) to receive (a) his current base salary, and accruals of vacation and PTO, in accordance with existing company policy, through and including the Separation Date, and (b) payment of any accrued and unused vacation and PTO on the Separation Date. Neither this Agreement nor any term herein shall be deemed to be an admission by Youbet, or shall be admissible in any proceeding as evidence, of any violation of any of Youbet’s policies or procedures or any federal, state or local laws or regulations.      It is the intention of Employee in executing this Agreement that the foregoing general release shall be effective as a bar to each and every claim, demand and cause of action specified hereinabove. In furtherance of this intention, Employee hereby expressly waives any and all rights and benefits conferred upon him by the provisions of SECTION 1542 OF THE CALIFORNIA CIVIL CODE, and expressly consents that this Agreement shall be given full force and effect according to each and all of its express terms and provisions, including those related to unknown and unsuspected claims, demands and causes of action, if any, as well as those relating to any other claims, demands and causes of action hereinabove specified. SECTION 1542 provides: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOW KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”      Employee acknowledges that he may hereafter discover claims or facts in addition to or different from those which Employee now knows or believes to exist with respect to the subject matter of this Agreement and which, if known or suspected at the time of executing this Agreement, may have - 3 - --------------------------------------------------------------------------------   materially affected the terms of this release. Nevertheless, Employee hereby waives any right, claim or cause of action that might arise as a result of such different or additional claims or facts. Employee acknowledges that he understands the significance and consequence of the foregoing release and the specific waiver of SECTION 1542.      5. Notice re: Waiver of Age Discrimination Claims      A. Employee understands that this Agreement contains a full release of existing claims, whether currently known or unknown, including age discrimination or other claims under the Age Discrimination in Employment Act, 29 U.S.C. section 623, et. seq., as amended by the Older Workers’ Benefit Protection Act of 1990. Employee is hereby advised to consult with an attorney prior to executing this Agreement and, by executing this Agreement, acknowledges that he has been afforded at least twenty one (21) days to consider this Agreement and to decide whether to enter into this Agreement, and in the event he should decide to execute this Agreement in fewer than 21 days, he has done so with the express understanding that he has been given and declined the opportunity to consider this Agreement for a full 21 days; and.      B. Employee has the right to revoke this Agreement within seven (7) days of signing it. To revoke this Agreement, Employee must send a written letter by certified mail to: Youbet.com, Inc. 5901 De Soto Avenue Woodland Hills, CA 91367 Attention: General Counsel The letter must be postmarked within seven (7) days of the date that Employee signs this Agreement, and shall clearly indicate Employee’s intent to revoke. If Employee revokes this Agreement, he shall not receive the payment or consideration described in paragraphs 3A, 3B and 3E hereinabove.      6. Confidentiality. Employee agrees that the terms and conditions of this Agreement shall be confidential, and that he shall not disclose them to any person (other than his attorneys, professional advisors and any prospective employer (hereinafter referred to as “Employee’s Confidants”), all of whom shall be informed of this confidentiality provision. Notwithstanding anything to the contrary contained herein, Employee may disclose any information concerning this Agreement in response to an order of a court of competent jurisdiction or in response to a lawfully issued subpoena. Neither Employee nor Employee’s Confidants shall disclose the terms, or the circumstances leading up to the execution, of this Agreement to anyone, including, but not limited to, any representative of any print, radio or television media, or any past, present or prospective employee of Youbet (other than Youbet’s senior management, legal, and human resources personnel), or otherwise participate in or contribute to any public discussion concerning, or in any way relating to, this Agreement or the events (including any negotiations) which led to its execution. It is agreed that in the event of a breach of the provisions of this paragraph 7, it would be impractical or extremely difficult to fix actual damages, and the parties therefore agree that in the event of a breach, Employee shall pay to Youbet, as liquidated damages, and not as a penalty, the sum - 4 - --------------------------------------------------------------------------------   of Twenty Thousand Dollars ($20,000.00) which represents reasonable compensation for the loss incurred because of such a breach, plus attorneys’ fees and costs incurred by Youbet.      7. No Lawsuits; Covenant Not to Sue. Employee represents that, prior to signing this Agreement, he has not filed or pursued any complaints, charges or lawsuits of any kind with any court, governmental or administrative agency or arbitrator against Youbet or its officers, directors, agents or employees asserting any claims that are released in this Agreement. To the extent permitted by law, at no time after the Effective Date will Employee file, maintain, or execute upon, or cause or permit the filing or maintenance or execution upon, in any state, federal or foreign court, or before any local, state, federal or foreign administrative agency, or any other tribunal, any judgment, charge, claim or action of any kind, nature and character whatsoever, known or unknown, which he may now have, has ever had, or may in the future have against Releasees which is based in whole or in part on any matter covered by paragraph 4 above.      8. No Representations. Employee represents and agrees that no promises, statements or inducements have been made to him which caused him to sign this Agreement, other than those expressly set forth in this Agreement.      9. No Assignment. Employee warrants and represents that he has not heretofore assigned to any person any released matter or any portion thereof, and shall defend, indemnify and hold harmless Youbet from and against any claim (including the payment of attorneys’ fees and costs actually incurred, whether or not litigation is commenced) based upon, in connection with or arising out of any such assignment made, purported or claimed.      10. No Reinstatement. Employee agrees that he will not at any future time seek employment or reemployment with Youbet or any of its subsidiaries after the Separation Date. Employee further agrees that Releasees shall not be liable for any damages now or in the future because any Releasee refuses to employ Employee for any reason whatsoever.      11. Goodwill and Reputation of Youbet. As of the Effective Date, Employee agrees that he will refrain from taking actions or making statements, written or oral, which disparage or defame the goodwill or reputation of Youbet and its directors, officers and employees, or which could adversely affect the morale of Youbet’s other employees.      12. Successors. This Agreement shall be binding upon Employee and upon his heirs, administrators, representatives and executors, and shall inure to the benefit of the Releasees and their respective heirs, administrators, representatives, executors, successors and assigns.      13. Integration. This Agreement constitutes the entire agreement and understanding concerning Employee’s employment, his separation from the same and the other subject matters addressed herein, and supersedes and replaces all prior negotiations and all agreements, proposed or otherwise, whether written or oral, concerning the subject matter hereof, except that nothing contained herein shall be deemed to terminate, modify or waive any provision of, or the rights and obligations of the parties to, the Confidentiality Agreement. - 5 - --------------------------------------------------------------------------------        14. Severability. If any provision of this Agreement or the application thereof to any situation is held invalid, the invalidity shall not affect the other provisions or applications of this Agreement which can be given effect without such invalid provisions or applications and, to this end, the provisions of this Agreement are declared to be severable.      15. Waiver. No waiver of any breach of any term or provision of this Agreement shall constitute a waiver of any other breach of this Agreement. No waiver shall be binding unless in writing and signed by the party waiving the breach.      16. Amendments. This Agreement may be modified only by a written instrument signed by the parties.      17. Governing Law. This Agreement shall be governed by California law, without regard to such State’s rules concerning conflicts of laws. In connection with this provision of the Agreement, the parties acknowledge that Youbet’s principal place of business is in Woodland Hills, California, and that employment practices concerning the Employee (including the negotiation of this Agreement) were decided upon and carried out to a significant degree in California.      I have read the foregoing Agreement, I accept and agree to the provisions it contains, and I hereby execute it knowingly and voluntarily with full understanding of its consequences. I declare that the foregoing statement is true and correct.                 /s/ Charles Bearchell     Date:   August 2, 2005  Charles Bearchell              Accepted and agreed to by: YOUBET.COM, INC.         By:   /s/ Charles Champion         Name:   Charles Champion        Title:   President and Chief Executive Officer         Date:   August 8, 2005        - 6 -

Exhibit 10.146 MERS MIN: 8000101-0000004464-3 MB ST. LOUIS CHESTNUT, L.L.C., a Delaware limited liability company, as Borrower (Borrower) to DANIEL S. HUFFENUS, as trustee (Trustee) for the benefit of MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., a Delaware corporation, as nominee of Lender, as beneficiary (Beneficiary) -------------------------------------------------------------------------------- DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING This document serves as a Fixture Filing under the Uniform Commercial Code. -------------------------------------------------------------------------------- Dated: As of December 21, 2006   Location: St. Louis, Missouri   County: St. Louis   Borrower’s Federal Tax I.D. No.:       Borrower’s Organizational No.:             PREPARED BY AND UPON RECORDATION RETURN TO:           Katten Muchin Rosenman LLP 401 South Tryon Street, Suite 2600 Charlotte, North Carolina 28202 Attention: Daniel S. Huffenus, Esq.     -------------------------------------------------------------------------------- DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING THIS DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING (this “Security Instrument”) is made as of this 21 day of December, 2006 by MB ST. LOUIS CHESTNUT, L.L.C., a Delaware limited liability company, having its principal place of business at 2901 Butterfield Road, Oak Brook, Illinois 60523, as mortgagor (“Borrower”), to DANIEL S. HUFFENUS, having an address at 401 South Tryon Street, Suite 2600, Charlotte, North Carolina 28202, as trustee (“Trustee”) for the benefit of MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., a Delaware stock corporation, having an address at 1595 Spring Hill Road, Vienna, Virginia 22182 (“MERS”), as nominee of BEAR STEARNS COMMERCIAL MORTGAGE, INC., a New York corporation, having an address at 383 Madison Avenue, New York, New York 10179, as beneficiary (together with its successors and assigns, “Lender”). W I T N E S S E T H: WHEREAS, pursuant to that certain Loan Agreement dated as of the date hereof between Borrower and Lender (as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time, the “Loan Agreement”), Borrower has agreed to borrow from Lender the sum of ONE HUNDRED TWELVE MILLION SIX HUNDRED NINETY FIVE THOUSAND AND NO/100 DOLLARS ($112,695,000.00) (the “Loan”) as evidenced by that certain Promissory Note dated the date hereof made by Borrower to Lender (such Note, together with all extensions, renewals, replacements, restatements or modifications thereof being hereinafter referred to as the “Note”). The final payment of the Note is due on January 1, 2037; WHEREAS, Borrower desires to secure the payment of the Debt (as defined hereinafter) and the performance of all of its obligations under the Note, the Loan Agreement and the other Loan Documents; and WHEREAS, this Security Instrument is that certain “Mortgage” as defined in the Loan Agreement, and payment, fulfillment, and performance by Borrower of its obligations thereunder and under the other Loan Documents are, subject to the limits set forth herein, secured hereby, and each and every term and provision of the Loan Agreement and the Note, including the rights, remedies, obligations, covenants, conditions, agreements, indemnities, representations and warranties of the parties therein, are hereby incorporated by reference herein as though set forth in full and shall be considered a part of this Security Instrument (the Loan Agreement, the Note, this Security Instrument, that certain Assignment of Leases and Rents of even date herewith made by Borrower in favor of MERS, as nominee of Lender (the “Assignment of Leases”) and all other documents evidencing or securing the Debt are hereinafter referred to collectively as the “Loan Documents”). NOW THEREFORE, in consideration of the making of the Loan by Lender and the covenants, agreements, representations and warranties set forth in this Security Instrument: -------------------------------------------------------------------------------- ARTICLE I GRANTS OF SECURITY 1.1           Property Mortgaged. Borrower does hereby irrevocably mortgage, grant, bargain, pledge, assign, warrant, transfer and convey to MERS, as nominee of Lender and its successors and assigns the following property, rights, interests and estates now owned, or hereafter acquired by Borrower (collectively, the “Property”): (a)   Land. The real property described in Exhibit A attached hereto and made a part hereof (the “Land”); (b)  Additional Land. All additional lands, estates and development rights hereafter acquired by Borrower for use in connection with the Land and the development of the Land and all additional lands and estates therein which may, from time to time, by supplemental mortgage or otherwise be expressly made subject to the lien of this Security Instrument; (c)   Improvements. The buildings, structures, fixtures, additions, enlargements, extensions, modifications, repairs, replacements and improvements now or hereafter erected or located on the Land (collectively, the “Improvements”); (d)  Easements. All easements, rights-of-way or use, rights, strips and gores of land, streets, ways, alleys, passages, sewer rights, water, water courses, water rights and powers, air rights and development rights, and all estates, rights, titles, interests, privileges, liberties, servitudes, tenements, hereditaments and appurtenances of any nature whatsoever, in any way now or hereafter belonging, relating or pertaining to the Land and the Improvements and the reversion and reversions, remainder and remainders, and all land lying in the bed of any street, road or avenue, opened or proposed, in front of or adjoining the Land, to the center line thereof and all the estates, rights, titles, interests, dower and rights of dower, curtesy and rights of curtesy, property, possession, claim and demand whatsoever, both at law and in equity, of Borrower of, in and to the Land and the Improvements and every part and parcel thereof, with the appurtenances thereto; (e)   Equipment. All “equipment,” as such term is defined in Article 9 of the Uniform Commercial Code, now owned or hereafter acquired by Borrower, which is used at or in connection with the Improvements or the Land or is located thereon or therein (including, but not limited to, all machinery, equipment, furnishings, and electronic data-processing and other office equipment now owned or hereafter acquired by Borrower and any and all additions, substitutions and replacements of any of the foregoing), together with all attachments, components, parts, equipment and accessories installed thereon or affixed thereto (collectively, the “Equipment”). Notwithstanding the foregoing, Equipment shall not include any property belonging to tenants under leases except to the extent that Borrower shall have any right or interest therein; 2 -------------------------------------------------------------------------------- (f)   Fixtures. All Equipment now owned, or the ownership of which is hereafter acquired, by Borrower which is so related to the Land and Improvements forming part of the Property that it is deemed fixtures or real property under the law of the particular state in which the Equipment is located, including, without limitation, all building or construction materials intended for construction, reconstruction, alteration or repair of or installation on the Property, construction equipment, appliances, machinery, plant equipment, fittings, apparatuses, fixtures and other items now or hereafter attached to, installed in or used in connection with (temporarily or permanently) any of the Improvements or the Land, including, but not limited to, engines, devices for the operation of pumps, pipes, plumbing, cleaning, call and sprinkler systems, fire extinguishing apparatuses and equipment, heating, ventilating, plumbing, laundry, incinerating, electrical, air conditioning and air cooling equipment and systems, gas and electric machinery, appurtenances and equipment, pollution control equipment, security systems, disposals, dishwashers, refrigerators and ranges, recreational equipment and facilities of all kinds, and water, gas, electrical, storm and sanitary sewer facilities, utility lines and equipment (whether owned individually or jointly with others, and, if owned jointly, to the extent of Borrower’s interest therein) and all other utilities whether or not situated in easements, all water tanks, water supply, water power sites, fuel stations, fuel tanks, fuel supply, and all other structures, together with all accessions, appurtenances, additions, replacements, betterments and substitutions for any of the foregoing and the proceeds thereof (collectively, the “Fixtures”). Notwithstanding the foregoing, “Fixtures” shall not include any property which tenants are entitled to remove pursuant to leases except to the extent that Borrower shall have any right or interest therein; (g)  Personal Property. All furniture, furnishings, objects of art, machinery, goods, tools, supplies, appliances, general intangibles, contract rights, accounts, accounts receivable, franchises, licenses, certificates and permits, and all other personal property of any kind or character whatsoever (as defined in and subject to the provisions of the Uniform Commercial Code as hereinafter defined), other than Fixtures, which are now or hereafter owned by Borrower and which are located within or about the Land and the Improvements, together with all accessories, replacements and substitutions thereto or therefor and the proceeds thereof (collectively, the “Personal Property”), and the right, title and interest of Borrower in and to any of the Personal Property which may be subject to any security interests, as defined in the Uniform Commercial Code, as adopted and enacted by the state or states where any of the Property is located (the “Uniform Commercial Code”), superior in lien to the lien of this Security Instrument and all proceeds and products of the above; (h)  Leases and Rents. All leases, subleases or subsubleases, lettings, licenses, concessions or other agreements (whether written or oral) pursuant to which any Person is granted a possessory interest in, or right to use or occupy all or any portion of the Land and the Improvements, and every modification, amendment or other agreement relating to such leases, subleases, subsubleases, or other agreements entered into in connection with such leases, subleases, subsubleases, or other agreements and every guarantee, of the performance and observance of the covenants, conditions and agreements to be performed and observed by the other party thereto, heretofore or hereafter entered into, whether before or after the filing by or against Borrower of any petition for relief under 11 U.S.C. §101 et seq., as the same may be 3 -------------------------------------------------------------------------------- amended from time to time (the “Bankruptcy Code”) (collectively, the “Leases”) and all right, title and interest of Borrower, its successors and assigns therein and thereunder, including, without limitation, cash or securities deposited thereunder to secure the performance by the lessees of their obligations thereunder and all rents, additional rents, revenues, issues and profits (including all oil and gas or other mineral royalties and bonuses) from the Land and the Improvements whether paid or accruing before or after the filing by or against Borrower of any petition for relief under the Bankruptcy Code (collectively, the “Rents”) and all proceeds from the sale or other disposition of the Leases and the right to receive and apply the Rents to the payment of the Debt; (i)   Condemnation Awards. All awards or payments, including interest thereon, which may heretofore and hereafter be made with respect to the Property, whether from the exercise of the right of eminent domain (including but not limited to any transfer made in lieu of or in anticipation of the exercise of the right), or for a change of grade, or for any other injury to or decrease in the value of the Property subject to the terms, provisions and conditions of the Loan Agreement; (j)   Insurance Proceeds. All proceeds in respect of the Property under any insurance policies covering the Property, including, without limitation, the right to receive and apply the proceeds of any insurance, judgments, or settlements made in lieu thereof, for damage to the Property subject to the terms, provisions and conditions of the Loan Agreement; (k)  Tax Certiorari. All refunds, rebates or credits in connection with reduction in real estate taxes and assessments charged against the Property as a result of tax certiorari or any applications or proceedings for reduction; (1)  Conversion. All proceeds of the conversion, voluntary or involuntary, of any of the foregoing including, without limitation, proceeds of insurance and condemnation awards, into cash or liquidation claims; (m) Rights. Subject to the terms, provisions and conditions of the Loan Agreement, the right, in the name and on behalf of Borrower, to appear in and defend any action or proceeding brought with respect to the Property and to commence any action or proceeding to protect the interest of Lender in the Property; (n)  Agreements. All agreements, contracts, certificates, instruments, franchises, permits, licenses, plans, specifications and other documents, now or hereafter entered into, and all rights therein and thereto, respecting or pertaining to the use, occupation, construction, management or operation of the Land and any part thereof and any Improvements or respecting any business or activity conducted on the Land and any part thereof and all right, title and interest of Borrower therein and thereunder, including, without limitation, the right, upon the happening of any default hereunder, to receive and collect any sums payable to Borrower thereunder, in each case, to the extent assignable; 4 -------------------------------------------------------------------------------- (o) Trademarks. All tradenames, trademarks, servicemarks, logos, copyrights, goodwill, books and records and all other general intangibles relating to or used in connection with the operation of the Property (excluding, however, the name “Inland” and any mark registered to The Inland Group, Inc., or any of its affiliates), in each case, to the extent assignable; (p)  Accounts. All reserves, escrows and deposit accounts maintained by Borrower with respect to the Property, including without limitation, all securities, investments, property and financial assets held therein from time to time and all proceeds, products, distributions or dividends or substitutions thereon and thereof; (q)  Letter of Credit. All letter-of-credit rights (whether or not the letter of credit is evidenced by a writing) Borrower now has or hereafter acquires relating to the properties, rights, titles and interests referred to in this Section 1.1; (r)   Tort Claims. All commercial tort claims Borrower now has or hereafter acquires relating to the properties, rights, titles and interests referred to in this Section 1.1; and (s)  Other Rights. Any and all other rights of Borrower in and to the items set forth in Subsections (a) through (r) above. AND without limiting any of the other provisions of this Security Instrument, to the extent permitted by applicable law, Borrower expressly grants to MERS, as nominee of Lender, as secured party, a security interest in the portion of the Property which is or may be subject to the provisions of the Uniform Commercial Code which are applicable to secured transactions; it being understood and agreed that the Improvements and Fixtures are part and parcel of the Land (the Land, the Improvements and the Fixtures collectively referred to as the “Real Property”) appropriated to the use thereof and, whether affixed or annexed to the Real Property or not, shall for the purposes of this Security Instrument be deemed conclusively to be real estate and mortgaged hereby. 1.2                 Assignment of Rents. Borrower hereby absolutely and unconditionally assigns to MERS, as nominee of Lender, all of Borrower’s right, title and interest in and to all current and future Leases and Rents; it being intended by Borrower that this assignment constitutes a present, absolute assignment and not an assignment for additional security only. Nevertheless, subject to the terms of the Assignment of Leases and Section 7.1(h) of this Security Instrument, Lender grants to Borrower a revocable license to collect, receive, use and enjoy the Rents. Borrower shall hold the Rents, or a portion thereof sufficient to discharge all current sums due on the Debt, for use in the payment of such sums. 1.3                 Security Agreement. This Security Instrument is both a real property mortgage and a “security agreement” within the meaning of the Uniform Commercial Code. The Property includes both real and personal property and all other rights and interests, whether tangible or intangible in nature, of Borrower in the Property. By executing and delivering this 5 -------------------------------------------------------------------------------- Security Instrument, Borrower hereby grants to MERS, as nominee of Lender, as security for the Obligations (hereinafter defined), a security interest in the Fixtures, the Equipment and the Personal Property and other property constituting the Property, whether now owned or hereafter acquired, to the full extent that the Fixtures, the Equipment and the Personal Property may be subject to the Uniform Commercial Code (said portion of the Property so subject to the Uniform Commercial Code being called the “Collateral”). THE COLLATERAL IS OR INCLUDES FIXTURES. If an Event of Default shall occur and be continuing, Lender, in addition to any other rights and remedies which it may have, shall have and may exercise immediately and without demand, any and all rights and remedies granted to a secured party upon default under the Uniform Commercial Code, including, without limiting the generality of the foregoing, the right to take possession of the Collateral or any part thereof, and to take such other measures as Lender may deem necessary for the care, protection and preservation of the Collateral. Upon request or demand of Lender after the occurrence and during the continuance of an Event of Default, Borrower shall, at its expense, assemble the Collateral and make it available to Lender at a convenient place (at the Land if tangible property) reasonably acceptable to Lender. Borrower shall pay to Lender on demand any and all expenses, including reasonable legal expenses and attorneys’ fees, incurred or paid by Lender in protecting its interest in the Collateral and in enforcing its rights hereunder with respect to the Collateral after the occurrence and during the continuance of an Event of Default. Any notice of sale, disposition or other intended action by Lender with respect to the Collateral sent to Borrower in accordance with the provisions hereof at least ten (10) business days prior to such action, shall, except as otherwise provided by applicable law, constitute commercially reasonable notice to Borrower. The proceeds of any disposition of the Collateral, or any part thereof, may, except as otherwise required by applicable law, be applied by Lender to the payment of the Debt in such priority and proportions as Lender in its discretion shall deem proper. Borrower’s (Debtor’s) principal place of business is as set forth on page one hereof and the address of Lender (Secured Party) is as set forth on page one hereof. 1.4           Fixture Filing. Certain of the Property is or will become “fixtures” (as that term is defined in the Uniform Commercial Code) on the Land, described or referred to in this Security Instrument, and this Security Instrument, upon being filed for record in the real estate records of the city or county wherein such fixtures are situated, shall operate also as a financing statement filed as a fixture filing in accordance with the applicable provisions of said Uniform Commercial Code upon such of the Property that is or may become fixtures. The Borrower hereby authorizes the Lender at any time and from time to time to file any initial financing statements, amendments thereto and continuation statements with or without the signature of the Borrower as authorized by applicable law, as applicable to all or part of the fixtures or Personal Property. For purposes of such filings, the Borrower agrees to furnish any information requested by the Lender promptly upon request by the Lender. The Borrower also ratifies its authorization for the Lender to have filed any like initial financing statements, amendments thereto and continuation statements, if filed prior to the date of this Security Instrument. The Borrower hereby irrevocably constitutes and appoints the Lender and any officer or agent of the Lender, with full power of substitution, as its true and lawful attorneys- in-fact 6 -------------------------------------------------------------------------------- with full irrevocable power and authority in the place and stead of the Borrower or in the Borrower’s own name to execute in the Borrower’s name any documents and otherwise to carry out the purposes of this Section 1.4, to the extent that the Borrower’s authorization above is not sufficient. To the extent permitted by law, the Borrower hereby ratifies all acts said attorneys-in-fact have lawfully done in the past or shall lawfully do or cause to be done in the future by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable. 1.5                Pledges of Monies Held. Borrower hereby pledges to Lender any and all monies now or hereafter held by Lender or on behalf of Lender, including, without limitation, any sums deposited in the Lockbox Account (if any), the Reserve Funds and Net Proceeds, as additional security for the Obligations until expended or applied as provided in this Security Instrument or in the Loan Agreement. 1.6                Grants to MERS. This Security Instrument and the benefit of the grants, assignments and transfers made to Trustee in this Article I shall inure to MERS solely in its capacity as Lender’s nominee. CONDITIONS TO GRANT TO HAVE AND TO HOLD the above granted and described Property unto Trustee, as trustee for the benefit of MERS, as nominee of Lender, and to its successors in trust and assigns, forever; IN TRUST, WITH THE POWER OF SALE, to secure payment to Lender of the Debt at the time and in the manner provided for in the Note, the Loan Agreement, and this Security Instrument; PROVIDED, HOWEVER, these presents are upon the express condition that, if Borrower shall well and truly pay to Lender the Debt at the time and in the manner provided in the Note, the Loan Agreement and this Security Instrument, shall well and truly perform the Other Obligations as set forth in this Security Instrument and shall well and truly abide by and comply with each and every covenant and condition set forth herein and in the Note, the Loan Agreement and the other Loan Documents, these presents and the estate hereby granted shall cease, terminate and be void, and Trustee shall reconvey the estate hereby granted pursuant to Section 15.10 hereof. ARTICLE II DEBT AND OBLIGATIONS SECURED 2.1           Debt. This Security Instrument and the grants, assignments and transfers made in Article 1 are given for the purpose of securing the debt evidenced by the Note (the “Debt”). 7 -------------------------------------------------------------------------------- 2.2          Other Obligations. This Security Instrument and the grants, assignments and transfers made in Article 1 are also given for the purpose of securing the following (the “Other Obligations”): (a)   the performance of all other obligations of Borrower contained herein; (b)  the performance of each obligation of Borrower contained in the Loan Agreement and any other Loan Document; and (c)   the performance of each obligation of Borrower contained in any renewal, extension, amendment, modification, consolidation, change of, or substitution or replacement for, all or any part of the Note, the Loan Agreement or any other Loan Document. 2.3          Debt and Other Obligations. Borrower’s obligations for the payment of the Debt and the performance of the Other Obligations shall be referred to collectively herein as the “Obligations.” ARTICLE III BORROWER COVENANTS Borrower covenants and agrees that: 3.1                Payment of Debt. Borrower will pay the Debt at the time and in the manner provided in the Loan Agreement, the Note and this Security Instrument. 3.2          Incorporation by Reference. All the covenants, conditions and agreements contained in (a) the Loan Agreement, (b) the Note and (c) all and any of the other Loan Documents, are hereby made a part of this Security Instrument to the same extent and with the same force as if fully set forth herein, and in the event of a conflict between the terms hereof and the terms of the Loan Agreement, the terms of the Loan Agreement shall control. 3.3          Insurance. Borrower shall obtain and maintain, or cause to be maintained, in full force and effect at all times insurance with respect to Borrower and the Property as required pursuant to the Loan Agreement. 3.4          Maintenance of Property. Borrower shall cause the Property to be maintained in a good and safe condition and repair. The Improvements, the Fixtures, the Equipment and the Personal Property shall not be removed, demolished or materially altered except as provided for in the Loan Agreement (except for normal replacement of the Fixtures, the Equipment or the Personal Property, tenant finish and refurbishment of the Improvements) without the consent of Lender as provided for in the Loan Agreement. Borrower shall promptly repair, replace or rebuild any part of the Property which may be destroyed by any casualty, or become damaged, worn or dilapidated and shall complete and pay for any structure at any time in the process of construction or repair on the Land except as set forth in the Loan Agreement. 8 -------------------------------------------------------------------------------- 3.5          Waste. Borrower shall not commit or suffer any waste of the Property or make any change in the use of the Property which will in any way materially increase the risk of fire or other hazard arising out of the operation of the Property, or take any action that might invalidate or allow the cancellation of any Policy, or do or permit to be done thereon anything that may in any way materially impair the value of the Property or the security of this Security Instrument. Borrower will not, without the prior written consent of Lender, permit any drilling or exploration for or extraction, removal, or production of any minerals from the surface or the subsurface of the Land, regardless of the depth thereof or the method of mining or extraction thereof. 3.6          Payment for Labor and Materials. (a) Subject to the terms, provisions and conditions of the Loan Agreement, Borrower will promptly pay or cause to be paid when due all bills and costs for labor, materials, and specifically fabricated materials (“Labor and Material Costs”) incurred in connection with the Property and never permit to exist beyond the due date thereof in respect of the Property or any part thereof any lien or security interest, even though inferior to the liens and the security interests hereof, and in any event never permit to be created or exist in respect of the Property or any part thereof any other or additional lien or security interest other than the liens or security interests hereof except for the Permitted Encumbrances. (b)  Subject to the terms, provisions and conditions of the Loan Agreement, after prior written notice to Lender, Borrower, or any tenant of the Property pursuant to the terms of such tenant’s lease, at its own expense, may contest by appropriate legal proceeding, promptly initiated and conducted in good faith and with due diligence, the amount or validity or application in whole or in part of any of the Labor and Material Costs, provided that (i) no Event of Default has occurred and is continuing under the Loan Agreement, the Note, this Security Instrument or any of the other Loan Documents, (ii) Borrower is permitted to do so under the provisions of any other mortgage, deed of trust or deed to secure debt affecting the Property, (iii) such proceeding shall suspend the collection of the Labor and Material Costs from Borrower and from the Property or Borrower shall have paid all of the Labor and Material Costs under protest, (iv) such proceeding shall be permitted under and be conducted in accordance with the provisions of any other instrument to which Borrower is subject and shall not constitute a default thereunder, (v) neither the Property nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, canceled or lost, and (vi) Borrower shall have furnished the security as may be required in the proceeding, or as may be reasonably requested by Lender to insure the payment of any contested Labor and Material Costs, together with all interest and penalties thereon. 3.7          Performance of Other Agreements. Borrower shall observe and perform each and every term, covenant and provision to be observed or performed by Borrower pursuant to the Loan Agreement, any other Loan Document and any other agreement or recorded instrument affecting or pertaining to the Property and any amendments, modifications or changes thereto. 9 -------------------------------------------------------------------------------- 3.8                Change of Name, Identity or Structure. Except as set forth in the Loan Agreement, Borrower shall not change Borrower’s name, identity (including its trade name or names) or, if not an individual, Borrower’s corporate, partnership or other structure without notifying Lender of such change in writing at least thirty (30) days prior to the effective date of such change and, in the case of a change in Borrower’s structure, without first obtaining the prior written consent of Lender which consent will not be unreasonably withheld, delayed or conditioned provided that such action is otherwise in compliance with the Loan Agreement. Borrower shall execute and deliver to Lender, prior to or contemporaneously with the effective date of any such change, any financing statement or financing statement change reasonably required by Lender to establish or maintain the validity, perfection and priority of the security interest granted herein. At the request of Lender, Borrower shall execute a certificate in form reasonably satisfactory to Lender listing the trade names under which Borrower intends to operate the Property, and representing and warranting that Borrower does business under no other trade name with respect to the Property. 3.9                Title. Borrower has good, marketable and insurable fee simple title to the real property comprising part of the Property and good title to the balance of such Property, free and clear of all Liens (as defined in the Loan Agreement) whatsoever except the Permitted Encumbrances (as defined in the Loan Agreement), such other Liens as are permitted pursuant to the Loan Documents and the Liens created by the Loan Documents. To Borrower’s actual knowledge, the Permitted Encumbrances in the aggregate do not materially adversely affect the value, operation or use of the Property of Borrower’s ability to repay the Loan. This Security Instrument, when properly recorded in the appropriate records, together with any Uniform Commercial Code financing statements required to be filed in connection therewith, will create (a) a valid, perfected first priority lien, security title and security interest on the Property, to the extent such security interests can be perfected by filing; subject only to any applicable Permitted Encumbrances, such other Liens as are permitted pursuant to the Loan Documents and the Liens created by the Loan Documents. There are no claims for payment for work, labor or materials affecting the Property which are past due and are or may become a lien prior to, or of equal priority with, the Liens created by the Loan Documents unless such claims for payments are being contested in accordance with the terms and conditions of this Security Instrument. 3.10              Letter of Credit Rights. If Borrower is at any time a beneficiary under a letter of credit relating to the properties, rights, titles and interests referenced in Section 1.1 of this Security Instrument now or hereafter issued in favor of Borrower, Borrower shall promptly notify Lender thereof and, at the request and option of Lender, Borrower shall, pursuant to an agreement in form and substance satisfactory to Lender, either (i) arrange for the issuer and any confirmer of such letter of credit to consent to an assignment to Lender of the proceeds of any drawing under the letter of credit or (ii) arrange for the Lender to become the transferee beneficiary of the letter of credit, with Lender agreeing, in each case that the proceeds of any drawing under the letter of credit are to be applied as provided in Section 7.2 of this Security Instrument. 10 -------------------------------------------------------------------------------- ARTICLE IV OBLIGATIONS AND RELIANCES 4.1                Relationship of Borrower and Lender. The relationship between Borrower and Lender is solely that of debtor and creditor, and Lender has no fiduciary or other special relationship with Borrower, and no term or condition of any of the Loan Agreement, the Note, this Security Instrument and the other Loan Documents shall be construed so as to deem the relationship between Borrower and Lender to be other than that of debtor and creditor. 4.2         No Reliance on Lender. The general partners, members, principals and (if Borrower is a trust) beneficial owners of Borrower are experienced in the ownership and operation of properties similar to the Property, and Borrower and Lender are relying solely upon such expertise and business plan in connection with the ownership and operation of the Property. Borrower is not relying on Lender’s expertise, business acumen or advice in connection with the Property. 4.3         No Lender Obligations. (a) Notwithstanding the provisions of Subsections 1.1(h) and (n) or Section 1.2, Lender is not undertaking the performance of (i) any obligations under the Leases; or (ii) any obligations with respect to such agreements, contracts, certificates, instruments, franchises, permits, trademarks, licenses and other documents. (b)  By accepting or approving anything required to be observed, performed or fulfilled or to be given to Lender pursuant to this Security Instrument, the Loan Agreement, the Note or the other Loan Documents, including, without limitation, any officer’s certificate, balance sheet, statement of profit and loss or other financial statement, survey, appraisal, or insurance policy, Lender shall not be deemed to have warranted, consented to, or affirmed the sufficiency, the legality or effectiveness of same, and such acceptance or approval thereof shall not constitute any warranty or affirmation with respect thereto by Lender. 4.4         Reliance. Borrower recognizes and acknowledges that in accepting the Loan Agreement, the Note, this Security Instrument and the other Loan Documents, Lender is expressly and primarily relying on the truth and accuracy of the warranties and representations set forth in Section 4.1 of the Loan Agreement without any obligation to investigate the Property and notwithstanding any investigation of the Property by Lender; that such reliance existed on the part of Lender prior to the date hereof, that the warranties and representations are a material inducement to Lender in making the Loan; and that Lender would not be willing to make the Loan and accept this Security Instrument in the absence of the warranties and representations as set forth in Section 4.1 of the Loan Agreement. 11 -------------------------------------------------------------------------------- ARTICLE V FURTHER ASSURANCES 5.1                Recording of Security Instrument, Etc. Borrower forthwith upon the execution and delivery of this Security Instrument and thereafter, from time to time, will cause this Security Instrument and any of the other Loan Documents creating a lien or security interest or evidencing the lien hereof upon the Property and each instrument of further assurance to be filed, registered or recorded in such manner and in such places as may be required by any present or future law in order to publish notice of and fully to protect and perfect the lien or security interest hereof upon, and the interest of Lender in, the Property. Borrower will pay all taxes, filing, registration or recording fees, and all expenses incident to the preparation, execution, acknowledgment and/or recording of the Note, this Security Instrument, the other Loan Documents, any note, deed of trust or mortgage supplemental hereto, any security instrument with respect to the Property and any instrument of further assurance, and any modification or amendment of the foregoing documents, and all federal, state, county and municipal taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of this Security Instrument, any deed of trust or mortgage supplemental hereto, any security instrument with respect to the Property or any instrument of further assurance, and any modification or amendment of the foregoing documents, except where prohibited by law so to do. 5.2         Further Acts, Etc. Borrower will, at the cost of Borrower, and without expense to Lender, do, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, deeds of trust, mortgages, assignments, notices of assignments, transfers and assurances as Lender shall, from time to time, reasonably require, for the better assuring, conveying, assigning, transferring, and confirming unto Lender the property and rights hereby mortgaged, deeded, granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted and transferred or intended now or hereafter so to be, or which Borrower may be or may hereafter become bound to convey or assign to Lender, or for carrying out the intention or facilitating the performance of the terms of this Security Instrument or for filing, registering or recording this Security Instrument, or for complying with all Legal Requirements. Borrower, on demand, will execute and deliver, and in the event it shall fail to so execute and deliver, hereby authorizes Lender to execute in the name of Borrower or without the signature of Borrower to the extent Lender may lawfully do so, one or more financing statements to evidence more effectively the security interest of Lender in the Property. Borrower grants to Lender an irrevocable power of attorney coupled with an interest for the purpose of exercising and perfecting any and all rights and remedies available to Lender at law and in equity following an Event of Default, including without limitation such rights and remedies available to Lender pursuant to this Section 5.2. Nothing contained in this Section 5.2 shall be deemed to create an obligation on the part of Borrower to pay any costs and expenses incurred by Lender in connection with the Securitization or other sale or transfer of the Loan. 5.3         Changes in Tax, Debt, Credit and Documentary Stamp Laws. (a) If any law is enacted or adopted or amended after the date of this Security Instrument which deducts the Debt from the value of the Property for the purpose of taxation or which imposes a tax, either directly or indirectly, on the Debt or Lender’s interest in the Property, Borrower will pay the tax, with interest and penalties thereon, if any.  If Lender is advised by counsel chosen by it that the 12 -------------------------------------------------------------------------------- payment of tax by Borrower would be unlawful or taxable to Lender or unenforceable or provide the basis for a defense of usury then Lender shall have the option by written notice of not less than one hundred eighty (180) days to declare the Debt immediately due and payable. (b)   Borrower will not claim or demand or be entitled to any credit or credits on account of the Debt for any part of the Taxes or Other Charges assessed against the Property, or any part thereof, and no deduction shall otherwise be made or claimed from the assessed value of the Property, or any part thereof, for real estate tax purposes by reason of this Security Instrument or the Debt. If such claim, credit or deduction shall be required by law, Lender shall have the option, by written notice of not less than one hundred eighty (180) days, to declare the Debt immediately due and payable. (c)   If at any time the United States of America, any State thereof or any subdivision of any such State shall require revenue or other stamps to be affixed to the Note, this Security Instrument, or any of the other Loan Documents or impose any other tax or charge on the same, Borrower will pay for the same, with interest and penalties thereon, if any. 5.4          Splitting of Security Instrument. The provisions of Section 9.7 of the Loan Agreement are hereby incorporated by reference herein. 5.5          Replacement Documents. Upon receipt of an affidavit of an officer of Lender as to the loss, theft, destruction or mutilation of the Note or any other Loan Document which is not of public record, and, in the case of any such mutilation, upon surrender and cancellation of such Note or other Loan Document, Borrower will issue, in lieu thereof, a replacement Note or other Loan Document, dated the date of such lost, stolen, destroyed or mutilated Note or other Loan Document in the same principal amount thereof and otherwise of like tenor. ARTICLE VI DUE ON SALE/ENCUMBRANCE 6.1           Lender Reliance. Borrower acknowledges that Lender has examined and relied on the experience of Borrower and its general partners, members, principals and (if Borrower is a trust) beneficial owners in owning and operating properties such as the Property in agreeing to make the Loan, and will continue to rely on Borrower’s ownership of the Property as a means of maintaining the value of the Property as security for repayment of the Debt and the performance of the Other Obligations. Borrower acknowledges that Lender has a valid interest in maintaining the value of the Property so as to ensure that, should Borrower default in the repayment of the Debt or the performance of the Other Obligations, Lender can recover the Debt by a sale of the Property conducted in accordance with the terms of the Loan Documents and applicable law. 13 -------------------------------------------------------------------------------- 6.2          No Sale/Encumbrance. Except as set forth in Section 5.2.13 of the Loan Agreement, Borrower agrees that Borrower shall not, without the prior written consent of Lender, sell, convey, mortgage, grant, bargain, encumber, pledge, assign, or otherwise transfer the Property or any part thereof, including, but not limited to, a grant of an easement, restriction, covenant, reservation or right of way (except as expressly permitted in Section 5.2.13 of the Loan Agreement), or permit the Property or any part thereof to be sold, conveyed, mortgaged, granted, bargained, encumbered, pledged, assigned, or otherwise transferred, unless Lender shall consent thereto in accordance with Section 6.4 hereof. 6.3          Sale/Encumbrance Defined. Except as permitted pursuant to the terms of Section 5.2.13 of the Loan Agreement, a sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer within the meaning of this Article 6 shall be deemed to include, but not be limited to, (a) an installment sales agreement wherein Borrower agrees to sell the Property or any part thereof for a price to be paid in installments; (b) an agreement by Borrower leasing all or a substantial part of the Property for other than actual occupancy by a space tenant thereunder or a sale, assignment or other transfer of, or the grant of a security interest in, Borrower’s right, title and interest in and to any Leases or any Rents; (c) the voluntary or involuntary sale, conveyance, transfer or pledge of the stock of the general partner of Borrower (or the stock of any corporation directly or indirectly controlling such general partner by operation of law or otherwise) or the creation or issuance of new stock by which an aggregate of more than ten percent (10%) of such general partner’s stock shall be vested in a party or parties who are not now stockholders; (d) the voluntary or involuntary sale, conveyance, transfer or pledge of any general or limited partnership interest in Borrower; (e) if Borrower, any general partner of Borrower, any guarantor or any indemnitor is a limited liability company, the change, removal or resignation of a member or managing member or the transfer or pledge of the interest of any member or managing member or any profits or proceeds relating to such interest; or (f) any other transfer prohibited by the terms of the Loan Agreement. 6.4          Lender’s Rights. Except as set forth in the Loan Agreement, Lender reserves the right to condition the consent required hereunder upon (a) a modification of the terms hereof and of the Loan Agreement, the Note or the other Loan Documents; (b) an assumption of the Loan Agreement, the Note, this Security Instrument and the other Loan Documents as so modified by the proposed transferee, subject to the provisions of Section 9.4 of the Loan Agreement; (c) payment of all of Lender’s reasonable expenses incurred in connection with such transfer including, without limitation, the cost of any third party reports, legal fees, rating agency or required legal opinions; (d) the payment of an assumption fee equal to one percent (1%) of the outstanding principal balance of the Loan; (e) the confirmation in writing by the applicable Rating Agencies that the proposed transfer will not, in and of itself, result in a downgrade, qualification or withdrawal of the initial, or, if higher, then current ratings assigned in connection with any Securitization; (f) intentionally deleted; (g) the proposed transferee’s continued compliance with the representations and covenants set forth in Section 4.1.30 and 5.2.12 of the Loan Agreement; (h) the delivery of evidence satisfactory to Lender that the single purpose nature and bankruptcy remoteness of Borrower following such transfers are in accordance with the then current standards of Lender and the Rating Agencies, or (i) such other 14 -------------------------------------------------------------------------------- conditions as Lender shall determine in its reasonable discretion to be in the interest of Lender, including, without limitation, the creditworthiness, reputation and qualifications of the transferee with respect to the Loan and the Property. Lender shall not be required to demonstrate any actual impairment of its security or any increased risk of default hereunder in order to declare the Debt immediately due and payable upon Borrower’s sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the Property without Lender’s consent (to the extent such consent is required hereunder or under the Loan Agreement). This provision shall apply to every sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the Property regardless of whether voluntary or not, or whether or not Lender has consented to any previous sale, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or transfer of the Property. ARTICLE VII RIGHTS AND REMEDIES UPON DEFAULT 7.1           Remedies. Upon the occurrence and during the continuance of any Event of Default, Borrower agrees that Lender or Trustee may take such action, without notice or demand, as it deems advisable to protect and enforce its rights against Borrower and in and to the Property, including, but not limited to, the following actions, each of which may be pursued concurrently or otherwise, at such time and in such order as Lender or Trustee may determine, in its sole discretion, without impairing or otherwise affecting the other rights and remedies of Lender or Trustee: (a)   declare the entire unpaid Debt to be immediately due and payable; (b)   institute proceedings, judicial or otherwise, for the complete foreclosure of this Security Instrument under any applicable provision of law, in which case the Property or any interest therein may be sold for cash or upon credit in one or more parcels or in several interests or portions and in any order or manner; (c)   with or without entry, to the extent permitted and pursuant to the procedures provided by applicable law, institute proceedings for the partial foreclosure of this Security Instrument for the portion of the Debt then due and payable, subject to the continuing lien and security interest of this Security Instrument for the balance of the Debt not then due, unimpaired and without loss of priority; (d)   sell for cash or upon credit the Property or any part thereof and all estate, claim, demand, right, title and interest of Borrower therein and rights of redemption thereof, pursuant to power of sale or otherwise, at one or more sales, as an entity or in parcels, at such time and place, upon such terms and after such notice thereof as may be required or permitted by law; 15 -------------------------------------------------------------------------------- (e)  institute an action, suit or proceeding in equity for the specific performance of any covenant, condition or agreement contained herein, in the Note, the Loan Agreement or in the other Loan Documents; (f)   recover judgment on the Note either before, during or after any proceedings for the enforcement of this Security Instrument or the other Loan Documents; (g)  apply for the appointment of a receiver, trustee, liquidator or conservator of the Property, without notice and without regard for the adequacy of the security for the Debt and without regard for the solvency of Borrower, any guarantor, indemnitor with respect to the Loan or of any Person, liable for the payment of the Debt; (h)  the license granted to Borrower under Section 1.2 hereof shall automatically be revoked and Lender may, to the extent permitted pursuant to procedures provided by applicable law, enter into or upon the Property, either personally or by its agents, nominees or attorneys and dispossess Borrower and its agents and servants therefrom, without liability for trespass, damages or otherwise and exclude Borrower and its agents or servants wholly therefrom, and take possession of all books, records and accounts relating thereto and Borrower agrees to surrender possession of the Property and of such books, records and accounts to Lender upon demand, and thereupon Lender may (i) use, operate, manage, control, insure, maintain, repair, restore and otherwise deal with all and every part of the Property and conduct the business thereat; (ii) complete any construction on the Property in such manner and form as Lender deems advisable; (iii) make alterations, additions, renewals, replacements and improvements to or on the Property; (iv) exercise all rights and powers of Borrower with respect to the Property, whether in the name of Borrower or otherwise, including, without limitation, the right to make, cancel, enforce or modify Leases, obtain and evict tenants, and demand, sue for, collect and receive all Rents of the Property and every part thereof; (v) require Borrower to pay monthly in advance to Lender, or any receiver appointed to collect the Rents, the fair and reasonable rental value for the use and occupation of such part of the Property as may be occupied by Borrower; (vi) require Borrower to vacate and surrender possession of the Property to Lender or to such receiver and, in default thereof, Borrower may be evicted by summary proceedings or otherwise; and (vii) apply the receipts from the Property to the payment of the Debt, in such order, priority and proportions as Lender shall deem appropriate in its sole discretion after deducting therefrom all expenses (including reasonable attorneys’ fees) incurred in connection with the aforesaid operations and all amounts necessary to pay the Taxes, Other Charges, insurance and other expenses in connection with the Property, as well as just and reasonable compensation for the services of Lender, its counsel, agents and employees; (i)   exercise any and all rights and remedies granted to a secured party upon default under the Uniform Commercial Code, including, without limiting the generality of the foregoing: (i) the right to take possession of the Fixtures, the Equipment, the Personal Property or any part thereof, and to take such other measures as Lender may deem necessary for the care, protection and preservation of the Fixtures, the Equipment, the Personal Property, and (ii) request Borrower at its expense to assemble the Fixtures, the Equipment, the Personal Property 16 -------------------------------------------------------------------------------- and make it available to Lender at a convenient place acceptable to Lender. Any notice of sale, disposition or other intended action by Lender with respect to the Fixtures, the Equipment, the Personal Property sent to Borrower in accordance with the provisions hereof at least five (5) days prior to such action, shall constitute commercially reasonable notice to Borrower; (j)   apply any sums then deposited or held in escrow or otherwise by or on behalf of Lender in accordance with the terms of the Loan Agreement, this Security Instrument or any other Loan Document to the payment of the following items in any order in its uncontrolled discretion: (i) Taxes and Other Charges; (ii) Insurance Premiums; (iii) Interest on the unpaid principal balance of the Note; (iv) Amortization of the unpaid principal balance of the Note; (v) All other sums payable pursuant to the Note, the Loan Agreement, this Security Instrument and the other Loan Documents, including without limitation advances made by Lender pursuant to the terms of this Security Instrument; (k)  pursue such other remedies as Lender may have under applicable law; or (1)  apply the undisbursed balance of any Net Proceeds Deficiency deposit, together with interest thereon, to the payment of the Debt in such order, priority and proportions as Lender shall deem to be appropriate in its discretion. In the event of a sale, by foreclosure, power of sale or otherwise, of less than all of Property, this Security Instrument shall continue as a lien and security interest on the remaining portion of the Property unimpaired and without loss of priority. 7.2          Application of Proceeds. The purchase money, proceeds and avails of any disposition of the Property, and or any part thereof, or any other sums collected by Lender pursuant to the Note, this Security Instrument or the other Loan Documents, may be applied by Lender to the payment of the Debt in such priority and proportions as Lender in its discretion shall deem proper. 7.3          Right to Cure Defaults. Upon the occurrence and during the continuance of any Event of Default or if Borrower fails to make any payment or to do any act as herein provided, Lender may, but without any obligation to do so and without notice to or demand on Borrower and without releasing Borrower from any obligation hereunder, make or do the same in such manner and to such extent as Lender may deem necessary to protect the security hereof. Lender is authorized to enter upon action or proceeding to the Property for such purposes, or appear in, defend, or bring any action or proceeding to protect its interest in the Property or to 17 -------------------------------------------------------------------------------- foreclose this Security Instrument or collect the Debt, and the cost and expense thereof (including reasonable attorneys’ fees to the extent permitted by law), with interest as provided in this Section 7.3, shall constitute a portion of the Debt and shall be due and payable to Lender upon demand. All such costs and expenses incurred by Lender in remedying such Event of Default or such failed payment or act or in appearing in, defending, or bringing any such action or proceeding shall bear interest at the Default Rate, for the period after notice from Lender that such cost or expense was incurred to the date of payment to Lender. All such costs and expenses incurred by Lender together with interest thereon calculated at the Default Rate shall be deemed to constitute a portion of the Debt and be secured by this Security Instrument and the other Loan Documents and shall be immediately due and payable upon demand by Lender therefor. 7.4          Actions and Proceedings. Lender has the right to appear in and defend any action or proceeding brought with respect to the Property and to bring any action or proceeding, in the name and on behalf of Borrower, which Lender, in its discretion, decides should be brought to protect its interest in the Property. 7.5          Recovery of Sums Required To be Paid. Lender shall have the right from time to time to take action to recover any sum or sums which constitute a part of the Debt as the same become due, without regard to whether or not the balance of the Debt shall be due, and without prejudice to the right of Lender thereafter to bring an action of foreclosure, or any other action, for a default or defaults by Borrower existing at the time such earlier action was commenced. 7.6          Examination of Books and Records. At reasonable times and upon reasonable notice, Lender, its agents, accountants and attorneys shall have the right to examine the records, books, management and other papers of Borrower which reflect upon their financial condition, at the Property or at any office regularly maintained by Borrower where the books and records are located. Lender and its agents shall have the right to make copies and extracts from the foregoing records and other papers. In addition, at reasonable times and upon reasonable notice, Lender, its agents, accountants and attorneys shall have the right to examine and audit the books and records of Borrower pertaining to the income, expenses and operation of the Property during reasonable business hours at any office of Borrower where the books and records are located. This Section 7.6 shall apply throughout the term of the Note and without regard to whether an Event of Default has occurred or is continuing. Unless an Event of Default shall be continuing, in which event the action contemplated by this Section 7.6 shall be at Borrower’s sole costs and expenses hereunder. 7.7          Other Rights. Etc. (a) The failure of Lender to insist upon strict performance of any term hereof shall not be deemed to be a waiver of any term of this Security Instrument. Borrower shall not be relieved of Borrower’s obligations hereunder by reason of (i) the failure of Lender to comply with any request of Borrower or any guarantor or indemnitor with respect to the Loan to take any action to foreclose this Security Instrument or otherwise enforce any of the provisions hereof or of the Note or the other Loan Documents, (ii) the release, regardless of consideration, of the whole or any part of the Property, or of any person liable for 18 -------------------------------------------------------------------------------- the Debt or any portion thereof, or (iii) any agreement or stipulation by Lender extending the time of payment or otherwise modifying or supplementing the terms of the Note, this Security Instrument or the other Loan Documents. (b)  It is agreed that the risk of loss or damage to the Property is on Borrower, and Lender shall have no liability whatsoever for decline in value of the Property, for failure to maintain the Policies, or for failure to determine whether insurance in force is adequate as to the amount of risks insured. Possession by Lender shall not be deemed an election of judicial relief, if any such possession is requested or obtained, with respect to any Property or collateral not in Lender’s possession. (c)  Lender or Trustee may resort for the payment of the Debt to any other security held by Lender or Trustee in such order and manner as Lender or Trustee, in its discretion, may elect. Lender or Trustee may take action to recover the Debt, or any portion thereof, or to enforce any covenant hereof without prejudice to the right of Lender or Trustee thereafter to foreclose this Security Instrument. The rights of Lender or Trustee under this Security Instrument shall be separate, distinct and cumulative and none shall be given effect to the exclusion of the others. No act of Lender or Trustee shall be construed as an election to proceed under any one provision herein to the exclusion of any other provision. Lender or Trustee shall not be limited exclusively to the rights and remedies herein stated but shall be entitled to every right and remedy now or hereafter afforded at law or in equity. 7.8           Right to Release Any Portion of the Property. Lender may release any portion of the Property for such consideration as Lender may require without, as to the remainder of the Property, in any way impairing or affecting the lien or priority of this Security Instrument, or improving the position of any subordinate lienholder with respect thereto, except to the extent that the obligations hereunder shall have been reduced by the actual monetary consideration, if any, received by Lender for such release, and may accept by assignment, pledge or otherwise any other property in place thereof as Lender may require without being accountable for so doing to any other lienholder. This Security Instrument shall continue as a lien and security interest in the remaining portion of the Property. 7.9          Violation of Laws. If the Property is not in material compliance with Legal Requirements, Lender may impose additional requirements upon Borrower in connection herewith including, without limitation, monetary reserves or financial equivalents. 7.10        Recourse and Choice of Remedies. Notwithstanding any other provision of this Security Instrument or the Loan Agreement, including, without limitation, Section 9.4 of the Loan Agreement, Lender and other Indemnified Parties (as hereinafter defined) are entitled to enforce the obligations of Borrower, any guarantor or indemnitor contained in Sections 9.2, 9.3 and 9.4 herein and Section 9.4 of the Loan Agreement without first resorting to or exhausting any security or collateral and without first having recourse to the Note or any of the Property, through foreclosure or acceptance of a deed in lieu of foreclosure or otherwise, and in the event Lender commences a foreclosure action against the Property, Lender is entitled to pursue a 19 -------------------------------------------------------------------------------- deficiency judgment with respect to such obligations against Borrower and any guarantor or indemnitor with respect to the Loan. The provisions of Sections 9.2, 9.3 and 9.4 herein and Section 9.4 of the Loan Agreement are exceptions to any non-recourse or exculpation provisions in the Loan Agreement, the Note, this Security Instrument or the other Loan Documents, and Borrower and any guarantor or indemnitor with respect to the Loan are fully and personally liable for the obligations pursuant to Sections 9.2, 9.3 and 9.4 herein and Section 9.4 of the Loan Agreement. The liability of Borrower and any guarantor or indemnitor with respect to the Loan pursuant to Sections 9.2, 9.3 and 9.4 herein and Section 9.4 of the Loan Agreement is not limited to the original principal amount of the Note. Notwithstanding the foregoing, nothing herein shall inhibit or prevent Lender from foreclosing or exercising any other rights and remedies pursuant to the Loan Agreement, the Note, this Security Instrument and the other Loan Documents, whether simultaneously with foreclosure proceedings or in any other sequence. A separate action or actions may be brought and prosecuted against Borrower pursuant to Sections 9.2, 9.3 and 9.4 herein and Section 9.4 of the Loan Agreement, whether or not action is brought against any other Person or whether or not any other Person is joined in the action or actions. In addition, Lender shall have the right but not the obligation to join and participate in, as a party if it so elects, any administrative or judicial proceedings or actions initiated in connection with any matter addressed in Article 8 or Section 9.4 herein. 7.11         Right of Entry. Upon reasonable notice to Borrower, Lender and its agents shall have the right to enter and inspect the Property at all reasonable times. 7.12         Release. Upon payment of all sums secured by this Security Instrument, the Lender shall release this Security Instrument. The Borrower shall pay the Lender’s reasonable costs incurred in releasing this Security Instrument. 7.13         References to Lender. Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, all references herein to “Lender” shall be deemed to collectively or individually (as the context requires) refer to Lender or to MERS, acting on behalf of and at the sole direction of Lender in its capacity as Lender’s nominee, as each of their interests may appear; provided, that, unless Lender, in its sole discretion, shall determine otherwise, only Lender (and not MERS) shall be deemed to be “Lender” with respect to (a) any consent or similar approval right granted to Lender hereunder or under any of the other Loan Documents (including, without limitation, any consent or similar approval right that is deemed granted if not approved or denied within a specified time period), (b) any items, documents or other information required to be delivered to Lender hereunder or under any of the other Loan Documents (other than notices expressly required to be sent to MERS) or (c) any future funding or other obligations of Lender to Borrower or any affiliate of Borrower hereunder or under any of the other Loan Documents, if any. 7.14         Failure to Act. Notwithstanding anything to the contrary contained herein or in any of the other Loan Documents, the failure of MERS to take any action hereunder or under any of the other Loan Documents shall not (a) be deemed to be a waiver of any term or 20 -------------------------------------------------------------------------------- condition of this Security Instrument or any of the other Loan Documents, or (b) adversely affect any rights of Lender hereunder or under any of the other Loan Documents. ARTICLE VIII ENVIRONMENTAL HAZARDS 8.1           Environmental Representations and Warranties. To the best of Borrower’s knowledge, and except as otherwise disclosed by that certain Environmental Site Assessment of the Property delivered to Lender (such report is referred to below as the “Environmental Report”), Borrower hereby represents and warrants (a) to the best of Borrower’s knowledge, based on the Environmental Report, there are no Hazardous Substances (defined below) or underground storage tanks in, on, or under the Property, except those that are both (i) in compliance with Environmental Laws (defined below) and with permits issued pursuant thereto and (ii) fully disclosed to Lender in writing pursuant the Environmental Report; (b) there are no past, present or threatened Releases (defined below) of Hazardous Substances in, on, under or from the Property which has not been fully remediated in accordance with Environmental Law; (c) there is no threat of any Release of Hazardous Substances migrating to the Property; (d) there is no past or present non-compliance with Environmental Laws, or with permits issued pursuant thereto, in connection with the Property which has not been fully remediated in accordance with Environmental Law; (e) Borrower does not know of, and has not received, any written or oral notice or other communication from any Person (including but not limited to a governmental entity) relating to Hazardous Substances or Remediation (defined below) thereof, of possible liability of any Person pursuant to any Environmental Law, other environmental conditions in connection with the Property, or any actual or potential administrative or judicial proceedings in connection with any of the foregoing; and (f) Borrower has truthfully and fully provided to Lender, in writing, any and all information relating to conditions in, on, under or from the Property that is known to Borrower and that is contained in Borrower’s files and records, including but not limited to any reports relating to Hazardous Substances in, on, under or from the Property and/or to the environmental condition of the Property. “Environmental Law” means any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law, relating to protection of human health or the environment, relating to Hazardous Substances, relating to liability for or costs of Remediation or prevention of Releases of Hazardous Substances or relating to liability for or costs of other actual or threatened danger to human health or the environment. Environmental Law includes, but is not limited to, the following statutes, as amended, any successor thereto, and any regulations promulgated pursuant thereto, and any state or local statutes, ordinances, rules, regulations and the like addressing similar issues: the Comprehensive Environmental Response, Compensation and Liability Act; the Emergency Planning and Community Right-to-Know Act; the Hazardous Substances Transportation Act; the Resource Conservation and Recovery Act (including but not limited to Subtitle I relating to underground storage tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking Water Act; the Occupational Safety 21 -------------------------------------------------------------------------------- and Health Act; the Federal Water Pollution Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the Endangered Species Act; the National Environmental Policy Act; and the River and Harbors Appropriation Act. Environmental Law also includes, but is not limited to, any present and future federal, state and local laws, statutes, ordinances, rules, regulations and the like, as well as common law: conditioning transfer of property upon a negative declaration or other approval of a governmental authority of the environmental condition of the Property; requiring notification or disclosure of Releases of Hazardous Substances or other environmental condition of the Property to any governmental authority or other Person, whether or not in connection with transfer of title to or interest in property; imposing conditions or requirements in connection with permits or other authorization for lawful activity; relating to nuisance, trespass or other causes of action related to the Property; and relating to wrongful death, personal injury, or property or other damage in connection with any physical condition or use of the Property. “Hazardous Substances” include but are not limited to any and all substances (whether solid, liquid or gas) defined, listed, or otherwise classified as pollutants, hazardous wastes, hazardous substances, hazardous materials, extremely hazardous wastes, or words of similar meaning or regulatory effect under any present or future Environmental Laws or that may have a negative impact on human health or the environment, including but not limited to petroleum and petroleum products, asbestos and asbestos-containing materials, polychlorinated biphenyls, lead, radon, radioactive materials, flammables and explosives, but excluding substances of kinds and in amounts ordinarily and customarily used or stored in similar properties for the purpose of cleaning or other maintenance or operations and otherwise in compliance with all Environmental Laws. “Release” of any Hazardous Substance includes but is not limited to any release, deposit, discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing or other movement of Hazardous Substances. “Remediation” includes but is not limited to any response, remedial, removal, or corrective action, any activity to cleanup, detoxify, decontaminate, contain or otherwise remediate any Hazardous Substance, any actions to prevent, cure or mitigate any Release of any Hazardous Substance, any action to comply with any Environmental Laws or with any permits issued pursuant thereto, any inspection, investigation, study, monitoring, assessment, audit, sampling and testing, laboratory or other analysis, or evaluation relating to any Hazardous Substances or to anything referred to in Article 8. 8.2           Environmental Covenants. Borrower covenants and agrees that: (a) all uses and operations on or of the Property, whether by Borrower or any other Person, shall be in compliance with all Environmental Laws and permits issued pursuant thereto; (b) Borrower shall not cause or permit the Release of any Hazardous Substances in, on, under or from the Property; (c) there shall be no Hazardous Substances in, on, or under the Property, except those that are both (i) in compliance with all Environmental Laws and with permits issued pursuant thereto and (ii) fully disclosed to Lender in writing; (d) Borrower shall keep the Property free and clear of all liens and other encumbrances imposed pursuant to any Environmental Law, whether due to any 22 -------------------------------------------------------------------------------- act or omission of Borrower or any other Person (the “Environmental Liens”); (e) Borrower shall, at its sole cost and expense, fully and expeditiously cooperate in all activities pursuant to Section 8.3 below, including but not limited to providing all relevant information and making knowledgeable persons available for interviews; (f) Borrower shall, at its sole cost and expense, perform any environmental site assessment or other investigation of environmental conditions in connection with the Property, pursuant to any reasonable written request of Lender made in the event that Lender has a good faith reason to believe based upon credible evidence or information that an environmental hazard exists on or affects the Property (including but not limited to sampling, testing and analysis of soil, water, air, building materials and other materials and substances whether solid, liquid or gas), and share with Lender the reports and other results thereof, and Lender and other Indemnified Parties shall be entitled to rely on such reports and other results thereof; (g) Borrower shall, at its sole cost and expense, comply with all reasonable written requests of Lender made in the event that Lender has a good faith reason to believe based upon credible evidence or information that an environmental hazard exists on or affects the Property to (i) reasonably effectuate Remediation of any condition (including but not limited to a Release of a Hazardous Substance) in, on, under or from the Property; (ii) comply with any Environmental Law; (iii) comply with any directive from any governmental authority; and (iv) take any other reasonable action necessary or appropriate for protection of human health or the environment; (h) Borrower shall not do or knowingly allow any tenant or other user of the Property to do any act that materially increases the dangers to human health or the environment, poses an unreasonable risk of harm to any Person (whether on or off the Property), impairs or may impair the value of the Property, is contrary to any requirement of any insurer, constitutes a public or private nuisance, constitutes waste, or violates any covenant, condition, agreement or easement applicable to the Property; and (i) Borrower shall immediately notify Lender in writing of (A) any presence or Releases or threatened Releases of Hazardous Substances in, on, under, from or migrating towards the Property; (B) any non-compliance with any Environmental Laws related in any way to the Property; (C) any actual or potential Environmental Lien; (D) any required or proposed Remediation of environmental conditions relating to the Property; and (E) any written or oral notice or other communication of which Borrower becomes aware from any source whatsoever (including but not limited to a governmental entity) relating in any way to Hazardous Substances or Remediation thereof, possible liability of any Person pursuant to any Environmental Law, other environmental conditions in connection with the Property, or any actual or potential administrative or judicial proceedings in connection with anything referred to in this Article 8. 8.3           Lender’s Rights. In the event that Lender has a good faith reason to believe based upon credible evidence or information that an environmental hazard exists on the Property, upon reasonable notice from Lender, Borrower shall, at Borrower’s expense, promptly cause an engineer or consultant satisfactory to Lender to conduct any environmental assessment or audit (the scope of which shall be determined in Lender’s sole and absolute discretion) and take any samples of soil, groundwater or other water, air, or building materials or any other invasive testing requested by Lender and promptly deliver the results of any such assessment, audit, sampling or other testing; provided, however, if such results are not delivered to Lender within a reasonable period, upon reasonable notice to Borrower, Lender and any other Person 23 -------------------------------------------------------------------------------- designated by Lender, including but not limited to any receiver, any representative of a governmental entity, and any environmental consultant, shall have the right, but not the obligation, to enter upon the Property at all reasonable times to assess any and all aspects of the environmental condition of the Property and its use, including but not limited to conducting any environmental assessment or audit (the scope of which shall be determined in Lender’s sole and absolute discretion) and taking samples of soil, groundwater or other water, air, or building materials, and reasonably conducting other invasive testing. Borrower shall cooperate with and provide access to Lender and any such Person designated by Lender. ARTICLE IX INDEMNIFICATION 9.1           General Indemnification. Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all claims, suits, liabilities (including, without limitation, strict liabilities), actions, proceedings, obligations, debts, damages, losses, costs, expenses, diminutions in value, fines, penalties, charges, fees, expenses, judgments, awards, amounts paid in settlement, punitive damages, foreseeable and unforeseeable consequential damages, of whatever kind or nature (including but not limited to reasonable attorneys’ fees and other costs of defense) (collectively, the “Losses”) imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any one or more of the following: (a) ownership of this Security Instrument, the Property or any interest therein or receipt of any Rents; (b) any amendment to, or restructuring of, the Debt, and the Note, the Loan Agreement, this Security Instrument, or any other Loan Documents; (c) any and all lawful action that may be taken by Lender in connection with the enforcement of the provisions of this Security Instrument or the Loan Agreement or the Note or any of the other Loan Documents, whether or not suit is filed in connection with same, or in connection with Borrower, any guarantor or indemnitor and/or any partner, joint venturer or shareholder thereof becoming a party to a voluntary or involuntary federal or state bankruptcy, insolvency or similar proceeding; (d) any accident, injury to or death of persons or loss of or damage to property occurring in, on or about the Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (e) performance of any labor or services or the furnishing of any materials or other property in respect of the Property or any part thereof; (f) the failure of any person to file timely with the Internal Revenue Service an accurate Form 1099-B, Statement for Recipients of Proceeds from Real Estate, Broker and Barter Exchange Transactions, which may be required in connection with this Security Instrument, or to supply a copy thereof in a timely fashion to the recipient of the proceeds of the transaction in connection with which this Security Instrument is made; (g) any failure of the Property to be in compliance with any Legal Requirements; (h) the enforcement by any Indemnified Party of the provisions of this Article 9; (i) any and all claims and demands whatsoever which may be asserted against Lender by reason of any alleged obligations or undertakings on its part to perform or discharge any of the terms, covenants, or agreements contained in any Lease; (j) the payment of any commission, charge or brokerage fee to anyone claiming through Borrower which may be payable in connection with 24 -------------------------------------------------------------------------------- the funding of the Loan; or (k) any misrepresentation made by Borrower in this Security Instrument or any other Loan Document. Notwithstanding the foregoing, Borrower shall not be liable to the Indemnified Parties under this Section 9.1 for any Losses to which the Indemnified Parties may become subject to the extent such Losses arise by reason of the gross negligence, illegal acts, fraud or willful misconduct of the Indemnified Parties or Losses resulting from acts or omissions arising after a completed foreclosure of the Property or acceptance by Lender of a deed in lieu of foreclosure. Any amounts payable to Lender by reason of the application of this Section 9.1 shall become immediately due and payable and shall bear interest at the Default Rate from the date loss or damage is sustained by Lender until paid. For purposes of this Article 9, the term “Indemnified Parties” means Lender and any Person who is or will have been involved in the origination of the Loan, any Person who is or will have been involved in the servicing of the Loan secured hereby, any Person in whose name the encumbrance created by this Security Instrument is or will have been recorded, persons and entities who may hold or acquire or will have held a full or partial interest in the Loan secured hereby (including, but not limited to, investors or prospective investors in the Securities, as well as custodians, trustees and other fiduciaries who hold or have held a full or partial interest in the Loan secured hereby for the benefit of third parties) as well as the respective directors, officers, shareholders, partners, employees, agents, servants, representatives, contractors, subcontractors, affiliates, subsidiaries, participants, successors and assigns of any and all of the foregoing (including but not limited to any other Person who holds or acquires or will have held a participation or other full or partial interest in the Loan, whether during the term of the Loan or as a part of or following a foreclosure of the Loan and including, but not limited to, any successors by merger, consolidation or acquisition of all or a substantial portion of Lender’s assets and business). 9.2           Mortgage and/or Intangible Tax. Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all Losses imposed upon or incurred by or asserted against any Indemnified Parties and directly or indirectly arising out of or in any way relating to any tax on the making and/or recording of this Security Instrument, the Note or any of the other Loan Documents, but excluding any income, franchise or other similar taxes. Borrower hereby agrees that, in the event that it is determined that any documentary stamp taxes or intangible personal property taxes are due hereon or on any mortgage or promissory note executed in connection herewith (including, without limitation, the Note), Borrower shall indemnify and hold harmless the Indemnified Parties for all such documentary stamp and/or intangible taxes, including all penalties and interest assessed or charged in connection therewith. 9.3           ERISA Indemnification. Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all Losses (including, without limitation, reasonable attorneys’ fees and costs incurred in the investigation, defense, and settlement of Losses incurred in correcting any prohibited transaction or in the sale of a prohibited loan, and in obtaining any individual prohibited transaction exemption under ERISA that may be required, in Lender’s sole discretion) that Lender may incur, directly or indirectly, as a result of a default under Sections 4.1.9 or 5.2.12 of the Loan Agreement. 25 -------------------------------------------------------------------------------- 9.4           Environmental Indemnification. Borrower shall, at its sole cost and expense, protect, defend, indemnify, release and hold harmless the Indemnified Parties from and against any and all Losses and costs of Remediation (whether or not performed voluntarily), engineers’ fees, environmental consultants’ fees, and costs of investigation (including but not limited to sampling, testing, and analysis of soil, water, air, building materials and other materials and substances whether solid, liquid or gas) imposed upon or incurred by or asserted against any Indemnified Parties, and directly or indirectly arising out of or in any way relating to any one or more of the following: (a) any presence of any Hazardous Substances in, on, above, or under the Property; (b) any past, present or threatened Release of Hazardous Substances in, on, above, under or from the Property; (c) any activity by Borrower, any Person affiliated with Borrower or any tenant or other user of the Property in connection with any actual, proposed or threatened use, treatment, storage, holding, existence, disposition or other Release, generation, production, manufacturing, processing, refining, control, management, abatement, removal, handling, transfer or transportation to or from the Property of any Hazardous Substances at any time located in, under, on or above the Property; (d) any activity by Borrower, any Person affiliated with Borrower or any tenant or other user of the Property in connection with any actual or proposed Remediation of any Hazardous Substances at any time located in, under, on or above the Property, whether or not such Remediation is voluntary or pursuant to court or administrative order, including but not limited to any removal, remedial or corrective action; (e) any past or present non-compliance or violations of any Environmental Laws (or permits issued pursuant to any Environmental Law) in connection with the Property or operations thereon, including but not limited to any failure by Borrower, any Affiliate of Borrower or any tenant or other user of the Property to comply with any order of any Governmental Authority in connection with any Environmental Laws; (f) the imposition, recording or filing of any Environmental Lien encumbering the Property; (g) any administrative processes or proceedings or judicial proceedings in any way connected with any matter addressed in Article 8 and this Section 9.4; (h) any past, present or threatened injury to, destruction of or loss of natural resources in any way connected with the Property, including but not limited to costs to investigate and assess such injury, destruction or loss; (i) any acts of Borrower or other users of the Property in arranging for disposal or treatment, or arranging with a transporter for transport for disposal or treatment, of Hazardous Substances owned or possessed by such Borrower or other users, at any facility or incineration vessel owned or operated by another Person and containing such or any similar Hazardous Substance; (j) any acts of Borrower or other users of the Property, in accepting any Hazardous Substances for transport to disposal or treatment facilities, incineration vessels or sites selected by Borrower or such other users, from which there is a Release, or a threatened Release of any Hazardous Substance which causes the incurrence of costs for Remediation; (k) any personal injury, wrongful death, or property damage arising under any statutory or common law or tort law theory, including but not limited to damages assessed for the maintenance of a private or public nuisance or for the conducting of an abnormally dangerous activity on or near the Property; and (1) any misrepresentation or inaccuracy in any representation or warranty or material breach or failure to perform any covenants or other obligations pursuant to Article 8. Notwithstanding the foregoing, Borrower shall not be liable under this Section 9.4 for any Losses or costs of Remediation to which the Indemnified Parties may become subject to the extent such 26 -------------------------------------------------------------------------------- Losses or costs of Remediation arise by reason of the gross negligence, illegal acts, fraud or willful misconduct of the Indemnified Parties or Losses resulting from acts or omissions arising after a completed foreclosure of the Property or acceptance by Lender of a deed in lieu of foreclosure. This indemnity shall survive any termination, satisfaction or foreclosure of this Security Instrument, subject to the provisions of Section 10.5. 9.5           Duty to Defend; Attorneys’ Fees and Other Fees and Expenses. Upon written request by any Indemnified Party, Borrower shall defend such Indemnified Party (if requested by any Indemnified Party, in the name of the Indemnified Party) by attorneys and other professionals approved by the Indemnified Parties. Notwithstanding the foregoing, if the defendants in any such claim or proceeding include both Borrower and any Indemnified Party and Borrower and such Indemnified Party shall have reasonably concluded that there are any legal defenses available to it and/or other Indemnified Parties that are different from or additional to those available to Borrower, such Indemnified Party shall have the right to select separate counsel to assert such legal defenses and to otherwise participate in the defense of such action on behalf of such Indemnified Party, provided that no compromise or settlement shall be entered without Borrower’s consent, which consent shall not be unreasonably withheld. Upon demand, Borrower shall pay or, in the sole and absolute discretion of the Indemnified Parties, reimburse, the Indemnified Parties for the payment of reasonable fees and disbursements of attorneys, engineers, environmental consultants, laboratories and other professionals in connection therewith. ARTICLE X WAIVERS 10.1         Waiver of Counterclaim. To the extent permitted by applicable law, Borrower hereby waives the right to assert a counterclaim, other than a mandatory or compulsory counterclaim, in any action or proceeding brought against it by Lender arising out of or in any way connected with this Security Instrument, the Loan Agreement, the Note, any of the other Loan Documents, or the Obligations. 10.2         Marshalling and Other Matters. To the extent permitted by applicable law, Borrower hereby waives, to the extent permitted by law, the benefit of all appraisement, valuation, stay, extension, reinstatement and redemption laws now or hereafter in force and all rights of marshalling in the event of any sale hereunder of the Property or any part thereof or any interest therein. Further, Borrower hereby expressly waives any and all rights of redemption from sale under any order or decree of foreclosure of this Security Instrument on behalf of Borrower, and on behalf of each and every person acquiring any interest in or title to the Property subsequent to the date of this Security Instrument and on behalf of all persons to the extent permitted by applicable law. 10.3         Waiver of Notice. To the extent permitted by applicable law, Borrower shall not be entitled to any notices of any nature whatsoever from Lender or Trustee except with 27 -------------------------------------------------------------------------------- respect to matters for which this Security Instrument specifically and expressly provides for the giving of notice by Lender or Trustee to Borrower and except with respect to matters for which Lender or Trustee is required by applicable law to give notice, and Borrower hereby expressly waives the right to receive any notice from Lender or Trustee with respect to any matter for which this Security Instrument does not specifically and expressly provide for the giving of notice by Lender or Trustee to Borrower. 10.4         Waiver of Statute of Limitations. To the extent permitted by applicable law, Borrower hereby expressly waives and releases to the fullest extent permitted by law, the pleading of any statute of limitations as a defense to payment of the Debt or performance of its Other Obligations. 10.5         Survival. The indemnifications made pursuant to Sections 9.3 and 9.4 herein and the representations and warranties, covenants, and other obligations arising under Article 8, shall continue indefinitely in full force and effect and shall survive and shall in no way be impaired by: any satisfaction or other termination of this Security Instrument, any assignment or other transfer of all or any portion of this Security Instrument or Lender’s interest in the Property (but, in such case, shall benefit both Indemnified Parties and any assignee or transferee), any exercise of Lender’s rights and remedies pursuant hereto including but not limited to foreclosure or acceptance of a deed in lieu of foreclosure, any exercise of any rights and remedies pursuant to the Loan Agreement, the Note or any of the other Loan Documents, any transfer of all or any portion of the Property (whether by Borrower or by Lender following foreclosure or acceptance of a deed in lieu of foreclosure or at any other time), any amendment to this Security Instrument, the Loan Agreement, the Note or the other Loan Documents, and any act or omission that might otherwise be construed as a release or discharge of Borrower from the obligations pursuant hereto. Notwithstanding anything to the contrary contained in this Security Instrument or the other Loan Documents, Borrower shall not have any obligations or liabilities under the indemnification under Section 9.4 herein or other indemnifications with respect to Hazardous Substances contained in the other Loan Documents with respect to those obligations and liabilities that Borrower can prove arose solely from Hazardous Substances that (i) were not present on or a threat to the Property prior to the date that Lender or its nominee acquired title to the Property, whether by foreclosure, exercise by power of sale, acceptance of a deed-in-lieu of foreclosure or otherwise and (ii) were not the result of any act or negligence of Borrower or any of Borrower’s affiliates, agents or contractors. ARTICLE XI EXCULPATION The provisions of Section 9.4 of the Loan Agreement are hereby incorporated by reference into this Security Instrument to the same extent and with the same force as if fully set forth herein. 28 -------------------------------------------------------------------------------- ARTICLE XII NOTICES All notices or other written communications hereunder shall be delivered in accordance with Section 10.6 of the Loan Agreement. Notices to MERS hereunder and under any of the other Loan Documents shall include a copy thereof to Lender (to be addressed and delivered in accordance with this Section 10.6 of the Loan Agreement) and shall be sent as follows: MERS Commercial P.O. Box 2300 Flint, Michigan 48501-2300 ARTICLE XIII APPLICABLE LAW 13.1         GOVERNING LAW. THIS SECURITY INSTRUMENT SHALL BE DEEMED TO BE A CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE STATE WHERE THE PROPERTY IS LOCATED AND SHALL IN ALL RESPECTS BE GOVERNED, CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE WHERE THE PROPERTY IS LOCATED. 13.2         Usury Laws. Notwithstanding anything to the contrary, (a) all agreements and communications between Borrower and Lender are hereby and shall automatically be limited so that, after taking into account all amounts deemed interest, the interest contracted for, charged or received by Lender shall never exceed the maximum lawful rate or amount, (b) in calculating whether any interest exceeds the lawful maximum, all such interest shall be amortized, prorated, allocated and spread over the full amount and term of all principal indebtedness of Borrower to Lender, and (c) if through any contingency or event, Lender receives or is deemed to receive interest in excess of the lawful maximum, any such excess shall be deemed to have been applied toward payment of the principal of any and all then outstanding indebtedness of Borrower to Lender, or if there is no such indebtedness, shall immediately be returned to Borrower. 13.3         Provisions Subject to Applicable Law. All rights, powers and remedies provided in this Security Instrument may be exercised only to the extent that the exercise thereof does not violate any applicable provisions of law and are intended to be limited to the extent necessary so that they will not render this Security Instrument invalid, unenforceable or not entitled to be recorded, registered or filed under the provisions of any applicable law. If any term of this Security Instrument or any application thereof shall be invalid or unenforceable, the 29 -------------------------------------------------------------------------------- remainder of this Security Instrument and any other application of the term shall not be affected thereby. ARTICLE XIV DEFINITIONS All capitalized terms not defined herein shall the respective meanings set forth in the Loan Agreement. Unless the context clearly indicates a contrary intent or unless otherwise specifically provided herein, words used in this Security Instrument may be used interchangeably in singular or plural form and the word “Borrower” shall mean “each Borrower and any subsequent owner or owners of the Property or any part thereof or any interest therein,” the word “Lender” shall mean “Lender and any subsequent holder of the Note,” the word “Note” shall mean “the Note and any other evidence of indebtedness secured by this Security Instrument,” the word “Property” shall include any portion of the Property and any interest therein, and the phrases “attorneys’ fees”, “legal fees” and “counsel fees” shall include any and all attorneys’, paralegal and law clerk fees and disbursements, including, but not limited to, fees and disbursements at the pre-trial, trial and appellate levels incurred or paid by Lender in protecting its interest in the Property, the Leases and the Rents and enforcing its rights hereunder. ARTICLE XV MISCELLANEOUS PROVISIONS 15.1         No Oral Change. This Security Instrument, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought. 15.2         Successors and Assigns. This Security Instrument shall be binding upon and inure to the benefit of Borrower and Lender and their respective successors and assigns forever. 15.3         Inapplicable Provisions. If any term, covenant or condition of the Loan Agreement, the Note or this Security Instrument is held to be invalid, illegal or unenforceable in any respect, the Loan Agreement, the Note and this Security Instrument shall be construed without such provision. 15.4         Headings, Etc. The headings and captions of various Sections of this Security Instrument are for convenience of reference only and are not to be construed as defining or limiting, in any way, the scope or intent of the provisions hereof. 30 -------------------------------------------------------------------------------- 15.5         Number and Gender. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa. 15.6         Subrogation. If any or all of the proceeds of the Note have been used to extinguish, extend or renew any indebtedness heretofore existing against the Property, then, to the extent of the funds so used, Lender shall be subrogated to all of the rights, claims, liens, titles, and interests existing against the Property heretofore held by, or in favor of, the holder of such indebtedness and such former rights, claims, liens, titles, and interests, if any, are not waived but rather are continued in full force and effect in favor of Lender and are merged with the lien and security interest created herein as cumulative security for the repayment of the Debt, the performance and discharge of Borrower’s obligations hereunder, under the Loan Agreement, the Note and the other Loan Documents and the performance and discharge of the Other Obligations. 15.7         Entire Agreement. The Note, the Loan Agreement, this Security Instrument and the other Loan Documents constitute the entire understanding and agreement between Borrower and Lender with respect to the transactions arising in connection with the Debt and supersede all prior written or oral understandings and agreements between Borrower and Lender with respect thereto. Borrower hereby acknowledges that, except as incorporated in writing in the Note, the Loan Agreement, this Security Instrument and the other Loan Documents, there are not, and were not, and no persons are or were authorized by Lender to make, any representations, understandings, stipulations, agreements or promises, oral or written, with respect to the transaction which is the subject of the Note, the Loan Agreement, this Security Instrument and the other Loan Documents. 15.8         Limitation on Lender’s Responsibility. No provision of this Security Instrument shall operate to place any obligation or liability for the control, care, management or repair of the Property upon Lender, nor shall it operate to make Lender responsible or liable for any waste committed on the Property by the tenants or any other Person, or for any dangerous or defective condition of the Property, or for any negligence in the management, upkeep, repair or control of the Property resulting in loss or injury or death to any tenant, licensee, employee or stranger. Nothing herein contained shall be construed as constituting Lender a “mortgagee in possession.” 15.9         Substitution of Trustee. Lender shall have, and is hereby granted by Borrower, the irrevocable power to appoint one or more individuals as a substitute Trustee hereunder, to be exercised at any time hereafter without notice and without specifying any reason therefor, by filing for record in the office where this Mortgage is recorded a deed of appointment or similar instrument, and said power of appointment of one or more individuals as successor Trustee may be exercised as often and whenever Lender deems it advisable. The exercise of said power of appointment, no matter how often, shall not be an exhaustion thereof. Upon the recordation of such deed of appointment or similar instrument, the individual Trustee so appointed shall thereupon, without any further act, become fully vested with identically the same 31 -------------------------------------------------------------------------------- title and estate in and to the Property and with all the rights, powers, trusts and duties of their, his, hers or its predecessor in the trust hereunder with like effect as if originally named as Trustee. Whenever in this Security Instrument reference is made to Trustee, it shall be construed to mean each individual appointed as Trustee for the time being, whether original or successors or successor in trust. All title, estate, rights, powers, trusts and duties hereunder given or appertaining to or devolving upon Trustee shall be in each of the individuals appointed as Trustee so that any action hereunder or purporting to be hereunder of any one of the individuals appointed as Trustee shall for all purposes be considered to be, and as effective as, the action of Trustee. 15.10       Reconveyance. Upon written request of the Lender and surrender of this Security Instrument and the Note to Trustee for cancellation or endorsement, and upon payment of its fees and charges, Trustee shall reconvey, without warranty, all or any part of the property then subject to this Security Instrument. Any reconveyance, whether full or partial, may be made in terms to “the person or persons legally entitled thereto,” and the recitals in such reconveyance of any matters or facts shall be conclusive proof of the truthfulness thereof. ARTICLE XVI STATE SPECIFIC PROVISIONS Principles of Construction. In the event of any inconsistencies between the terms and conditions of this Article 16 and the terms and conditions of this Security Instrument, the terms and conditions of this Article 16 shall control and be binding. 16.1         Missouri Provisions. (a)           The right of Lender to collect and receive the Rents from the Property or to take possession of the Property or to exercise any of the rights or powers herein granted to Lender shall, to the extent not prohibited by law, also extend to the period from and after the filing of any suit or the taking of other actions to foreclose the lien of this Security Instrument, including any period allowed by law for the redemption of the Property after any foreclosure sale. (b)           Upon the occurrence of an Event of Default, Lender shall, at its option and without notice or demand, be entitled to enter upon the Property to take immediate possession of the personalty and the fixtures. Lender may sell all or any portion of the personalty and the fixtures at public or private sale in accordance with the Uniform Commercial Code as adopted in Missouri or in accordance with the foreclosure advertisement and sale provisions under this Security Instrument. Borrower agrees that a commercially reasonable manner of disposition of the personalty and the fixtures upon a default shall include, without limitation and at the option of Lender, the sale of personalty and the fixtures, in whole or in part, concurrently with a foreclosure sale of the Property in accordance with the provisions of this Security Instrument. In the further event Lender shall dispose of any or all of the personalty and the fixtures after default, the proceeds of disposition shall be applied in the following order:    (i) to the expenses of 32 -------------------------------------------------------------------------------- retaking, holding, preparing for sale, selling and the like; (ii) to the reasonable attorneys’ fees and legal expenses incurred by Lender; and (iii) to the satisfaction of the indebtedness secured hereby. Borrower hereby waives any right of redeeming the personalty and the fixtures whether foreclosure with regard thereto is coterminous with or separate from foreclosure of the Property. (c)           If an Event of Default shall occur and be continuing, Trustee is authorized and empowered to proceed to sell the Property as one parcel in its entirety or any part thereof, either in mass or in parcels, at the absolute discretion of Trustee, at public vendue, to the highest bidder for cash at the door of the courthouse or other location then customarily employed for that purpose in the county (or city) where the Property is located, first giving notice of the time and place of sale, and a description of the property to be sold, by advertisement published and as is provided by the laws of the State of Missouri then in effect, and upon sale shall execute and deliver a deed of conveyance of the property sold to the purchaser or purchasers thereof, and any statement or recital of fact in such deed, in relation to the non-payment of the money hereby secured to be paid, existence of the indebtedness so secured, notice of advertisement, sale and receipt of the proceeds of sale, shall be prima facie evidence of the truth of such statements or recital, and Trustee shall receive the proceeds of such sale out of which Trustee shall dispose of the proceeds: FIRST, to discharge the expenses of executing this Security Instrument, including a reasonable commission to Trustee, and all proper costs, charges and expenses of the sale and reasonable attorney’s fees in connection with the sale; SECOND, to discharge all taxes, levies and assessments with costs and interest thereon from the date of advance to the date of sale at an interest rate equal to the Default Rate, including all monies previously advanced for taxes, levies and assessments and the due pro rata portion thereof for the current year; THIRD, to discharge in the order of their priority, if any, the remaining debts and obligations secured by this Security Instrument, and liens of record inferior thereon, it being agreed that the Loan shall, upon such sale being made before the maturity date of the Loan, be and become immediately due and payable; less the expense, if any, of obtaining possession upon the delivery and surrender to the purchaser of possession of the Property; and FOURTH, the residue of the proceeds shall be paid to Borrower and its assigns, provided, however, that as to such residue Trustee shall not be bound by any inheritance, devise, conveyance, assignment or lien upon Borrower’s equity, without actual notice prior to distribution. Lender may bid and become purchaser at any sale under this Security Instrument. The power of sale hereunder shall not be exhausted by any one or more such sales (or attempts to sell) as to all or any portion of the Property remaining unsold, but shall continue unimpaired until all of the Property has been sold or all indebtedness of Borrower to Lender secured hereby shall have been paid in full. (d)           Trustee may sell and convey the Property under the power aforesaid, although Trustee has been, may now be or may hereafter be attorney or agent of Lender in respect to the loan made by Lender evidenced by the Loan Documents or this Security Instrument or in respect to any matter of business whatsoever. (e)           Trustee hereby lets the Property to Borrower until a sale be had under the foregoing provisions, upon the following terms and conditions, such letting being to-wit: Borrower and every and all persons claiming or possessing the Property, or any part thereof, by, through or under Borrower shall pay rent therefor during said term at the rate of one cent per 33 -------------------------------------------------------------------------------- month, payable monthly upon demand, and shall surrender immediate peaceable possession of the Property, to the purchaser thereof, under such sale, without notice or demand therefor. Should possession not be surrendered as provided for herein the purchaser shall be entitled to institute proceedings for possession as aforesaid. (f)            In the event any foreclosure advertisement is running or has run at the time of such appointment of a successor trustee, the successor trustee may consummate the advertised sale without the necessity of republishing such advertisement. The making of oath or giving of bond by Trustee or any successor trustee is expressly waived. (g)           Statutory Notice – Insurance. The following notice is given pursuant to Section 427.120 of the Missouri Revised Statutes; nothing contained herein shall be deemed to limit or modify the terms of this Security Instrument. UNLESS YOU PROVIDE EVIDENCE OF THE INSURANCE COVERAGE REQUIRED BY THIS SECURITY INSTRUMENT, WE MAY PURCHASE INSURANCE AT YOUR EXPENSE TO PROTECT OUR INTERESTS IN YOUR COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT, PROTECT YOUR INTERESTS. THE COVERAGE THAT WE PURCHASE MAY NOT PAY ANY CLAIM THAT YOU MAKE OR ANY CLAIM THAT IS MADE AGAINST YOU IN CONNECTION WITH THE COLLATERAL. YOU MAY LATER CANCEL ANY INSURANCE PURCHASED BY US, BUT ONLY AFTER PROVIDING EVIDENCE THAT YOU HAVE OBTAINED INSURANCE AS REQUIRED BY THIS SECURITY INSTRUMENT. IF WE PURCHASE INSURANCE FOR THE COLLATERAL, YOU WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING THE INSURANCE PREMIUM, INTEREST AND OTHER CHARGES WE MAY IMPOSE IN CONNECTION WITH THE PLACEMENT OF THE INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE INSURANCE. THE COSTS OF THE INSURANCE MAY BE ADDED TO YOUR TOTAL OUTSTANDING BALANCE OR OBLIGATION. THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST OF INSURANCE THAT YOU MAY BE ABLE TO OBTAIN ON YOUR OWN. [NO FURTHER TEXT ON THIS PAGE] 34 -------------------------------------------------------------------------------- IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by Borrower the day and year first above written.     BORROWER:                 MB ST. LOUIS CHESTNUT, L.L.C., a Delaware limited liability company                 By: Minto Builders (Florida), Inc., a Florida corporation, its sole member                             By: /s/ Valerie Medina             Name: Valerie Medina           Title: Assistant Secretary   35 -------------------------------------------------------------------------------- ACKNOWLEDGMENT STATE OF  Illinois COUNTY OF  DuPage The foregoing instrument was acknowledged before me this 18 day of December 2006 by Valerie Medina as Asst. Secretary of MINTO BUILDERS (FLORIDA), INC., a Florida corporation, which is the sole member of MB ST. LOUIS CHESTNUT, L.L.C., a Delaware limited liability company, who executed the foregoing instrument, and acknowledged the execution thereof to be her free act and deed as such officer on behalf of said corporation in its capacity as general partner of said limited partnership, in its capacity as sole member and manager of said limited liability company for the use and purposes therein mentioned, and the said instrument is the act and deed of said corporation, limited partnership and limited liability company. She is personally known to me or who has produced                                     as identification. My commission expires:   ROSE MARIE ALLRED   [Notarial Seal]   Print Name:     Notary Public     Serial Number:                             OFFICIAL SEAL   ROSE MARIE ALLRED   NOTARY PUBLIC - STATE OF ILLINOIS   MY COMMISSION EXPlRES:05/21/09   36 -------------------------------------------------------------------------------- EXHIBIT A LEGAL DESCRIPTION (the legal description follows on next page) --------------------------------------------------------------------------------

EXHIBIT 10.1 FOUNDATION COAL HOLDINGS, INC. 2004 STOCK INCENTIVE PLAN RESTRICTED STOCK AGREEMENT THIS AGREEMENT, is made effective as of                     , 2005 (the “Date of Grant”), between Foundation Coal Holdings, Inc. (the “Company”) and Director (the “Participant”). R E C I T A L S: WHEREAS, the Company has adopted the Foundation Coal Holdings, Inc. 2004 Stock Incentive Plan, as from time to time amended (the “Plan”), the terms of which are hereby incorporated by reference and made a part of this Agreement; and WHEREAS, the Committee has determined that it would be in the best interests of the Company and its stockholders to grant the restricted Shares provided for herein to Participant pursuant to the Plan and the terms set forth herein; NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties agree as follows: 1. Definitions. Whenever the following terms are used in this Agreement, they shall have the meanings set forth below. Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan. (a) Cause: “Cause” shall mean (i) Participant’s continued failure substantially to perform Participant’s duties (other than as a result of total or partial incapacity due to physical or mental illness) for a period of ten (10) days following written notice by the Company to Participant of such failure, (ii) dishonesty in the performance of Participant’s duties, (iii) Participant’s conviction of, or plea of nolo contendere to, a crime constituting (x) a felony under the laws of the United States or any state thereof or (y) a misdemeanor involving moral turpitude or (iv) Participant’s willful malfeasance or willful misconduct in connection with Participant’s duties or any act or omission which is injurious to the financial condition or business reputation of the Company or any of its Affiliates. (b) Disability: “Disability” shall mean Participant becomes physically or mentally incapacitated and is therefore unable for a period of six (6) consecutive months or for an aggregate of nine (9) months in any twenty-four (24) consecutive month period to perform Participant’s duties. 2. Grant of Shares. The Company hereby grants to Participant 3,000 Shares effective the date hereof, subject to adjustment as set forth in the Plan. The Participant agrees to be bound by all terms and conditions of this Agreement and the Plan, as amended from time to time.   1 -------------------------------------------------------------------------------- 3. Restrictions on Transfer of Shares. Except as otherwise determined by the Committee, the Shares cannot be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of during the Restriction Period, and any such purported assignment, transfer, pledge or encumbrance shall be void and unenforceable against the Company; provided that the designation of a beneficiary shall not constitute an assignment, transfer, pledge or encumbrance. For purposes of this Agreement, the Restriction Period shall mean the period from the Date of Grant until the fifth (5th) anniversary of the Date of Grant; provided, however, that , subject to the Participant’s continued service as a director of the Company, the Restriction Period shall lapse with respect to twenty percent (20%) of the Shares on December 31, 2005 and with respect to an additional twenty percent (20%) on each anniversary thereof, until the Shares are 100% vested. Notwithstanding the foregoing, upon a Change in Control, the Restriction Period shall lapse with respect to the Restricted Stock, and the Restricted Stock shall thereby be free of such restrictions. 4. Forfeiture of Shares. If Participant’s Employment shall terminate prior to the expiration of the Restriction Period for any reason, any Shares with respect to which the Restriction Period has not yet lapsed (the “Restricted Stock”) shall, upon such termination of service, be forfeited by Participant to the Company, without the payment of any consideration or further consideration by the Company, and neither Participant nor any successors, heirs, assigns, or personal representatives of Participant shall thereafter have any further rights or interest in the Restricted Stock or under this Agreement, and Participant’s name shall thereupon be deleted from the list of the Company’s stockholders with respect to the Restricted Stock. 5. Dividends; Voting. If Participant is a shareholder of record on any applicable record date, Participant shall receive any dividends on the Shares granted hereunder when paid regardless of whether the restrictions imposed by Paragraph 3 hereof have lapsed. If Participant is a shareholder of record on any applicable record date, Participant shall have the right to vote the Shares granted hereunder regardless of whether the restrictions imposed by Paragraph 3 hereof have lapsed. 6. No Right to Continued Employment. Neither the Plan nor this Agreement shall be construed as giving Participant the right to be retained as a non-employee director of the Company or any Affiliate. 7. Legend on Certificates. The certificates representing the Shares shall be subject to such stop transfer orders and other restrictions as the Committee may determine is required by the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which such Shares are listed, any applicable federal or state laws and the Company’s Certificate of Incorporation and Bylaws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. In addition, the certificates representing the Shares shall be issued bearing a restrictive legend that sets forth the restrictions on transfer, forfeiture provisions and other terms and conditions to which the Shares are subject pursuant to this Agreement. 8. Securities Laws. Upon the acquisition of any Shares hereunder, Participant will make or enter into such written representations, warranties and agreements as the Committee may reasonably request in order to comply with applicable securities laws or with   2 -------------------------------------------------------------------------------- this Agreement. The granting of Shares hereunder shall be subject to all applicable laws, rules and regulations and to such approvals of any governmental agencies as may be required. 9. Notices. Any notice under this Agreement shall be addressed to the Company in care of its General Counsel, addressed to the principal executive office of the Company and to Participant at the address last appearing in the personnel records of the Company for Participant or to either party at such other address as either party hereto may hereafter designate in writing to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee. 10. Entire Agreement. This Agreement, together with the Stockholders Agreement and the Plan, embodies the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior oral or written agreements and understandings relating to the subject matter hereof. 11. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to conflicts of laws. 12. Signature in Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto.   FOUNDATION COAL HOLDINGS, INC. By:       Its:   Sr. VP Safety and Human Resources    Director   3

  Exhibit 10.23 SEVERANCE AGREEMENT      THIS SEVERANCE AGREEMENT (this “Agreement”), dated as of November 28, 2005, is made and entered by and between Novell, Inc., a Delaware corporation (the “Company”), and Jeffrey M. Jaffe (the “Executive”). WITNESSETH:      WHEREAS, the Executive is a senior executive of the Company and is expected to make major contributions to the short- and long-term profitability, growth and financial strength of the Company;      WHEREAS, the Board has determined that appropriate arrangements should be taken to encourage the continued attention and dedication of Executive to his assigned duties without distraction;      WHEREAS, in consideration of the Executive’s employment with the Company, the Company desires to provide Executive with certain compensation and benefits set forth in this Agreement in order to ameliorate the financial and career impact on Executive in the event the Executive’s employment with the Company is terminated for a reason related to, or unrelated to, a Change in Control (as defined below) of the Company;      NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the Company and the Executive agree as follows: 1. Certain Defined Terms. In addition to terms defined elsewhere herein, the following terms have the following meanings when used in this Agreement with initial capital letters:      (a) “Base Pay” means the greater of (i) Executive’s annual base salary rate, exclusive of bonuses, commissions and other Incentive Pay, as in effect immediately preceding Executive’s Termination Date, or (ii) Executive’s highest annual base salary rate, exclusive of bonuses, commissions and other Incentive Pay, as in effect in any of the three (3) full calendar years preceding Executive’s Termination Date.      (b) “Board” means the Board of Directors of the Company.      (c) “Cause”:           (i) For purposes of Involuntary Termination Prior to a Change in Control, means a determination by the Company’s Chief Executive Officer or Senior Vice President-People, in either case with legal advice and consultation of the   --------------------------------------------------------------------------------   Company’s Senior Vice President — General Counsel, acting in his authority as the Company’s general counsel, that Executive has committed any of the following acts:                (A) continued violations of the Executive’s obligations which are demonstrably willful or deliberate on the Executive’s part after there has been delivered to the Executive a written demand for performance from the Company which describes the basis for the Company’s belief that the Executive has willfully or deliberately violated his obligations to the Company;                (B) engaging in willful misconduct which is injurious to the Company or any Subsidiary;                (C) committing a felony, an act of fraud against or the misappropriation of property belonging to the Company or any Subsidiary;                (D) breaching, in any material respect, terms of any confidentiality or proprietary information agreement between the Executive and the Company; or                (E) committing a material violation of the Company’s Code of Business Ethics or Employee Conduct and Standards Policy, as either or both are in effect from time to time by the Company.           (ii) For purposes of Involuntary Termination Associated With a Change in Control, means a determination by the Board that Executive has committed any of the following acts:                (A) the Executive has been convicted of a criminal violation involving fraud, embezzlement or theft in connection with his duties or in the course of her employment with the Company or any Subsidiary; or                (B) the Executive has committed intentional wrongful disclosure of secret processes or confidential information of the Company or any Subsidiary; and any such act has been demonstrably and materially harmful to the Company. For purposes of this subparagraph (B), no act on the part of the Executive will be deemed “intentional” if it was due primarily to an error in judgment or negligence, but will be deemed “intentional” if done by the Executive not in good faith and without reasonable belief that the Executive’s action was in the best interest of the Company. Notwithstanding the foregoing, the Executive will not be deemed to have been terminated for “Cause” under this subsection (ii) unless and until there has been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the members of the Board then in office at a meeting of the Board, finding that, in the good faith opinion of the Board, the Executive has committed an act constituting “Cause,” as herein defined, and specifying the particulars thereof in detail. Prior to any such determination, Executive shall be provided with reasonable notice of such pending determination and Executive, together with his counsel (if the Executive chooses to have counsel present at such meeting), shall be provided with the opportunity -2- --------------------------------------------------------------------------------   to be heard before the Board makes any such determination. Nothing herein will limit the right of the Executive or his beneficiaries to contest the validity or propriety of any such determination.      (d) “Change in Control” means the occurrence of any of the following events:           (i) the acquisition by any individual, entity or group (within the meaning of section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 25% or more of the combined voting power of the then outstanding Voting Stock of the Company; provided, however, that for purposes of this Section 1(d)(i), the following acquisitions will not constitute a Change in Control: (A) any issuance of Voting Stock of the Company directly from the Company that is approved by the Incumbent Board (as defined in Section 1(d)(ii), below), (B) any acquisition by the Company of Voting Stock of the Company, (C) any acquisition of Voting Stock of the Company by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary, or (D) any acquisition of Voting Stock of the Company by any Person pursuant to a Business Combination that complies with clauses (A), (B) and (C) of Section 1(d)(iii), below; and provided, further, that a Change in Control will not occur if any Person becomes the beneficial owner of 25% or more of the combined voting power of the Voting Stock of the Company solely as a result of an issuance of Voting Stock described in clause (A) of this Section 1(d)(i) or an acquisition of Voting Stock described in clause (B) of this Section 1(d)(i) unless and until such Person thereafter acquires beneficial ownership of Voting Stock of the Company that causes the aggregate percent of the combined voting power of the Voting Stock of the Company then owned beneficially by such Person to exceed the percent of the combined voting power of Voting Stock of the Company owned beneficially by such Person immediately after such issuance or acquisition described in clause (A) or (B) of this Section 1(d)(i);           (ii) individuals who, as of the date hereof, constitute the Board (the “Incumbent Board,” as modified by this Section 1(d)(ii)), cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a Director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least two-thirds of the Directors then comprising the Incumbent Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination) will be deemed to have then been a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest (within the meaning of Rule 14a-11 of the Exchange Act) with respect to the election or removal of Directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;           (iii) consummation of a reorganization, merger or consolidation, a sale or other disposition of all or substantially all of the assets of the Company, or other transaction (each, a “Business Combination”), unless, in each case, immediately following such Business Combination, (A) all or substantially all of the individuals and -3- --------------------------------------------------------------------------------   entities who were the beneficial owners of Voting Stock of the Company immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding shares of Voting Stock of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), (B) no Person (other than the Company; such entity resulting from such Business Combination; any employee benefit plan (or related trust) sponsored or maintained by the Company, any Subsidiary or such entity resulting from such Business Combination; or any Person who immediately prior to such Business Combination beneficially owned directly or indirectly 25% or more of the combined voting power of the voting stock of the Company and whose ownership of such Voting Stock did not result in a Change in Control under Section 1(d)(i)) beneficially owns, directly or indirectly, 25% or more of the combined voting power of the then outstanding shares of Voting Stock of the entity resulting from such Business Combination, and (C) at least a majority of the members of the Board of Directors of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or           (iv) approval by the stockholders of the Company of a complete liquidation or dissolution of the Company, except pursuant to a Business Combination that complies with clauses (A), (B) and (C) of Section 1(d)(iii).      (e) “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1986, as amended.      (f) “Code” means the Internal Revenue Code of 1986, as amended.      (g) “Constructive Termination Associated With a Change in Control” means the termination of the Executive’s employment with the Company by Executive as a result of the occurrence of one of the following events as a result of a Change in Control:           (i) without the Executive’s express written consent, the failure to elect or reelect or otherwise to maintain the Executive in the office or the position, or an equivalent office or position, of or with the Company and/or a Subsidiary (or any successor thereto by operation of law of or otherwise), as the case may be, which the Executive held immediately prior to a Change in Control, or the removal of the Executive as a Director of the Company and/or a Subsidiary (or any successor thereto) if the Executive has been a Director of the Company and/or a Subsidiary immediately prior to the Change in Control;           (ii) without the Executive’s express written consent, the failure of the Company to remedy any of the following within ten (10) business days after receipt by the Company of written notice thereof from the Executive: (A) an adverse change in the nature or scope of the authorities, powers, functions, responsibilities or duties attached to the position with the Company and any Subsidiary which the Executive held immediately prior to the Change in Control, (B) a reduction in the aggregate of the Executive’s Base -4- --------------------------------------------------------------------------------   Pay and Incentive Pay, or (C) the termination or denial of the Executive’s rights to Employee Benefits or a reduction in the scope or value thereof;           (iii) without the Executive’s express written consent, a determination by the Executive (which determination will be conclusive and binding upon the parties hereto provided it has been made in good faith and in all events will be presumed to have been made in good faith unless otherwise shown by the Company by clear and convincing evidence) that a change in circumstances has occurred following a Change in Control, including, without limitation, a change in the scope of the business or other activities for which the Executive was responsible immediately prior to the Change in Control, which has rendered the Executive unable to carry out, has hindered the Executive’s performance of, or has caused the Executive to suffer a reduction in, any of the authorities, powers, functions, responsibilities or duties attached to the position held by the Executive immediately prior to the Change in Control, which situation is not remedied within ten (10) business days after written notice to the Company from the Executive of such determination;           (iv) without the Executive’s express written consent, the liquidation, dissolution, merger, consolidation or reorganization of the Company or transfer of all or substantially all of its business and/or assets, unless the successor or successors (by liquidation, merger, consolidation, reorganization, transfer or otherwise) to which all or substantially all of its business and/or assets have been transferred (by operation of law or otherwise) assumes all duties and obligations of the Company under this Agreement pursuant to Section 15(a);           (v) without the Executive’s express written consent, a requirement by the Company that the Executive have his principal location of work changed to any location that is in excess of thirty-five (35) miles from the location thereof immediately prior to the Change in Control, or that the Executive travel away from his office in the course of discharging his responsibilities or duties hereunder at least 20% more (in terms of aggregate days in any calendar year or in any calendar quarter when annualized for purposes of comparison to any prior year) than was required of the Executive in any of the three (3) full years immediately prior to the Change in Control; or           (vi) without limiting the generality or effect of the foregoing, without the Executive’s express written consent, any material breach of this Agreement by the Company or any successor thereto which is not remedied by the Company within ten (10) business days after receipt by the Company of written notice from the Executive of such breach. In no event shall the termination of Executive’s employment with the Company on account of the Executive’s death or Disability or because the Executive engaged in conduct constituting Cause be deemed to be a Constructive Termination Associated With a Change in Control. -5- --------------------------------------------------------------------------------        (h) “Constructive Termination Prior to a Change in Control” means the termination of Executive’s employment with the Company by the Executive as a result of:           (i) without the Executive’s express written consent, a comprehensive and substantial reduction in all or most of the Executive’s primary duties, authority and responsibilities compared to the Executive’s duties, authority and responsibilities immediately prior to such reduction;           (ii) without the Executive’s express written consent, a significant reduction in the Executive’s Base Pay compared to the Executive’s Base Pay in effect immediately prior to such reduction; provided, however, that a reduction in the Executive’s Base Pay of less than twenty percent (20%) or a reduction in the Executive’s Base Pay that is part of an overall reduction in compensation also applied to other senior executives of the Company as a result of decreased business performance by the Company or one of its business units, shall not constitute a Constructive Termination Prior to a Change in Control; or           (iii) without the Executive’s express written consent, the failure of the Company to obtain the assumption of this Agreement by any successors. In no event shall the termination of Executive’s employment with the Company on account of the Executive’s death or Disability or because the Executive engaged in conduct constituting Cause be deemed to be a Constructive Termination Prior to a Change in Control.      (i) “Disability” means the Executive becomes permanently disabled within the meaning of, and begins actually to receive disability benefits pursuant to, the long-term disability plan in effect for, or applicable to, the Executive.      (j) “Employee Benefits” means the perquisites, benefits and service credit for benefits as provided under any and all employee retirement income and welfare benefit policies, plans, programs or arrangements in which the Executive is entitled to participate, including, without limitation, any stock option, performance share, performance unit, stock purchase, stock appreciation, savings, pension, supplemental executive retirement, or other retirement income or welfare benefit, deferred compensation, incentive compensation, group or other life, health, medical/hospital or other insurance (whether funded by actual insurance or self-insured by the Company or a Subsidiary), disability, salary continuation, expense reimbursement and other employee benefit policies, plans, programs or arrangements that may now exist or any equivalent successor policies, plans, programs or arrangements that may be adopted hereafter by the Company or a Subsidiary, providing perquisites, benefits and service credit for benefits at least as great in the aggregate as are payable thereunder.      (k) “Exchange Act” means the Securities Exchange Act of 1934, as amended. -6- --------------------------------------------------------------------------------        (l) “Incentive Pay” means the greater of: (i) Executive’s maximum Target Bonus for which Executive was eligible during the period that includes the Termination Date, or (ii) the highest aggregate bonus or incentive payment paid to Executive during any of the three (3) full calendar years prior to his Termination Date. For purposes of this definition, “Target Bonus” means the annual bonus, incentive, commission or other sales incentive compensation, or comparable incentive payment opportunity which, in the sole discretion of the Company, is deemed to constitute a Target Bonus, in addition to Base Pay, for which Executive was eligible to receive, but did not receive prior to his Termination Date, in regard to services rendered in the year covered by Executive’s Termination Date and is to be made pursuant to any bonus, incentive, profit-sharing, performance, discretionary pay or similar agreement, policy, plan, program or arrangement (whether or not funded) of the Company or a Subsidiary, or any successor thereto. For purposes of this definition, “Incentive Pay” does not include any stock option, stock appreciation, stock purchase, restricted stock or similar plan, program, arrangement or grant, one time bonus or payment (including, but not limited to, any sign-on bonus), any amounts contributed by the Company for the benefit of Executive to any qualified or nonqualified deferred compensation plan, whether or not provided under an arrangement described in the prior sentence, or any amounts designated by the parties as amounts other than Incentive Pay.      (m) “Involuntary Termination Associated With a Change in Control” means the termination of Executive’s employment related to a Change in Control: (i) by the Company for any reason other than Cause, the Executive’s death or the Executive’s Disability, or (ii) on account of a Constructive Termination Associated with a Change in Control.      (n) “Involuntary Termination Prior to a Change in Control” means the termination of Executive’s employment unrelated to a Change in Control: (i) by the Company for any reason other than Cause, the Executive’s death or the Executive’s Disability, or (ii) on account of a Constructive Termination Prior to a Change in Control.      (o) “Key Employee” shall mean any employee or former employee of the Company who is considered a key employee under section 409A(2)(B)(i) of the Code, having an identification date for purposes of section 409A of December 31, or any other party deemed a key Employee under applicable regulations issued pursuant to sections 409A.      (p) “Restricted Business” means,           (i) if the Executive is entitled to severance benefits under this Agreement on account of an Involuntary Termination Prior to a Change in Control, (A) the design, development, manufacture, marketing or support of local or wide area network products, computer operating systems, applications products, software products or services that enable organizations to more effectively conduct business using the Web, or any other software products of the type designed, developed, manufactured, sold or supported by the Company or as proposed to be designed, developed, manufactured, sold or supported by the Company pursuant to a development project that is actually being -7- --------------------------------------------------------------------------------   pursued during the term of this Agreement; (B) any business that performs technology and consulting services that help businesses develop and accelerate their transition to Internet-based e-business solutions and processes, or management services that assist businesses in improving their operating processes; or (C) any business that competes directly or indirectly with the hardware, software or consulting businesses of the Company.           (ii) if the Executive is entitled to severance benefits under this Agreement on account of an Involuntary Termination Associated With a Change in Control, any business function with a direct competitor of the Company that is substantially similar to the business function performed by the Executive with the Company immediately prior to his Termination Date.      (q) “Restricted Territory” means the counties, towns, cities or states of any country in which the Company operates or does business.      (r) “Severance Period” means the twelve (12) month period after the Executive’s Termination Date.      (s) “Subsidiary” means any Company controlled affiliate.      (t) “Termination Date” means the last day of Executive’s employment with the Company.      (u) “Termination of Employment” means, except as provided in the following sentence, the termination of Executive’s active employment relationship with the Company on account of an Involuntary Termination Prior to a Change in Control or an Involuntary Termination Associated With a Change in Control. For purposes of the non-solicitation provision of Section 11 of the Agreement, the term “Termination of Employment” shall mean the termination of Executive’s employment relationship with the Company for any reason, including, but not limited to, the Executive’s Involuntary Termination Prior to a Change in Control, Involuntary Termination Associated With a Change in Control, voluntary termination, termination on account of Disability, or termination by the Company for Cause.      (v) “Voting Stock” means securities entitled to vote generally in the election of directors. 2. Termination Prior to a Change in Control.      (a) Involuntary Termination Prior to a Change in Control. In the event Executive’s employment is terminated on account of an Involuntary Termination Prior to a Change in Control, Executive shall be entitled to the benefits provided in subsection (b) of this Section 2.      (b) Compensation and Benefits Upon Involuntary Termination Prior to a Change in Control. Subject to the provisions of Section 5 hereof, in the event a -8- --------------------------------------------------------------------------------   termination described in subsection (a) of this Section 2 occurs, the Company shall pay and provide to the Executive after his Termination Date:           (i) 150% of his Base Pay, payable in equal installments over the Severance Period, consistent with the Company’s past payroll practices, commencing with the first payroll period that occurs after the period during which Executive’s right to revoke his acceptance to the terms of the Release has expired. Notwithstanding the foregoing, the Company may determine, in its sole discretion and at any time, to provide that the amounts payable under this subsection (i) shall be paid to Executive in a lump sum, as opposed to installments over the Severance Period; provided, however, that such discretion shall not be exercised in a manner which will cause adverse income tax results to Executive.           (ii) Executive shall receive his pro rated Incentive Pay for the year in which his Termination of Employment occurs. The pro rated Incentive Pay shall be based on the Executive’s Incentive Pay for the year in which Executive’s Termination Date occurs, multiplied by a fraction, the numerator of which is the number of days during which Executive was employed by the Company in the year of his termination and the denominator of which is 365. Such pro rated Incentive Pay shall be paid to Executive in equal installments over the Severance Period, consistent with the Company’s past payroll practices, commencing with the first payroll period that occurs after the period during which Executive’s right to revoke his acceptance to the terms of the Release has expired. Notwithstanding the foregoing, the Company may determine, in its sole discretion and at any time, to provide that the amounts payable under this subsection (ii) shall be paid to Executive in a lump sum, as opposed to installments over the Severance Period.           (iii) For the Severance Period commencing the month immediately following the month in which his Termination Date occurs, Executive shall continue to receive the medical and dental coverage in effect on his Termination Date (or generally comparable coverage) for himself and, where applicable, his spouse and dependents, as the same may be changed from time to time for employees generally, as if Executive had continued in employment during such period; provided, however, that in the event that such continuation coverage violates applicable law or results in a material adverse tax effect to the Company or the Executive, the Company shall pay Executive cash in lieu of such coverage in an amount equal to Executive’s after-tax cost of continuing comparable coverage, where such coverage may not be continued by the Company (or where such continuation would adversely affect the tax status of the plan pursuant to which the coverage is provided). If the Executive does not receive the cash payment described in the preceding sentence, the Company shall take all commercially reasonable efforts to provide that the COBRA health care continuation coverage period under section 4980B of the Code, shall commence immediately after the foregoing twelve (12) month benefit period, with such continuation coverage continuing until the earlier of (i) the end of the applicable COBRA health care continuation coverage period or (ii) the date on which Executive is covered by the medical and dental coverage of his successor employer, if any. -9- --------------------------------------------------------------------------------             (iv) With respect to any Company stock options held by the Executive as of the date of such Involuntary Termination Prior to a Change in Control, the Company shall accelerate the vesting of that portion of the Executive’s stock options, if any, which would have vested and become exercisable within the one (1) year period after the Executive’s Termination Date, such options, plus any other options that previously became exercisable and have not expired or been exercised, to remain exercisable, notwithstanding anything in any other agreement governing such options, for the longer of (A) a period of six (6) months after the Executive’s Termination Date, or (B) the period set forth in the award agreement covering the option (the “Option Expiration Date”); provided, however, that in no event will the option be exercisable beyond its original term or, if not addressed in the grant agreement, then not later than the latest date that will avoid adverse tax consequences to the Executive (if such date is earlier than the Option Expiration Date).           (v) With respect to any shares of Company common stock held by the Executive that are, at the time of such Involuntary Termination Prior to a Change in Control, subject to the Company’s repurchase right upon termination of the Executive’s employment (“Restricted Stock”), the Company shall waive such repurchase right as to the number of shares of Restricted Stock that would have vested within the one (1) year period after the Executive’s Termination Date.           (vi) To cover the cost of outplacement assistance services for Executive that are actually provided by an outplacement agency selected by Executive, for which the Company provides prior approval, with such approval not to be unreasonably withheld, in an amount not to exceed twenty percent (20%) of the Executive’s Base Pay.           (vii) Executive shall receive any amounts earned, accrued or owing but not yet paid to Executive as of his Termination Date, payable in a lump sum, and any benefits accrued or earned in accordance with the terms of any applicable benefit plans and programs of the Company. 3. Termination Associated With a Change in Control.      (a) Involuntary Termination Associated With a Change in Control. In the event Executive’s employment is terminated after, or in connection with, a Change in Control, on account of (i) an Involuntary Termination Associated With a Change in Control within the two year period after the Change in Control, or (ii) an Involuntary Termination Associated With a Change in Control that occurs (A) not more than six (6) months prior to the date on which a Change in Control occurs or (B) following the commencement of any discussion with a third person that ultimately results in a Change in Control, Executive shall be entitled to the benefits provided in subsection (b) of this Section 3. If Executive is entitled to benefits described in this Section 3 by reason of clause (a)(ii) above, Executive shall receive the compensation and benefits described in Section 2(b) above after his Termination of Employment, in accordance with the provisions of Section 2(b), regardless of whether the Change in Control actually occurs, and Executive shall receive the additional compensation and benefits described in Section -10- --------------------------------------------------------------------------------   3(b) below only if the Change in Control is consummated and shall receive such additional amounts after the consummation of the Change in Control, in accordance with the provisions of Section 3(b) below. For purposes of subsection 3(a)(ii)(B) above, to be eligible to receive amounts described in Section 3(b) below, the Change in Control must be consummated within the twelve (12) month period following Executive’s Termination Date, except in circumstances pursuant to which the consummation of the Change in Control is delayed, through no failure of the Company or the third person, by a governmental or regulatory authority or agency with jurisdiction over the matter, or as a result of other similar circumstances. In such a circumstance, the remaining of the twelve (12) month period shall be tolled and shall recommence upon termination of the delaying event.      (b) Compensation and Benefits Upon Involuntary Termination Associated With a Change in Control. Subject to the provisions of Section 5 hereof, in the event a termination described in subsection (a) of this Section 3 occurs, the Company shall pay and provide to the Executive after his Termination Date:           (i) Lump sum payment equal to (A) 2 times Base Pay, plus (B) 2 times Incentive Pay. Payment shall be made in accordance with the Company’s normal payroll practices but not later than the thirtieth day after Executive’s Termination Date (or the end of the revocation period for the Release, if later); provided, however, that if Executive is deemed by the Company to be a Key Employee as of the Termination Date, such payment shall occur on the earlier of the following: (x) six months following Executive’s Termination Date; or (y) the date on which the Company determines payment may be made without causing adverse tax consequences to Executive.           (ii) Executive shall receive his pro rated Incentive Pay for the year in which his Termination of Employment occurs. The pro rated Incentive Pay shall be based on the Executive’s Incentive Pay for the year in which Executive’s Termination Date occurs, multiplied by a fraction, the numerator of which is the number of days during which Executive was employed by the Company in the year of his termination and the denominator of which is 365. Such pro rated Incentive Pay shall be paid to Executive in a lump sum in accordance with the Company’s normal payroll practices but not later than the thirtieth day after Executive’s Termination Date (or the end of the revocation period for the Release, if later).           (iii) For the Severance Period commencing the month immediately following the month in which his Termination Date occurs, Executive shall continue to receive the medical and dental coverage in effect on his Termination Date (or generally comparable coverage) for himself and, where applicable, his spouse and dependents, as the same may be changed from time to time for employees generally, as if Executive had continued in employment during such period; provided, however, that in the event that such continuation coverage violates applicable law or results in a material adverse tax effect to the Company or the Executive, the Company shall pay Executive cash in lieu of such coverage in an amount equal to Executive’s after-tax cost of continuing comparable coverage, where such coverage may not be continued by the Company (or where such continuation would adversely affect the tax status of the plan pursuant to which the -11- --------------------------------------------------------------------------------   coverage is provided). If the Executive does not receive the cash payment described in the preceding sentence, the Company shall take all commercially reasonable efforts to provide that the COBRA health care continuation coverage period under section 4980B of the Code, shall commence immediately after the foregoing twenty-four (24) month benefit period, with such continuation coverage continuing until the earlier of (i) the end of the applicable COBRA health care continuation coverage period or (ii) the date on which Executive is covered by the medical and dental coverage of his successor employer, if any.           (iv) Lump sum payment equal to the total amount that Executive would have received under the Company’s 401(k) plan as a Company match if Executive was eligible to participate in the Company’s 401(k) plan for the twenty-four (24) month period after his Termination Date and he contributed the maximum amount to the plan for the match. Payment shall be made in accordance with the Company’s normal payroll practices but not later than the thirtieth day after Executive’s Termination Date (or the end of the revocation period for the Release, if later).           (v) Lump sum payment equal to the total premiums that the Company would have paid under Executive’s split-dollar life insurance policy, if any, that is in effect immediately prior to his Termination Date, if Executive was employed by the Company for the twenty-four (24) month period following Executive’s Termination Date; provided, however, that if the remaining length of the term of the split-dollar arrangement pursuant to which the Company must make premium payments is less than the foregoing twenty-four (24) month period, Executive shall only receive a lump sum payment equal to the remaining Company premiums for the term of the arrangement. Payment shall be made in accordance with the Company’s normal payroll practices but not later than the thirtieth day after Executive’s Termination Date (or the end of the revocation period for the Release, if later). Notwithstanding the foregoing, no payment shall be made to Executive pursuant to this subsection (v) if on the Executive’s Termination Date, either Executive does not have a split-dollar life insurance policy with the Company or the Company has no obligations to make premium contributions to Executive’s split-dollar life insurance policy.           (vi) Lump sum payment equal to twenty percent (20%) of the Executive’s Base Pay in order to cover the cost of outplacement assistance services for Executive. Payment shall be made in accordance with the Company’s normal payroll practices but not later than the thirtieth day after Executive’s Termination Date (or the end of the revocation period for the Release, if later).           (vii) Executive shall receive any amounts earned, accrued or owing but not yet paid to Executive as of his Termination Date, payable in a lump sum, and any benefits accrued or earned in accordance with the terms of any applicable benefit plans and programs of the Company.      (c) Notwithstanding any provision to the contrary in any applicable plan, program or agreement, upon the occurrence of a Change in Control, all stock options, Restricted Stock and other equity rights held by the Executive will become fully vested -12- --------------------------------------------------------------------------------   and/or exercisable, as the case may be, on the date on which the Change in Control occurs, and all stock options held by the Executive shall remain exercisable, notwithstanding anything in any other agreement governing such options, for the longer of (i) a period of twenty-four (24) months after the Executive’s Termination Date, or (ii) the period set forth in the award agreement covering the option (the “Option Expiration Date”); provided, however, that in no event will the option be exercisable beyond its original term or, if not addressed in the grant agreement, then not later than the latest date that will avoid adverse tax consequences to the Executive (if such date is earlier than the Option Expiration Date). 4. Termination of Employment on Account of Disability, Cause or Death. Notwithstanding anything in this Agreement to the contrary, if Executive’s employment terminates on account of Disability, Executive shall be entitled to receive disability benefits under any disability program maintained by the Company that covers Executive, and Executive shall not be considered to have terminated employment under this Agreement and shall not receive benefits pursuant to Sections 2 and 3 hereof. If Executive’s employment terminates on account of Cause or because of his death, Executive shall not be considered to have terminated employment under this Agreement and shall not receive benefits pursuant to Sections 2 and 3 hereof. 5. Release. Notwithstanding the foregoing, no such payments shall be made or benefits provided unless Executive executes, and does not revoke, the Company’s standard written release, substantially in the form as attached hereto as Annex A, (the “Release”), of any and all claims against the Company and all related parties with respect to all matters arising out of Executive’s employment by the Company (other than entitlements under the terms of this Agreement or under any other plans or programs of the Company in which Executive participated and under which Executive has accrued or become entitled to a benefit) or a termination thereof. 6. Enforcement. Without limiting the rights of the Executive at law or in equity, if the Company fails to make any payment or provide any benefit required to be made or provided hereunder on a timely basis, the Company will pay interest on the amount or value thereof at an annualized rate of interest equal to the so-called composite “prime rate” as quoted from time to time during the relevant period in the Eastern Edition of The Wall Street Journal. Such interest will be payable as it accrues on demand. Any change in such prime rate will be effective on and as of the date of such change. 7. Certain Additional Payments by the Company.      (a) The provisions of this Section 7 shall apply notwithstanding anything in this Agreement to the contrary. Subject to subsection (b) below, in the event that it shall be determined that any payment, benefit provided or distribution by the Company to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a “Payment”), would constitute an “excess parachute payment” within the meaning of section 280G of the Code, the Company shall pay Executive an additional amount (the “Gross-Up Payment”) such that the net amount retained by Executive after deduction of any excise tax imposed under -13- --------------------------------------------------------------------------------   section 4999 of the Code, and any federal, state and local income tax, employment tax, excise tax and other tax imposed upon the Gross-Up Payment, shall be equal to the Payment. The right to each payment of such amount shall vest as of the day on which the payment determination is made, and each such payment shall be made on the thirtieth day following the vesting date.      (b) Notwithstanding subsection (a), and notwithstanding any other provisions of this Agreement to the contrary, if the net after-tax benefit to Executive of receiving the Gross-Up Payment does not exceed the Safe Harbor Amount (as defined below) by more than 10% (as compared to the net-after tax benefit to Executive resulting from elimination of the Gross-Up Payment and reduction of the Payments to the Safe Harbor Amount), then (i) the Company shall not pay Executive the Gross-Up Payment and (ii) the provisions of subsection (c) below shall apply. The term “Safe Harbor Amount” means the maximum dollar amount of parachute payments that may be paid under section 280G of the Code without imposition of an excise tax under section 4999 of the Code.      (c) The provisions of this subsection (c) shall apply only if the Company is not required to pay Executive a Gross-Up Payment as a result of subsection (b) above. If the Company is not required to pay Executive a Gross-Up Payment as a result of the provisions of subsection (b), the Company will apply a limitation on the Payment amount as set forth in subsection (i) below (a “Parachute Cap”) if the application of the Parachute Cap is beneficial to Executive, according to the following provisions:           (i) If subsection (ii) does not apply, the aggregate present value of the Payments under Section 3 of this Agreement (“Agreement Payments”) shall be reduced (but not below zero) to the Reduced Amount. The “Reduced Amount” shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be subject to the limitation of deduction under section 280G of the Code. For purposes of this Section 7, “present value” shall be determined in accordance with section 280G(d)(4) of the Code.           (ii) It is the intention of the parties that the Parachute Cap apply only if application of the Parachute Cap is beneficial to Executive. Therefore, if the net amount that would be retained by Executive under this Agreement without the Parachute Cap, after payment of any excise tax under section 4999 of the Code, exceeds the net amount that would be retained by Executive with the Parachute Cap, then the Company shall not apply the Parachute Cap to Executive’s payments. In that event, neither the Parachute Cap nor the Gross-Up Payment will apply to Executive.      (d) All determinations to be made under this Section 7 shall be made by the nationally recognized independent public accounting firm used by the Company immediately prior to the Change in Control (“Accounting Firm”), which Accounting Firm shall provide its determinations and any supporting calculations to the Company and Executive within ten days of Executive’s termination date. If any Gross-Up Payment is required to be made, the Company shall make the Gross-Up Payment within ten days after receiving the Accounting Firm’s calculations. Any such determination by the Accounting Firm shall be binding upon the Company and Executive. -14- --------------------------------------------------------------------------------        (e) All of the fees and expenses of the Accounting Firm in performing the determinations referred to in this Section 7 shall be borne solely by the Company. 8. No Mitigation Obligation. The Company hereby acknowledges that it will be difficult and may be impossible for the Executive to find reasonably comparable employment following the Termination Date. Accordingly, the payment of the severance compensation by the Company to the Executive in accordance with the terms of this Agreement is hereby acknowledged by the Company to be reasonable, and the Executive will not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor will any profits, income, earnings or other benefits from any source whatsoever create any mitigation, offset, reduction or any other obligation on the part of the Executive hereunder or otherwise. 9. Legal Fees and Expenses. In the event of a Change in Control, it is the intent of the Company that the Executive not be required to incur legal fees and the related expenses associated with the interpretation, enforcement or defense of the Executive’s rights under this Agreement by litigation or otherwise because the cost and expense thereof would detract from the benefits intended to be extended to the Executive hereunder. Accordingly, if a Change in Control occurs and it should appear to the Executive that the Company has failed to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover from, the Executive the benefits provided or intended to be provided to the Executive under Section 3(b) of the Agreement, the Company irrevocably authorizes the Executive from time to time to retain counsel of the Executive’s choice, at the expense of the Company as hereafter provided, to advise and represent the Executive in connection with any such interpretation, enforcement or defense, including without limitation the initiation or defense of any litigation or other legal action, whether by or against the Company or any Director, officer, stockholder or other person affiliated with the Company, in any jurisdiction. Notwithstanding any existing or prior attorney-client relationship between the Company and such counsel, the Company irrevocably consents to the Executive’s entering into an attorney-client relationship with such counsel, and in that connection the Company and the Executive agree that a confidential relationship will exist between the Executive and such counsel. Without respect to whether the Executive prevails, in whole or in part, in connection with any of the foregoing, the Company will pay and be solely financially responsible for any and all attorneys’ and related fees and expenses incurred by the Executive in connection with any of the foregoing; provided that, in regard to such matters, the Executive has not acted frivolously, in bad faith or with no colorable claim of success. Such expenses will be paid by the Company on the thirtieth day following its receipt of adequate substantiation to support payment of the expense amount. 10. Confidentiality. The Executive hereby covenants and agrees that he will not disclose to any person not employed by the Company, or use in connection with engaging in competition with the Company, any confidential or proprietary information (as defined below) of the Company. For purposes of this Agreement, the term “confidential or proprietary information” will include all information of any nature and in any form that is -15- --------------------------------------------------------------------------------   owned by the Company and that is not publicly available (other than by the Executive’s breach of this Section 10) or generally known to persons engaged in businesses similar or related to those of the Company. Confidential or proprietary information will include, without limitation, the Company’s financial matters, customers, employees, industry contracts, strategic business plans, product development (or other proprietary product data), marketing plans, consulting solutions and processes, and all other secrets and all other information of a confidential or proprietary nature which is protected by the Uniform Trade Secrets Act. For purposes of the preceding two sentences, the term “Company” will also include any Subsidiary (collectively, the “Restricted Group”). The foregoing obligations imposed by this Section 10 will not apply (i) in the course of the business of and for the benefit of the Company, (ii) if such confidential or proprietary information has become, through no fault of the Executive, generally known to the public, or (iii) if the Executive is required by law to make disclosure (after giving the Company notice and an opportunity to contest such requirement). 11. Covenants Not to Compete and Not to Solicit. In the event of Executive’s Termination of Employment, the Company’s obligations to provide severance pay as provided in Sections 2 and 3 shall be expressly conditioned upon the Executive’s covenants not to compete and not to solicit as provided herein. In the event the Executive breaches his obligations to the Company as provided herein, the Company’s obligations to make severance payments to Executive pursuant to Sections 2 and 3 shall cease, without prejudice to any other remedies that may be available to the Company.      (a) Covenant Not to Compete.           (i) If Executive is receiving compensation and benefits under Section 2(b) above, then for a period of nine (9) months following Executive’s Termination Date, the Executive shall not directly or indirectly, engage in (whether as employee, consultant, proprietor, partner, director or otherwise), or have any ownership interest in, or participate in a financing, operation, management or control of, any person, firm, corporation or business that is a Restricted Business in a Restricted Territory without the prior written consent of the Board. For this purpose, ownership of no more than 5% of the outstanding Voting Stock of a publicly traded corporation shall not constitute a violation of this provision.           (ii) If Executive is receiving compensation and benefits under Section 3(b) above (or subsequently becomes entitled to severance under Section 3(b) above because of a termination described in Section 3(a)(ii)), then for a period of one (1) year following Executive’s Termination Date, the Executive shall not directly or indirectly, engage in (whether as employee, consultant, proprietor, partner, director or otherwise), or have any ownership interest in, or participate in a financing, operation, management or control of, any person, firm, corporation or business that is a Restricted Business in a Restricted Territory without the prior written consent of the Board. For this purpose, ownership of no more than 5% of the outstanding Voting Stock of a publicly traded corporation shall not constitute a violation of this provision. -16- --------------------------------------------------------------------------------        (b) Covenant Not to Solicit. The Executive shall not, for a period of two (2) years after the Executive’s Termination Date for any reason: (i) solicit, encourage or take any other action which is intended to induce any other employee of the Company to terminate his employment with the Company; or (ii) interfere in any manner with the contractual or employment relationship between the Company and any such employee of the Company. The foregoing shall not prohibit Executive or any entity with which Executive may be affiliated from hiring a former employee of the Company, provided that such hiring results exclusively from such former employee’s affirmative response to a general recruitment effort.      (c) Interpretation. The covenants contained herein are intended to be construed as a series of separate covenants, one for each county, town, city and state or other political subdivision of a Restricted Territory. Except for geographic coverage, each such separate covenant shall be deemed identical in terms to the covenant contained in the preceding subsections. If, in any judicial proceeding, the court shall refuse to enforce any of the separate covenants (or any part thereof) deemed included in such subsections, then such unenforceable covenant (or such part) shall be deemed to be eliminated from this Agreement for the purpose of those proceedings to the extent necessary to permit the remaining separate covenants (or portions thereof) to be enforced.      (d) Reasonableness. In the event that the provisions of this Section 11 shall ever be deemed to exceed the time, scope or geographic limitations permitted by applicable laws, then such provisions shall be reformed to the maximum time, scope or geographic limitations, as the case may be, permitted by applicable laws. 12. Employment Rights. Nothing expressed or implied in this Agreement will create any right or duty on the part of the Company or the Executive to have the Executive remain in the employment of the Company or any Subsidiary prior to or following any Change in Control. 13. Certain Tax Matters.      (a) Withholding. The Company may withhold from any amounts payable under this Agreement all federal, state, city or other taxes as the Company is required to withhold pursuant to any applicable law, regulation or ruling.      (b) Effect of Section 409A of the Code. The parties intend that the provisions of this Agreement will operate in a manner that will avoid adverse federal income tax consequences under Section 409A of the Code. Executive hereby acknowledges and agrees that the Company may take any actions deemed necessary in its sole discretion to avoid adverse federal income tax consequences under section 409A of the Code and that such action may be taken without the consent of Executive.      (c) Time of Payment. If a payment is not made by the designated payment date under this Agreement, the payment will be made in any event by the later of (i) the end of the calendar year in which the designated payment date occurs or (ii) the 15th day -17- --------------------------------------------------------------------------------   of the third calendar month following the designated payment date, or such other date as may be permitted by section 409A of the Code and the regulations thereunder. 14. Term of Agreement. This Agreement shall continue in full force and effect for the duration of Executive’s employment with the Company; provided, however, that after the termination of Executive’s employment during the term of this Agreement, this Agreement shall remain in effect until all of the obligations of the parties hereunder are satisfied or have expired. 15. Successors and Binding Agreement.      (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation, reorganization or otherwise) to all or substantially all of the business or assets of the Company, by agreement in form and substance reasonably satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform if no such succession had taken place. This Agreement will be binding upon and inure to the benefit of the Company and any successor to the Company, including without limitation any persons acquiring directly or indirectly all or substantially all of the business or assets of the Company whether by purchase, merger, consolidation, reorganization or otherwise (and such successor will thereafter be deemed the “Company” for the purposes of this Agreement), but will not otherwise be assignable, transferable or delegable by the Company.      (b) This Agreement will inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees and legatees. This Agreement will supersede the provisions of any employment or other agreement between the Executive and the Company that relate to any matter that is also the subject of this Agreement, and such provisions in such other agreements will be null and void.      (c) This Agreement is personal in nature and neither of the parties hereto will, without the consent of the other, assign, transfer or delegate this Agreement or any rights or obligations hereunder except as expressly provided in Sections 15(a) and 15(b). Without limiting the generality or effect of the foregoing, the Executive’s right to receive payments hereunder will not be assignable, transferable or delegable, whether by pledge, creation of a security interest, or otherwise, other than by a transfer by the Executive’s will or by the laws of descent and distribution and, in the event of any attempted assignment or transfer contrary to this Section 15(c), the Company will have no liability to pay any amount so attempted to be assigned, transferred or delegated. 16. Notices. For all purposes of this Agreement, all communications, including without limitation notices, consents, requests or approvals, required or permitted to be given hereunder will be in writing and will be deemed to have been duly given when hand delivered or dispatched by electronic facsimile transmission (with receipt thereof orally confirmed by the recipient), or five (5) business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid, or -18- --------------------------------------------------------------------------------   three (3) business days after having been sent by a nationally recognized courier service for overnight/next-day delivery, such as FedEx, UPS, or the United States Postal Service, addressed to the Company (to the attention of the Secretary of the Company) at its principal executive office and to the Executive at his principal residence, or to such other address as any party may have furnished to the other in writing and in accordance herewith, except that notices of changes of address will be effective only upon receipt. 17. Governing Law. The validity, interpretation, construction and performance of this Agreement will be governed by and construed in accordance with the substantive laws of the Commonwealth of Massachusetts, without giving effect to the principles of conflict of laws of such Commonwealth. 18. Validity. If any provision of this Agreement or the application of any provision hereof to any person or circumstances is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to any other person or circumstances will not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal will be reformed to the extent (and only to the extent) necessary to make it enforceable, valid or legal. 19. Miscellaneous.      (a) Except as provided in subparagraph (b) below, no provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto or compliance with any condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, expressed or implied with respect to the subject matter hereof have been made by either party that are not set forth expressly in this Agreement. References to Sections are to references to Sections of this Agreement. Any reference in this Agreement to a provision of a statute, rule or regulation will also include any successor provision thereto. Whenever used herein, the masculine includes the feminine.      (b) Notwithstanding any contrary provision of this Agreement, the Company may modify benefits otherwise payable or to be provided under this Agreement without obtaining the Executive’s consent to such modification to the extent that the Company determines in its sole discretion that such modification is necessary or appropriate in order to effect compliance with applicable law or regulatory requirements. In particular, the Executive acknowledges and agrees that the provisions of Section 409A of the Code may require delay in payment or provision of benefits otherwise due under the terms of this Agreement until a date that is at least six (6) months following the date of the Executive’s separation from service with the Company, and may limit the permissible forms or timing of severance benefits that may be provided under this Agreement. 20. Survival. Notwithstanding any provision of this Agreement to the contrary, the parties’ respective rights and obligations under Sections 2, 3, 7, 9, 10, and 11 will survive -19- --------------------------------------------------------------------------------   any termination or expiration of this Agreement or the termination of the Executive’s employment for any reason whatsoever. 21. Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original but all of which together will constitute one and the same agreement. [SIGNATURE PAGE FOLLOWS] -20- --------------------------------------------------------------------------------        IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the date first above written.           NOVELL, INC.                   By:         /s/ Jack L. Messman           Name: Jack L. Messman         Title: Chairman and Chief Executive Officer                   EXECUTIVE         /s/ Jeffrey M. Jaffe                   -21- --------------------------------------------------------------------------------   Annex A SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE      THIS SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE (the “Agreement”) is made as of this                      day of                     ,                     , by and between Novell, Inc. (the “Company”) and                      (“Executive”).      WHEREAS, Executive formerly was employed by the Company as                     ;      WHEREAS, Executive and Company entered into the Severance Agreement, dated                                          , 200_, (the “Severance Agreement”) which provides for certain benefits in the event that Executive’s employment is terminated on account of a reason set forth in the Severance Agreement;      WHEREAS, Executive and the Company mutually desire to terminate Executive’s employment on an amicable basis, such termination to be effective                                          ,                      (“Date of Resignation”); and      WHEREAS, in connection with the termination of Executive’s employment, the parties have agreed to a separation package and the resolution of any and all disputes between them.      NOW, THEREFORE, IT IS HEREBY AGREED by and between Executive and the Company as follows:      1. (a) Executive, for and in consideration of the commitments of the Company as set forth in paragraph 6 of this Agreement, and intending to be legally bound, does hereby REMISE, RELEASE AND FOREVER DISCHARGE the Company, its affiliates, subsidiaries and parents, and its officers, directors, employees, and agents, and its and their respective successors and assigns, heirs, executors, and administrators (collectively, “Releasees”) from all causes of action, suits, debts, claims and demands whatsoever in law or in equity, which Executive ever had, now has, or hereafter may have, whether known or unknown, or which Executive’s heirs, executors, or administrators may have, by reason of any matter, cause or thing whatsoever, from the beginning of Executive’s employment to the date of this Agreement, and particularly, but without limitation of the foregoing general terms, any claims arising from or relating in any way to Executive’s employment relationship with the Company, the terms and conditions of that employment relationship, and the termination of that employment relationship, including, but not limited to, any claims arising under the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, Title VII of The Civil Rights Act of 1964, the Americans with Disabilities Act, the Family and Medical Leave Act of 1993, the Employee Retirement Income Security Act of 1974, [State Fair Employment Practice Law], and any other claims under any federal, state or local common law, statutory, or regulatory provision, now or hereafter recognized, and A-1 --------------------------------------------------------------------------------   any claims for attorneys’ fees and costs. This Agreement is effective without regard to the legal nature of the claims raised and without regard to whether any such claims are based upon tort, equity, implied or express contract or discrimination of any sort.           (b) To the fullest extent permitted by law, and subject to the provisions of paragraph 11 below, Executive represents and affirms that (i) [other than                     ,] Executive has not filed or caused to be filed on Executive’s behalf any claim for relief against the Company or any Releasee and, to the best of Executive’s knowledge and belief, no outstanding claims for relief have been filed or asserted against the Company or any Releasee on Executive’s behalf; (ii) [other than                     ,] Executive has not reported any improper, unethical or illegal conduct or activities to any supervisor, manager, department head, human resources representative, agent or other representative of the Company, to any member of the Company’s legal or compliance departments, or to the ethics hotline, and has no knowledge of any such improper, unethical or illegal conduct or activities; and (iii) Executive will not file, commence, prosecute or participate in any judicial or arbitral action or proceeding against the Company or any Releasee based upon or arising out of any act, omission, transaction, occurrence, contract, claim or event existing or occurring on or before the date of this Agreement.      2. [The Company, for and in consideration of the commitments of the Executive as set forth in this Agreement, and intending to be legally bound, does hereby REMISE, RELEASE AND FOREVER DISCHARGE the Executive from all claims, demands or causes of action arising out of facts or occurrences prior to the date of this Agreement, but only to the extent the Company knows or reasonably should know of such facts or occurrence and only to the extent such claim, demand or cause of action relates to a violation of applicable law or the performance of Executive’s duties with the Company; provided, however, that this release of claims shall not in any case be effective with respect to any claim by the Company alleging a breach of the Executive’s obligations under this Agreement.] [Note: Paragraph 2 only applies if Executive is receiving severance benefits on account of an Involuntary Termination Associated With a Change in Control.]      3. In consideration of the Company’s agreements as set forth in paragraph 6 herein, Executive agrees to be comply with the limitations described in Sections 10 and 11 of the Severance Agreement.      4. Executive further agrees and recognizes that Executive has permanently and irrevocably severed Executive’s employment relationship with the Company, that Executive shall not seek employment with the Company or any affiliated entity at any time in the future, and that the Company has no obligation to employ him in the future.      5. Executive further agrees that Executive will not disparage or subvert the Company, or make any statement reflecting negatively on the Company, its affiliated corporations or entities, or any of their officers, directors, employees, agents or representatives, including, but not limited to, any matters relating to the operation or A-2 --------------------------------------------------------------------------------   management of the Company, Executive’s employment and the termination of Executive’s employment, irrespective of the truthfulness or falsity of such statement.      6. In consideration for Executive’s agreement as set forth herein, the Company agrees: [Note: The following severance benefits would apply if the Executive has an Involuntary Termination Prior to a Change in Control.]           (i) [to pay Executive 150% of Executive’s Base Pay (as defined in the Severance Agreement) [for the Severance Period (as defined in the Severance Agreement), payable in equal installments, consistent with the Company’s past payroll practices, commencing with the first payroll period that occurs after the period during which Executive’s right to revoke Executive’s acceptance to the terms of this Agreement have expired.] or [, payable in a lump sum, within thirty (30) days after Executive’s Date of Resignation (or the end of the revocation period set forth in this Agreement, if later).]           (ii) to pay Executive Executive’s pro rated Incentive Pay (as defined in the Severance Agreement) for the year in which Executive’s Date of Resignation occurs. Such pro rated Incentive Pay shall be paid to Executive [for the Severance Period payable in equal installments, consistent with the Company’s past payroll practices, commencing with the first payroll period that occurs after the period during which Executive’s right to revoke Executive’s acceptance to the terms of the Release has expired.] or [paid in a lump sum, within thirty (30) days after Executive’s Date of Resignation (or the end of the revocation period set forth in this Agreement, if later).]           (iii) [for a period of twelve (12) months following Executive’s Date of Resignation, Executive shall continue to receive the medical and dental coverage in effect on Executive’s Date of Resignation (or generally comparable coverage) for Executive and, where applicable, Executive’s spouse and dependents, as the same may be changed from time to time for employees generally, as if Executive had continued in employment during such period.] or [pay Executive cash in a lump sum payment equal to Executive’s after-tax cost of continuing comparable medical and dental coverage for the twelve (12) month period following Executive’s Date of Resignation]. [The Company shall take all commercially reasonable efforts to provide that the COBRA health care continuation coverage period under section 4980B of the Code, shall commence immediately after the foregoing twelve (12) month benefit period, with such continuation coverage continuing until the earlier of (i) the end of the applicable COBRA health care continuation coverage period or (ii) the date on which Executive is covered by the medical and dental coverage of Executive’s successor employer, if any.]           (iv) with respect to any Company stock options held by the Executive as of Executive’s Date of Resignation, the portion of Executive’s stock options, if any, which would have vested and become exercisable within the one (1) year period after the Executive’s Date of Resignation shall become vested and A-3 --------------------------------------------------------------------------------   exercisable as of Executive’s Date of Resignation, such options, plus any other options that previously became exercisable and have not expired or been exercised, to remain exercisable, notwithstanding anything in any other agreement governing such options, for the longer of (A) a period of six (6) months after the Executive’s Date of Resignation, or (B) the period set forth in the award agreement covering the option, subject in either case only to the original term of the option. Any stock options held by Executive that are not exercisable as of the Executive’s Date of Resignation shall terminate as of the Executive’s Date of Resignation.           (v) with respect to any shares of Company common stock that are held by the Executive that are, at the time of Executive’s Date of Resignation, subject to the Company’s repurchase right upon termination of the Executive’s employment (“Restricted Stock”), to waive such repurchase right as to the number of shares of Restricted Stock that would have become no longer subject to the Company’s repurchase right within the one (1) year period after the Executive’s Date of Resignation.           (vi) pay the cost of outplacement assistance services for Executive that are actually provided by an outplacement agency selected by Executive, which the Company provides prior approval, with such approval not to be unreasonably withheld, in an amount not to exceed twenty percent (20%) of the Executive’s Base Pay.           (vii) Executive shall receive any amounts earned, accrued or owing but not yet paid to Executive as of Executive’s Date of Resignation, payable in a lump sum, and any benefits accrued or earned in accordance with the terms of any applicable benefit plans and programs of the Company. Except as set forth in this Agreement, it is expressly agreed and understood that Releasees do not have, and will not have, any obligations to provide Executive at any time in the future with any payments, benefits or considerations other than those recited in this paragraph, or those required by law, other than under the terms of any benefit plans which provide benefits or payments to former employees according to their terms.] [Note: The following severance benefits would apply if the Executive has an Involuntary Termination Associated With a Change in Control.]           (i) [to pay to Executive a lump sum payment equal to (A) 2 times Base Pay (as defined in the Severance Agreement), plus (B) 2 times Incentive Pay (as defined in the Severance Agreement). Payment shall be made within thirty (30) days after the effective date of Executive’s Date of Resignation (or the end of the revocation period set forth in this Agreement, if later).           (ii) to pay Executive Executive’s pro rated Incentive Pay (as defined in the Severance Agreement) for the year in which Executive’s Date of A-4 --------------------------------------------------------------------------------   Resignation occurs. Such pro rated Incentive Pay shall be paid to Executive in a lump sum within thirty (30) days after the effective date of the termination (or the end of the revocation period set forth in this Agreement, if later).           (iii) [for a period of twenty-four (24) months following Executive’s Date of Resignation, Executive shall continue to receive the medical and dental coverage in effect on Executive’s Date of Resignation (or generally comparable coverage) for Executive and, where applicable, Executive’s spouse and dependents, as the same may be changed from time to time for employees generally, as if Executive had continued in employment during such period] or [pay Executive cash in a lump sum payment equal to Executive’s after-tax cost of continuing comparable medical and dental coverage for the twenty-four (24) month period following Executive’s Date of Resignation.] [The Company shall take all commercially reasonable efforts to provide that the COBRA health care continuation coverage period under section 4980B of the Code, shall commence immediately after the foregoing twenty-four (24) month benefit period, with such continuation coverage continuing until the earlier of (i) the end of the applicable COBRA health care continuation coverage period or (ii) the date on which Executive is covered by the medical and dental coverage of Executive’s successor employer, if any.]           (iv) to pay to Executive a lump sum payment equal to the total amount that Executive would have received under the Company’s 401(k) plan as a Company match if Executive was eligible to participate in the Company’s 401(k) plan for the twenty-four (24) month period after Executive’s Date of Resignation and Executive contributed the maximum amount to the plan for the match. Payment shall be made within thirty (30) days after the Executive’s Date of Resignation (or the end of the revocation period set forth in this Agreement, if later).           (v) [to pay to Executive a lump sum payment equal to the total premiums that the Company would have paid under Executive’s split-dollar life insurance policy, if any, that is in effect immediately prior to Executive’s Date of Resignation, if Executive was employed by the Company for the twenty-four (24) month period following Executive’s Date of Resignation. Payment shall be made within thirty (30) days after the effective date of Executive’s Date of Resignation (or the end of the revocation period set forth in this Agreement, if later)]. [Note: The foregoing only applies if Executive has a split-dollar arrangement with the Company and the Company is required to make premium contributions on Executive’s Date of Resignation. The total months covered by the premiums will be reduced if the term of the policy is shorter than that provided for Executive.]           (vi) to pay to Executive a lump sum payment equal to twenty percent (20%) of the Executive’s Base Pay in order to cover the cost of outplacement assistance services for Executive. Payment shall be made within thirty (30) days after the effective date of Executive’s Date of Resignation (or the end of the revocation period set forth in this Agreement, if later). A-5 --------------------------------------------------------------------------------             (vii) Executive shall receive any amounts earned, accrued or owing but not yet paid to Executive as of Executive’s Date of Resignation, payable in a lump sum, and any benefits accrued or earned in accordance with the terms of any applicable benefit plans and programs of the Company. Except as set forth in this Agreement, it is expressly agreed and understood that Releasees do not have, and will not have, any obligations to provide Executive at any time in the future with any payments, benefits or considerations other than those recited in this paragraph, or those required by law, other than under the terms of any benefit plans which provide benefits or payments to former employees according to their terms.]      7. Executive understands and agrees that the payments, benefits and agreements provided in this Agreement are being provided to him in consideration for Executive’s acceptance and execution of, and in reliance upon Executive’s representations in, this Agreement. Executive acknowledges that if Executive had not executed this Agreement containing a release of all claims against the Company, Executive would only have been entitled to the payments provided in the Company’s standard severance pay plan for employees.      8. Executive acknowledges and agrees that the Company previously has satisfied any and all obligations owed to him under any employment agreement or offer letter Executive has with the Company and, further, that this Agreement supersedes any employment agreement or offer letter Executive has with the Company, and any and all prior agreements or understandings, whether written or oral, between the parties shall remain in full force and effect to the extent not inconsistent with this Agreement, and further, that, except as set forth expressly herein, no promises or representations have been made to him in connection with the termination of Executive’s employment agreement, if any, or offer letter, if any, with the Company, or the terms of this Agreement.      9. Executive agrees not to disclose the terms of this Agreement to anyone, except Executive’s spouse, attorney and, as necessary, tax/financial advisor. Likewise, the Company agrees that the terms of this Agreement will not be disclosed except as may be necessary to obtain approval or authorization to fulfill its obligations hereunder or as required by law. It is expressly understood that any violation of the confidentiality obligation imposed hereunder constitutes a material breach of this Agreement.      10. Executive represents that Executive does not presently have in Executive’s possession any records and business documents, whether on computer or hard copy, and other materials (including but not limited to computer disks and tapes, computer programs and software, office keys, correspondence, files, customer lists, technical information, customer information, pricing information, business strategies and plans, sales records and all copies thereof) (collectively, the “Corporate Records”) provided by the Company and/or its predecessors, subsidiaries or affiliates or obtained as a result of Executive’s prior employment with the Company and/or its predecessors, subsidiaries or affiliates, or created by Executive while employed by or rendering services to the A-6 --------------------------------------------------------------------------------   Company and/or its predecessors, subsidiaries or affiliates. Executive acknowledges that all such Corporate Records are the property of the Company. In addition, Executive shall promptly return in good condition any and all Company owned equipment or property, including, but not limited to, automobiles, personal data assistants, facsimile machines, copy machines, pagers, credit cards, cellular telephone equipment, business cards, laptops and computers. As of the Date of Resignation, the Company will make arrangements to remove, terminate or transfer any and all business communication lines including network access, cellular phone, fax line and other business numbers.      11. Nothing in this Agreement shall prohibit or restrict Executive from: (i) making any disclosure of information required by law; (ii) providing information to, or testifying or otherwise assisting in any investigation or proceeding brought by, any federal regulatory or law enforcement agency or legislative body, any self-regulatory organization, or the Company’s [designated legal, compliance or human resources officers]; or (iii) filing, testifying, participating in or otherwise assisting in a proceeding relating to an alleged violation of any federal, state or municipal law relating to fraud, or any rule or regulation of the Securities and Exchange Commission or any self-regulatory organization.      12. The parties agree and acknowledge that the agreement by the Company described herein, and the settlement and termination of any asserted or unasserted claims against the Releasees, are not and shall not be construed to be an admission of any violation of any federal, state or local statute or regulation, or of any duty owed by any of the Releasees to Executive.      13. Executive agrees and recognizes that should Executive breach any of the obligations or covenants set forth in this Agreement, the Company will have no further obligation to provide Executive with the consideration set forth herein, and will have the right to seek repayment of all consideration paid up to the time of any such breach. Further, Executive acknowledges in the event of a breach of this Agreement, Releasees may seek any and all appropriate relief for any such breach, including equitable relief and/or money damages, attorney’s fees and costs.      14. Executive further agrees that the Company shall be entitled to preliminary and permanent injunctive relief, without the necessity of proving actual damages, as well as to an equitable accounting of all earnings, profits and other benefits arising from any violations of this Agreement, which rights shall be cumulative and in addition to any other rights or remedies to which the Company may be entitled.      15. This Agreement and the obligations of the parties hereunder shall be construed, interpreted and enforced in accordance with the laws of the Commonwealth of Massachusetts.      16. Executive certifies and acknowledges as follows: A-7 --------------------------------------------------------------------------------             (a) That Executive has read the terms of this Agreement, and that Executive understands its terms and effects, including the fact that Executive has agreed to RELEASE AND FOREVER DISCHARGE the Company and each and everyone of its affiliated entities from any legal action arising out of Executive’s employment relationship with the Company and the termination of that employment relationship;           (b) That Executive has signed this Agreement voluntarily and knowingly in exchange for the consideration described herein, which Executive acknowledges is adequate and satisfactory to him and which Executive acknowledges is in addition to any other benefits to which Executive is otherwise entitled;           (c) That Executive has been and is hereby advised in writing to consult with an attorney prior to signing this Agreement;           (d) That Executive does not waive rights or claims that may arise after the date this Agreement is executed;           (e) That the Company has provided him with a period of [twenty-one (21)] or [forty-five (45)] days within which to consider this Agreement, and that Executive has signed on the date indicated below after concluding that this Separation of Employment Agreement and General Release is satisfactory to him; and           (f) Executive acknowledges that this Agreement may be revoked by him within seven (7) days after execution, and it shall not become effective until the expiration of such seven (7) day revocation period. In the event of a timely revocation by Executive, this Agreement will be deemed null and void and the Company will have no obligations hereunder. [SIGNATURE PAGE FOLLOWS] A-8 --------------------------------------------------------------------------------        Intending to be legally bound hereby, Executive and the Company executed the foregoing Separation of Employment Agreement and General Release this                      day of                     ,                     .                                   Witness:                           [Executive]                                       NOVELL, INC.                                       By:           Witness:                               Name:                 Title:                 A-9

Exhibit 10.3   Idaho Power Company 1994 Restricted Stock Plan Form of Restricted Stock Agreement (time vesting)                                                                               IDACORP, Inc. IDAHO POWER COMPANY 1994 RESTRICTED STOCK PLAN (DATES) PERIOD OF RESTRICTION RESTRICTED STOCK AGREEMENT     (Date)     (Name) (Address)     In accordance with the terms of the Idaho Power Company 1994 Restricted Stock Plan (the "Plan"), pursuant to action of the Compensation Committee (the "Committee") of the Board of Directors, IDACORP, Inc. (the "Company") hereby grants to you (the "Participant"), subject to the terms and conditions set forth in this Restricted Stock Agreement (including Annex A hereto and all documents incorporated herein by reference), an award of restricted shares of Company common stock (the "Restricted Stock"), as set forth below: Date of Grant:   Number of Shares of Restricted Stock:   Restricted Period: Date of Grant through ________________ Performance Goal: N/A Vesting Schedule: ALL OF THE SHARES OF RESTRICTED STOCK SUBJECT TO THIS AWARD SHALL VEST ON ___________ IF THE PARTICIPANT REMAINS EMPLOYED THROUGH THE RESTRICTED PERIOD. THESE SHARES OF RESTRICTED STOCK ARE SUBJECT TO FORFEITURE AS PROVIDED IN ANNEX A AND THE PLAN. Further terms and conditions of the Award are set forth in Annex A hereto, which is an integral part of this Restricted Stock Agreement. All terms, provisions and conditions applicable to the Award set forth in the Plan and not set forth herein are hereby incorporated by reference herein.  To the extent any provision hereof is inconsistent with the Plan, the Plan will govern.  The Participant hereby acknowledges receipt of a copy of this Restricted Stock Agreement including Annex A hereto and a copy of the Plan and agrees to be bound by all the terms and provisions hereof and thereof.   IDACORP, Inc.   By:______________________________   Agreed:   ___________________________ Attachment:  Annex A                     ANNEX A TO IDAHO POWER COMPANY 1994 RESTRICTED STOCK PLAN RESTRICTED STOCK AGREEMENT             IT IS UNDERSTOOD AND AGREED THAT THE AWARD OF RESTRICTED STOCK EVIDENCED BY THE RESTRICTED STOCK AGREEMENT TO WHICH THIS IS ANNEXED IS SUBJECT TO THE FOLLOWING ADDITIONAL TERMS AND CONDITIONS: 1.         Forfeiture and Transfer Restrictions. A.        FORFEITURE RESTRICTIONS.  EXCEPT AS PROVIDED OTHERWISE IN SECTION 2 OF THIS ANNEX A, IF THE PARTICIPANT'S EMPLOYMENT IS TERMINATED DURING THE RESTRICTED PERIOD, THE SHARES OF RESTRICTED STOCK SUBJECT TO THIS AWARD SHALL BE FORFEITED AS OF THE DATE OF TERMINATION. B.         TRANSFER RESTRICTIONS. THE RESTRICTED STOCK MAY NOT BE SOLD, TRANSFERRED, PLEDGED, ASSIGNED, OR OTHERWISE ALIENATED OR HYPOTHECATED DURING THE RESTRICTED PERIOD. 2.         TERMINATION OF EMPLOYMENT.  IF THE PARTICIPANT'S EMPLOYMENT IS TERMINATED DURING THE RESTRICTED PERIOD (I) DUE TO THE PARTICIPANT'S DEATH OR DISABILITY OR (II) DUE TO THE PARTICIPANT'S RETIREMENT, THE RESTRICTED STOCK SHALL VEST ON THE DATE OF SUCH TERMINATION OF EMPLOYMENT WITH RESPECT TO A PRORATED NUMBER OF SHARES OF RESTRICTED STOCK DETERMINED BY MULTIPLYING THE TOTAL NUMBER OF SHARES SUBJECT TO THIS AWARD TIMES A FRACTION, THE NUMERATOR OF WHICH IS THE NUMBER OF WHOLE MONTHS HAVING ELAPSED DURING THE RESTRICTED PERIOD AS OF THE DATE OF SUCH TERMINATION OF EMPLOYMENT AND THE DENOMINATOR OF WHICH IS THE TOTAL NUMBER OF WHOLE MONTHS IN THE RESTRICTED PERIOD.  FOR PURPOSES OF THIS SECTION 2, DETERMINATION OF WHETHER A PARTICIPANT'S EMPLOYMENT IS TERMINATED DUE TO THE PARTICIPANT'S RETIREMENT SHALL BE MADE IN THE SOLE DISCRETION OF THE COMMITTEE AND THE COMMITTEE'S DETERMINATION SHALL BE FINAL.             RETIREMENT MEANS A PARTICIPANT'S TERMINATION FROM EMPLOYMENT WITH THE COMPANY OR A SUBSIDIARY AT THE PARTICIPANT'S EARLY OR NORMAL RETIREMENT DATE, AS APPLICABLE. A.        EARLY RETIREMENT DATE - SHALL MEAN THE DATE ON WHICH A PARTICIPANT TERMINATES EMPLOYMENT, IF SUCH TERMINATION DATE OCCURS ON OR AFTER PARTICIPANT'S ATTAINMENT OF AGE FIFTY-FIVE (55) BUT PRIOR TO PARTICIPANT NORMAL RETIREMENT DATE. B.         NORMAL RETIREMENT DATE - SHALL MEAN THE DATE ON WHICH THE PARTICIPANT TERMINATES EMPLOYMENT, IF SUCH TERMINATION DATE OCCURS ON OR AFTER THE PARTICIPANT ATTAINS AGE SIXTY-TWO (62).   3.         VESTING OF RESTRICTED STOCK. EXCEPT AS PROVIDED OTHERWISE IN SECTION 3.2 OF THE PLAN AND SECTIONS 1 OR 2 OF THIS ANNEX A, THE RESTRICTED STOCK SHALL VEST IN ACCORDANCE WITH THE VESTING SCHEDULE SET FORTH IN THE RESTRICTED STOCK AGREEMENT.  ANY SHARES THAT DO NOT VEST SHALL BE FORFEITED. 4.         VOTING RIGHTS, DIVIDENDS AND CUSTODY.  THE PARTICIPANT SHALL BE ENTITLED TO VOTE AND RECEIVE REGULAR CASH DIVIDENDS PAID WITH RESPECT TO THE SHARES SUBJECT TO THIS AWARD DURING THE RESTRICTED PERIOD; PROVIDED, HOWEVER, THAT IN NO EVENT SHALL THE PARTICIPANT VOTE OR RECEIVE DIVIDENDS PAID WITH RESPECT TO ANY FORFEITED SHARES ON OR AFTER THE DATE OF FORFEITURE.  THE SHARES SUBJECT TO THIS AWARD SHALL BE REGISTERED IN THE NAME OF THE PARTICIPANT AND HELD IN THE COMPANY'S CUSTODY DURING THE RESTRICTED PERIOD. 5.         TAX WITHHOLDING. THE COMPANY MAY MAKE SUCH PROVISIONS AS ARE NECESSARY FOR THE WITHHOLDING OF ALL APPLICABLE TAXES ON THE RESTRICTED STOCK, IN ACCORDANCE WITH SECTION 5.3 OF THE PLAN.  WITH RESPECT TO THE MINIMUM STATUTORY TAX WITHHOLDING REQUIRED WITH RESPECT TO THE RESTRICTED STOCK, THE PARTICIPANT MAY ELECT TO SATISFY SUCH WITHHOLDING REQUIREMENT BY HAVING THE COMPANY WITHHOLD SHARES FROM THIS AWARD. 6.         Ratification of Actions.  By accepting this Award or other benefit under the Plan, the Participant and each person claiming under or through him shall be conclusively deemed to have indicated the Participant's acceptance and ratification of, and consent to, any action taken under the Plan or the Award by IDACORP, Inc. 7.         Notices.  Any notice hereunder to IDACORP, Inc. shall be addressed to its office at 1221 West Idaho Street, Boise, Idaho 83702; Attention: Manager of Compensation, and any notice hereunder to the Participant shall be addressed to him or her at the address specified on the Restricted Stock Agreement, subject to the right of either party to designate at any time hereafter in writing some other address. 8.         Definitions.  Capitalized terms not otherwise defined herein shall have the meanings given them in the Plan. 9.         Governing Law and Severability.  To the extent not preempted by Federal law, the Restricted Stock Agreement will be governed by and construed in accordance with the laws of the State of Idaho, without regard to conflicts of law provisions.  In the event any provision of the Restricted Stock Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Restricted Stock Agreement, and the Restricted Stock Agreement shall be construed and enforced as if the illegal or invalid provision had not been included.