SECTION 10. EXTERNALAUDIT

PROCEDURES

Sec. 10.01. In General. Unless QI requests an IRS audit in lieu of an external audit, the IRS agrees not to conduct an onsite audit of QI, or any PAI with which QI has an agreement, with respect to withholding and reporting obligations covered by this Agreement provided that an external auditor designated in Appendix B of

this Agreement conducts an audit of QI, and any PAI, in accordance with this section 10. QI shall permit the external auditor to have access to all relevant records of QI for purposes of performing the external audit, including information regarding specific account holders. QI shall permit the IRS to communicate directly with the external auditor and to review the audit procedures followed by the external auditor. QI represents that there are no legal prohibitions that prevent the external auditor from examining any information relevant to the external audit to be performed under this section 10 and that there are no legal prohibitions that prevent the IRS from communicating directly with the auditor. QI shall permit the IRS to examine the external auditor’s work papers and reports. However, the external auditor is not required to divulge the identity of QI’s account holders to the IRS. Sec. 10.02. Designation of External Au- ditor . QI’s external auditor must be one of the auditors listed in Appendix B of this Agreement, unless QI and the IRS agree, prior to the audit, to substitute another auditor. QI shall not propose an external auditor unless it has a reasonable belief that the auditor is subject to laws, regulations, or rules that impose sanctions for failure to exercise its independence and to perform the audit competently. The IRS has the right to reject a proposed external auditor, or to revoke its acceptance of an external auditor, if the IRS, in its sole discretion, reasonably believes that the auditor is not independent or cannot perform an effective audit under this Agreement. Sec. 10.03. Timing and Scope of Exter- nal Audits. QI shall have the external auditor conduct an audit of the second full calendar year and the fifth full calendar year that this Agreement is in effect, subject to section 10.06 of this Agreement. The external auditor shall verify whether QI is in compliance with this Agreement by conducting an audit that meets the requirements of this section 10.03. The external auditor shall verify whether QI is in compliance with its QI agreement by providing a report to the IRS. The report must be received by the IRS, at the address set forth in section 12.06 of this Agreement, no later than June 30 of the year following the year being audited. The IRS may, however, upon request by

the external auditor, extend the due date of the audit report upon good cause. The report must disclose that the external auditor has, at a minimum, performed the following checks listed in this paragraph 10.03, and set forth how each of those checks was performed and the results of the checks. QI’s (or a PAI’s) external auditor is encouraged to contact the IRS at the address set forth in section 12.06 of this Agreement and submit an audit plan (which includes, if relevant, the extent to which the external auditor proposes to rely on QI’s internal audit procedures) prior to performing the audit so that the audit may be conducted in the most efficient and least costly manner possible. (A) Documentation . The external auditor must– (1) Verify that QI has training materials, manuals, and directives that instruct the appropriate QI employees how to request, collect, review, and maintain documentation in accordance with this Agreement; (2) Review QI’s account opening procedures and interview QI’s employees, to determine if appropriate documentation is requested from account holders and, if obtained, that it is reviewed and maintained in accordance with this Agreement; (3) Verify that QI follows procedures designed to inform account holders that claim a reduced rate of withholding under an income tax treaty about any applicable limitation on benefits procedures; (4) Review QI’s accounts, using a valid sample of accounts for which treaty benefits are claimed, to ensure that QI is obtaining the treaty statements required by section 5.03(B); (5) Review information, using a valid sample, contained in account holder files to determine if the documentation validity standards of section 5.10 of this Agreement are being met. For example, the external auditor must verify that changes in account holder information (e.g., a change of address to a U.S. address or change of account holder status from foreign to U.S.) are being conveyed to QI’s withholding agent, or, if QI assumes primary NRA withholding responsibility or primary Form 1099 reporting and backup withholding responsibility, that QI is applying the appropriate withholding rate; (6) Review accounts, using a valid sample of U.S. non-exempt recipient account holders, to determine if QI is obtaining Forms

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W-9 from those customers whose identity is not prohibited by law from disclosure, and that QI is transmitting those forms to a withholding agent to the extent QI does not assume primary Form 1099 reporting and backup withholding responsibility with respect to reportable amounts and, if applicable, designated broker proceeds; (7) Review accounts, using a valid sample of U.S. non-exempt recipient account holders whose identity and account information is prohibited by law, including by contract, from disclosure, to verify that– (i) Such accounts exist in only rare and unusual circumstances (and detailing in the audit report the nature of such circumstances); and (ii) The procedures of section 6.04 have been, and are being, followed. (8) Review QI’s agreements with its PAIs to ensure that the obligations imposed on the PAIs are identical to the obligations imposed on QI under this Agreement, except as otherwise provided in section 4.02. (9) State in its external audit report if the auditor is aware that QI is in material violation or is under investigation for violation of any of the know-your-customer rules, practices, or procedures applicable to the offices audited. (10) State in its external audit report if the auditor is aware that QI removes U.S. non- exempt recipients from accounts covered by this Agreement for the purpose of circumventing the Form 1099 reporting and backup withholding provisions of this Agreement. (B) Withholding Rate Pools. The external auditor must– (1) Verify that QI has training materials, manuals, and directives that instruct the appropriate QI employees how to determine withholding rate pools based on documentation and the presumption rules; (2) Interview employees responsible for determining withholding rate pools to ascertain if they are adequately trained to determine those pools and that they follow adequate procedures for determining those pools; (3) Review QI’s procedures for preparing the withholding statements associated with QI’s Forms W-8IMY and verify that the withholding statements provided to withholding agents convey complete and correct information on a timely basis; (4) Perform test checks, using a valid

sample of account holders assigned to each withholding rate pool, and cross check that assignment against the documentation provided by, or presumption rules that apply to, the account holder, the type of income earned, and the withholding rate applied; (5) Perform test checks, using a valid sample of accounts of U.S. non-exempt recipients, to verify that appropriate withholding rate pools are established for U.S. non-exempt recipients; and (6) Verify, if QI is using the alternative procedure for U.S. non-exempt recipients contained in section 6.03(B) of this Agreement, that QI is providing sufficient and timely information to withholding agents that allocates reportable payments to U.S. non-exempt recipients. (C) Withholding Responsibilities. The external auditor must– (1) To the extent QI has assumed primary NRA withholding responsibility, perform test checks, using a valid sample of foreign account holders, to verify that QI is withholding the proper amounts; (2) To the extent QI has not assumed primary NRA withholding responsibility, verify that QI has fulfilled its responsibilities under section 3.02 of this Agreement; (3) To the extent QI has assumed primary Form 1099 reporting and backup withholding responsibility, perform test checks using a valid sample of U.S. nonexempt recipient account holders to verify that QI backup withheld when required; (4) To the extent QI has not assumed primary Form 1099 reporting and backup withholding responsibility, perform test checks using a valid sample of U.S. nonexempt account holders to verify that QI has fulfilled its backup withholding responsibilities under sections 3.04, 3.05 and 3.06 of this Agreement; (5) Review the accounts of U.S. non-exempt recipient account holders whose identity is prohibited by law, including by contract, from disclosure and verify that QI or another payor is backup withholding on reportable payments made to such account holders; (6) Review a valid sample of accounts of U.S. non-exempt recipient account holders and determine if assets that generate or could generate reportable payments are held in an account of any U.S. non-exempt recipient account holders whose identity is prohibited by law, including by

contract, from disclosure, and ascertain the reason why such assets have not been disposed of or the account holder disclosed; and (7) Verify that amounts withheld were timely deposited in accordance with section 3.08 of this Agreement. (D) Return Filing and Information Re- porting. The external auditor must– (1) Obtain copies of original and amended Forms 1042 and Forms 945, and any schedules, statements, or attachments required to be filed with those forms, and determine whether the amounts of income, taxes, and other information reported on those forms are accurate by– (i) Reviewing work papers; (ii) Reviewing Forms W-8IMY, together with the associated withholding statements, that QI has provided to withholding agents; (iii) Reviewing copies of Forms 1042-S that withholding agents have provided QI; (iv) Reviewing account statements from withholding agents; (v) Reviewing correspondence between QI and withholding agents; and (vi) Interviewing personnel responsible for preparing the Forms 1042 and 945 and the work papers used to prepare those forms. (2) Obtain copies of original and corrected Forms 1042-S and Forms 1099 together with the work papers used to prepare those forms and determine whether the amounts reported on those forms are accurate by– (i) Reviewing the Forms 1042-S received from withholding agents; (ii) Reviewing the Forms W-8IMY, and the associated withholding statements, that QI has provided withholding agents; (iii) Reviewing a valid sample of account statements issued by QI to account holders; and (iv) Interviewing QI’s personnel responsible for preparing the Forms 1042-S and, if applicable, Forms 1099, and the work papers used to prepare those forms. (3) Thoroughly review the statements attached to amended Forms 1042 filed to claim a refund, ascertain their veracity, and determine the causes of any overwithholding reported and ensure QI did not issue Forms 1042-S to persons whom it included as part of its collective credit or refund. (4) Determine, in the case of collective

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credits or refunds, that QI repaid the appropriate account holders prior to requesting a collective refund or credit. (E) Change in Circumstances. The external auditor must verify that in the course of the audit it has not discovered any significant change in circumstances, as described in section 11.03(A), (D), or (E) of this Agreement. Sec. 10.04. Use of Statistical Sampling. If the external auditor is required to make a determination based on a valid sample of accounts, it shall use a statistical sampling whenever an examination of all of accounts within a particular class of accounts would be prohibitive in terms of time and expense. If it is reasonable to examine all accounts in connection with a particular issue, statistical sampling techniques shall not be used. If statistical sampling techniques are required, the external auditor must determine a sample size that provides a 95 percent confidence level. If statistical sampling has been used and the auditor determines that underwithholding has occurred with respect to the sampled accounts, the IRS will determine the total amount of underwithheld tax by projecting the underwithholding over the entire population of similar accounts. For this purpose, QI agrees to provide the IRS with the information (e.g., number of accounts and amounts) required to project the underwithholding. QI shall either report and pay, in accordance with section 9.06 of this Agreement, the underwithheld tax determined under the IRS projection or propose another amount of underwithholding based on a more accurate population, a more accurate projection technique, or an examination of all similar accounts. If the IRS does not agree with the amount proposed by QI, the IRS shall assess a tax by making a return under section 6020 of the Code. Sec. 10.05. External Auditor’s Report. Upon completion of the audit of QI and any PAI, the external auditor shall issue a report, or reports, of audit findings directly to the IRS by sending the original report to the IRS at the address set forth in section 12.06 of this Agreement by June 30 following the calendar year being audited, or if that date falls on a Saturday or Sunday, the next U.S. business day. The report must be in writing, in English, and currency amounts must be stated in U.S.

dollars. The report must fully describe the scope of the audit, the methodologies (including sampling techniques) used to determine whether QI is in compliance with the provisions of this Agreement, and the result of each such determination. The report must also specifically address each of the items in section 10.03 of this Agreement. Sec. 10.06. Expanding Scope and Tim- ing of External Audit. Upon review of the external auditor’s report, the IRS may request, and QI must permit, the external auditor to perform additional audit procedures, or to expand the external audit to cover some or all of the calendar years for which the period of limitations for assessment of taxes has not expired. In addition, the IRS may request, and QI agrees to permit, the external auditor to perform an audit for one or more calendar years not scheduled for audit under section 10.03 of this Agreement.

SECTION 11. EXPIRATION, TERMINATION AND DEFAULT

Sec. 11.01. Term of Agreement. This Agreement shall be in effect on _________ and shall expire on December 31 of the fifth full calendar year after the year in which this Agreement first takes effect. This Agreement may be renewed as provided in section 11.06 of this Agreement. Sec. 11.02. Termination of Agreement. This Agreement may be terminated by either the IRS or QI prior to the end of its term by delivery of a notice of termination to the other party in accordance with section 12.06 of this Agreement. The IRS, however, shall not terminate the Agreement unless there has been a significant change in circumstances, as defined in section 11.03 of this Agreement, or an event of default has occurred, as defined in section 11.04 of this Agreement, and the IRS determines, in its sole discretion, that the significant change in circumstances or the event of default warrants termination of this Agreement. In addition, the IRS shall not terminate this Agreement in the event of default if QI can establish to the satisfaction of the IRS that all events of default for which it has received notice have been cured within the time period agreed upon. The IRS shall notify QI, in accordance with section 11.05 of this Agreement, that an

event of default has occurred and that the IRS intends to terminate the Agreement unless QI cures the default. A notice of termination sent by either party shall take effect on the date specified in the notice. Sec. 11.03. Significant Change in Cir- cumstances. For purposes of this Agreement, a significant change in circumstances includes, but is not limited to– (A) An acquisition of all, or substantially all, of QI’s assets in any transaction in which QI is not the surviving legal entity; (B) A change in U.S. federal law or policy, or applicable foreign law or policy, that affects the validity of any provision of this Agreement, materially affects the procedures contained in this Agreement, or affects QI’s ability to perform its obligations under this Agreement; (C) A ruling of any court that affects the validity of any provision of this Agreement; (D) A material change in the know-yourcustomer rules and procedures set forth in any Attachment to this Agreement; or (E) A significant change in QI’s business practices that affects QI’s ability to meet its obligations under this Agreement. Sec. 11.04. Events of Default. For purposes of this Agreement, an event of default occurs if QI fails to perform any material duty or obligation required under this Agreement, and includes, but is not limited to, the occurrence of any of the following: (A) QI fails to implement adequate procedures, accounting systems, and internal controls to ensure compliance with this Agreement; (B) QI underwithholds an amount that QI is required to withhold under chapter 3 of the Code and fails to correct the underwithholding or to file an amended Form 1042 reporting, and paying, the appropriate tax; (C) QI underwithholds an amount that QI is required to backup withhold under section 3406 of the Code; (D) QI makes a misrepresentation on Forms W-8IMY or the associated withholding statement that results in underwithholding by a withholding agent; (E) QI makes excessive refund claims; (F) Documentation described in section 5 of this Agreement is lacking, incorrect, or unreliable for a significant number of direct account holders; (G) QI fails to timely file Forms 945,

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1042, 1042-S, or 1099 or files forms that are materially incorrect or fraudulent or fails to provide information necessary for a withholding agent or payor to file Forms 1099 with respect to disclosed U.S. persons; (H) QI fails to have an external audit performed when required, QI’s external auditor fails to provide its report directly to the IRS on a timely basis, QI fails to cooperate with the external auditor, or QI or its external auditor fails to cooperate with the IRS; (I) QI fails to disclose to a withholding agent, or to the IRS, U.S. nonexempt recipient account holders to the extent the disclosure is not prohibited by foreign law, including by contract; (J) QI fails to inform the IRS of any change in the know-your-customer rules described in any Attachment to this Agreement within 90 days of the change becoming effective; (K) QI fails to inform the IRS within 90 days of any significant change in its business practices to the extent that change affects QI’s obligations under this Agreement; (L) QI fails to inform the IRS of any private arrangement, as described in section 4 of this Agreement; (M) QI fails to cure a default identified by the IRS or by an external auditor; (N) QI makes any fraudulent statement or a misrepresentation of material fact with regard to this Agreement to the IRS, a withholding agent, or QI’s external auditor; (O) The IRS determines that QI’s external auditor is not sufficiently independent to adequately perform its audit function or the external auditor fails to provide an audit report that complies with section 10 of this Agreement; (P) An intermediary with which QI has a PAI agreement is in default with that agreement and QI fails to meet its obligation to terminate that agreement within the time period specified in section 4.03 of this Agreement; (Q) QI has not complied with the procedures of section 6.04 of this Agreement or has any undisclosed U.S. non-exempt recipients (except in rare and unusual circumstances) whose accounts contain assets that generate, or could generate, reportable payments; (R) QI is prohibited by any law from disclosing the identity of an account holder

or account information to QI’s external auditor; (S) QI, to the extent it has primary Form 1099 reporting and backup withholding responsibility, fails to comply with the requirements of chapter 61 and section 3406 of the Code; (T) QI, to the extent that it elects the alternative withholding rate pool procedures of section 6.03(B) of this Agreement (regarding U.S. non-exempt recipient account holders) fails to provide allocation information by January 15th as required by that section; (U) QI fails to make deposits in the time and manner required by section 3.08 of this Agreement or fails to make adequate deposits, taking into account the procedures of 9.07 of this Agreement; (V) QI fails to permit the external auditor to perform additional audit procedures, or to expand the external audit to cover some or all of the calendar years for which the period of limitations for assessment of taxes has not expired under the provisions of section 10.06 of this Agreement; or (W) QI removes U.S. non-exempt recipients from accounts covered by this Agreement for the purpose of circumventing the Form 1099 reporting and backup withholding provisions of this Agreement. Sec. 11.05. Notice and Cure. Upon the occurrence of an event of default, the IRS may deliver to QI a notice of default specifying the event of default that has occurred. QI shall respond to the notice of default within 60 days (60-day response) from the date of the notice of default. The 60-day response shall contain an offer to cure the event of default and the time period in which the cure will be accomplished or shall state the reasons why QI does not agree that an event of default has occurred. If QI does not provide a 60-day response, the IRS may deliver a notice of termination as provided in section 11.02 of this Agreement. If QI provides a 60-day response, the IRS shall either accept or reject QI’s statement that no default has occurred or accept or reject QI’s proposal to cure an event of default. If the IRS rejects QI’s contention that no default has occurred or rejects QI’s proposal to cure a default, the IRS will offer a counter-proposal to cure the event of

default. Within 30 days of receiving the IRS’s counter-proposal, QI shall notify the IRS (30-day response) whether it continues to maintain that no default has occurred or whether it rejects the IRS’s counter-proposal to cure an event of default. If QI’s 30-day response states that no default has occurred or it rejects the IRS’s counter-proposal to cure, the parties shall seek to resolve their disagreement within 30 days of the IRS’s receipt of QI’s 30-day response. If a satisfactory resolution has not been achieved at the end of this latter 30-day period, or if QI fails to provide a 30-day response, the IRS may terminate this Agreement by providing a notice of termination in accordance with section 11.02 of this Agreement. If QI receives a notice of termination from the IRS, it may appeal the determination within 30 days of the date of the notice of termination by sending a written notice to the address specified in section 12.06 of this Agreement. If QI appeals the notice of termination, this Agreement shall not terminate until the appeal has been decided. If an event of default is discovered in the course of an external audit, the QI may cure the default, without following the procedures of this section 11.05, if the external auditor’s report describes the default and the actions that QI took to cure the default and the IRS determines that the cure procedures followed by QI were sufficient. If the IRS determines that QI’s actions to cure the default were not sufficient, the IRS shall issue a notice of default and the procedures described in this section 11.05 shall be followed. Sec. 11.06. Renewal. If QI intends to renew this Agreement, it shall submit an application for renewal to the IRS no earlier than one year and no later than six months prior to the expiration of this Agreement. Any such application for renewal must contain an update of the information provided by QI to the IRS in connection with the application to enter into this Agreement, and any other information the IRS may request in connection with the renewal process. This Agreement shall be renewed only upon the signatures of both QI and the IRS. Either the IRS or QI may seek to negotiate a new qualified intermediary agreement rather than renew this Agreement.

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