PEACE BRIDGE UNDERSTANDING

These understandings provide a road map forward for the Peace Bridge and have been reached by representatives of the governments of Canada and New York State. It is understood that where steps listed in this document require the approval of the Peace Bridge Authority, they are contingent on the decisions of its Board of Directors as a binational body. The Peace Bridge performs as a single enterprise with a presence and operation on both the Buffalo (US) and Fort Erie (Canada) side, and to optimize the Bridge’s performance, both plazas must be developed and improved to their fullest.

The development of the Buffalo side of the bridge will be prioritized to improve the US Plaza area and the pre-inspection pilot program will be aggressively pursued to move the inspection booths to the Canada side of the bridge, opening the US Plaza and alleviating congestion.

In general, the participants will proceed with three independent and distinct project areas immediately and simultaneously: The study of, followed by the EIS preparation for, the US Plaza widening; the pre-inspection pilot; and US Plaza improvement projects for which an environmental review or EIS where applicable and undertaken by the appropriate entity being the PBA and/or New York State and its agencies is unnecessary, underway or completed, and which will be accelerated.

The participants understand that each of these projects addresses particular needs, has independent utility and is not dependent on or determinative of any other project. Each project already has its own environmental review track, which will proceed (or not) as required. Therefore, in reliance on the representations of each other and on the provisions herein, the participants agree as follows:

1.

US Plaza Enhancement and Widening Project

The PBA will immediately initiate a comprehensive traffic study of the US plaza in an expeditious manner, with the assistance of NYS as agreed, to evaluate the current traffic configuration. Based on the results of the traffic study, the PBA and NYS shall jointly develop a plan for improving traffic flow, improving the Plaza, including Plaza widening if that is recommended by the study to reduce congestion or reduce neighborhood impacts.

Thereafter an environmental review or EIS where applicable and undertaken by the PBA and/or New York State and its agencies will be prepared as required. The EIS undertaken by New York State and its agencies will be prepared in a manner so as not to interfere with any other current or future PBA projects. The cost of the Plaza enhancement and widening is estimated to range between $40 million and $50 million and will be funded by the PBA and the remainder of the $15 million of NY Works funds. The PBA will proceed immediately to use its best efforts to expedite completion of said plan in under three years. The PBA will lead and manage this project. The PBA will consult with NYS in its management of this project. It is understood that the configuration of the Plaza project cannot be finalized until the outcome of the pilot pre-inspection is determined. However, other plaza enhancements and improvements (as provided for herein) can be commenced prior to, and during, the pre-inspection pilot as long as such improvements do not interfere with the possible outcome(s) of the pilot. Projected Schedule: Traffic Study to commence July 2013; studies and feasibility planning, and the participants will use their best efforts to complete it by April 2014; start environmental process and preliminary engineering May 2014 subject to the environmental process or environmental review or EIS where applicable and undertaken by the PBA and/or New York State and its agencies proceeding in a manner so as not to interfere with any other current or future PBA projects; ROD issued March 2015. The participants, working as partners, will use their best efforts to complete the project as soon as possible. 2. Pre-Inspection Pilot Program

The PBA intends to proceed immediately with any required reviews and approvals regarding the Pre-Inspection Pilot Program, which will provide for primary inspection of U.S.-bound trucks on the Canadian side of the bridge for a pilot program of 12 to 18 months. The estimated cost for the pilot is $500,000 funded by PBA capital reserves. Upon completion of a successful pilot, the capital costs could be as much as $30 million, with funding to be determined. Projected Schedule: PBA desires to commence the Pilot 6 months after commencement of Blaine, WA pilot (anticipated January 2014); assuming the pilot is successful and assuming the successful completion of a comprehensive agreement between Canada and the United States on land, rail and marine pre-clearance, a permanent pre-inspection facility could be considered and once approved, designed and built as soon as possible. 3. US Plaza Improvement Projects (PBA/State/Fed funds)

There are Plaza improvement proposals that are independent that do not require an environmental review or for which an environmental review is complete or underway. These projects will be prioritized and accelerated. -2-

Gateway Ramp Project

NYS shall proceed on an expedited basis with Gateway Ramp Project, which is designed to provide a direct connection from the Plaza to I-190 NB, eliminate the Plaza exit onto Baird Drive and remove Baird Drive from Front Park, and create a new entrance to the Plaza at Porter Avenue for all traffic coming from City streets. NYSDOT has commenced the environmental review process under NEPA. The estimated cost is $22 million funded by $15.8 million in federal highway funds and $6 million in NY Works funds.

Projected Schedule: Record of decision April 2014, Design Build contract: notice to proceed May 2014, construction completion December 2015.

Customs Warehouse Project The PBA shall proceed with the Customs Warehouse Project, which will provide a small addition to a 1960s-era building and provide upgrades to meet post-9/11 security requirements and improve energy efficiency. The environmental review process has been completed by the GSA and the PBA. The estimated cost is $22.5 million funded by PBA.

Projected Schedule: The Customs Warehouse Project is acknowledged to be a top priority for the PBA and will be completed as soon as possible.

Approach Widening Project The PBA shall proceed with the Approach Widening Project on the U.S. end of the bridge, which will provide for better separation of truck traffic from automobile traffic, improve the flow of traffic to Nexus booths, and provide a staging area for eventual redecking of the bridge. The environmental review process has been completed by the PBA. The estimated cost is $13 million funded by PBA.

Projected Schedule: Early Construction package (foundation design and parking): Notice to proceed June 2013, completion December 2013 on a best efforts basis (approximately $1 million); Remaining Construction package is acknowledged to be a top priority for the PBA and is to be completed as soon as possible.

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ECH Property Acquisition

Empire State Development shall proceed with the acquisition of the ECH property to remove blight from the area surrounding the Bridge and the community. The PBA, as a lienholder, shall cooperate in the acquisition and make no claim against New York State for payment of any outstanding mortgage costs on the property. ESD has completed the environmental review. The acquisition price is $4.7 million funded by New York State, and the State will cover all costs including legal costs associated with the acquisition.

Projected Schedule: ESD anticipates closing on property in June 2013. Busti Avenue Acquisition

The PBA and NYS will cooperate on the purchase of Busti Avenue by the New York State for the purpose of creating a neighborhood buffer and potential other uses subject to further planning.

Projected Schedule: NYS to undertake environmental review process under SEQRA complete by June 2014, acquisition complete by July 2014. It is the participants’ current intention to maintain the current PBA structure and to refinance any bonds due in 2014. In the furtherance of those objectives, the PBA will engage a reputable financial institution to advise the Board on the necessary capital to raise for future projects. The participants desire the terms and conditions herein to be enacted by the PBA and for the PBA to take such actions in order to effectuate the same including any bond financing and construction efforts, if such is in accordance with their duties as board members and fiduciaries. In consideration of the terms and conditions herein, the State of New York agrees that the legislation intended to abolish the PBA will not take legal effect.

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