EXHIBIT 10.

EXTRACTS FROM REPORTS OF THE LIQUIDATOR SHOWING LITIGATION IN FRANCE AND PANAMA, PLEDGES, SETTLEMENTS WITH CONTRACTORS, ETC.

[No. 1, third part.]

MANAGEMENT OF M. BRUNET, FEBRUARY 4, 1889, TO MARCH 8, 1890.

M. Brunet came into office on the 4th of February, 1889. On this date the situation of the enterprise on the Isthmus was most critical. The liquidator found it impossible to continue the works, the sudden stoppage of which, the sending away of several thousands of workmen might bring about serious troubles and irreparable disasters. The contractors could not leave their workshops and reconcile their work people from one day to the next, and they were not disposed to give up these workshops and the matériel until after their respective situations had been definitely settled.

In short, the general state of public opinion and the disposition manifested in the financial world at the commencement of 1889 was of such a nature as to justify the liquidator in thinking that the transfer of the work to a new company was not absolutely impossible. It was, therefore, necessary to proceed with a certain amount of prudence and not definitively compromise, by too prompt action, the whole future of the undertaking.

On the other hand, if this favorable hypothesis was not realized, it was the duty of the liquidator to attempt to take up again and continue the work by means of the formation of a company of construction.

The work already done, the considerable quantity of matériel brought to Colombia and in place for working, had an incontestable value if used to continue the excavation of the canal; it would have been quite a different matter had the scheme been definitively abandoned. Also, the works must be taken care of, the matériel preserved on a line of plants of 75 kilometers. For this resources were deficient. A seizure made by one of the contractors on the Isthmus, the company of public works and constructions, of money in the hands of two companies in Paris, debtors of the Panama Company, made sums of money which would have been very useful to the liquidator unavailable.

The liquidator suddenly found himself deprived of large capital which he expected to have at Panama, and on which he had counted to pay the necessary expenses on the Isthmus. About the 10th to the 15th of February, 1889, the directors of the Panama Company, contrary to the instructions of the liquidator, had paid, under the influence of a panic and exaggerated fears, to all the employees working on the Isthmus, threequarters of the indemnity in proportion to the length of their service which the company were liable for in the case of dismissal of the workmen. The total amount of the payments thus made was 1,582,000 francs. However interesting may have been the situation of those employees,

these payments still left remaining the obligation to bring back to France these workmen and were untimely, occurring as they did just at the moment when the liquidator had scarcely at his disposal the necessary funds to avoid the whole abandonment of the scheme and the disastrous consequences of that.

On the other hand, the liquidator could not attempt in the future to form a company for the accomplishment or finishing the canal without having previously caused the formation of a commission of examination which would have for its task to render an account of the value of the work accomplished, of the machinery, materials, etc., and give an opinion as to whether the work could be accomplished, and under what conditions. It was necessary to provide for the expenses of such an investigation and to take steps during it and afterwards, if it should be necessary, to provide for the protection of the work already done and for keeping in condition the machinery, etc.

Above all it was important to avoid any sudden interruption of work on the Isthmus. After the 9th of February, 1889, the liquidator had entered into, with four large contracting firms-namely, MM. Artigue Sonderegger & Co., Baratoux, Letellier & Co., M. Eiffel, Jacob-the agreements and pledges (nantissements) prepared by the temporary administrators and authorized by the tribunal.

The same day he gave them bills of exchange representing the amount they had earned since the suspension of payment up to the 9th of February. The work which was to follow was also to be settled by means of bills accepted by the liquidation.

The 18th of February and the 23d of March, 1889, the liquidator entered into identical arrangements with M. Slaven, president of the American Contracting and Dredging Company, in that case the pledge consisting of the deposit of 3,000 shares of stock of the Panama Railroad Company, which pledge was made in the American manner.

By means of these successive agreements the work has been continued on the Isthmus up to various dates, reaching from the 15th of March to the 15th of May, 1889.

But the liquidator had another mission to fulfill. In appointing him the civil tribunal had given him "the most extensive powers, notably to cede or contribute to the new company all or part of the company's assets, to make or ratify with the contractors of the Panama Canal all agreements, having for their object to assure the continuation of the work."

On the supposition that the work was to be soon resumed, as on the supposition that the liquidator could only effect the establishment of a company to accomplish it, it was of the highest interest to disengage the liquidation from contracts which had been entered into with burdensome conditions, with a view to assure the very prompt construction of the canal with locks, and which would bear heavily upon any company disposed to undertake the continuation of the work. Moreover, the liquidator was not able to repossess the workshops and machinery, etc. (matériel), which had been turned over to the contractors by the com

pany except after having arranged the respective claims of these contractors.

The conditions on which those arrangements were made varying according to the original arrangement with each contractor it is proper to consider them separately.

It must be remembered that all the canceling of contracts had taken place without the liquidator's according to the contractors any indemnity for loss of profits or other causes.

COMPANY OF PUBLIC WORKS AND CONSTRUCTIONS.

The company of public works and constructions had remained adverse to all the arrangements made between the provisional administrators and the other large contractors. They had brought several suits both before and after the suspension of payment.

1. On the 6th of September, 1888, they summoned M. Ferdinand de Lesseps and the council of administration of the Panama Company for damages before the tribunal civil of the Seine on account of certain expressions in the report presented on the 1st of August to the ordinary general meeting of stockholders.

2. On the 7th of September, 1888, they summoned the Panama Company before the tribuual of commerce of the Seine to be condemned to the guarantee of the sum of 609,139 francs claimed from the company of public works and constructions by MM. E. Jacquemin and associates, sub-contractors.

3. On the 13th of October, 1889, the society of public works and construction raised the figure of the preceding demand to 13,335,903.55 francs. They also demanded, in view of the situation of the company, to be guaranteed by it against the claims of subcontractors, and claimed the reimbursement of expenses occasioned by the stopping of the works. 4. The canal company, acting on the advice of its provisional administrators and administrative council, on the 7th of January, 1889, summoned the society of public works and construction before the tribunal of commerce for payment of 8,702,756.30 francs.

6. However, under date of the 13th of December, 1888, the society of public works and construction had made seizures by way of garnishment, limited finally to 2,000,000 francs by an order of the president of the civil tribunal, of debts owing to the Panama Company by two credit companies. Thus, as has been said above, this opposition paralyzed resources of which the liquidator had great need.

On the 28th of February, 1889, there took place between the liquidator and the company of public works and constructions a transaction on the following basis:

1. All accounts without exception between the parties are to be settled by allowing to each of them the sums held by them at the date of the agreement.

2. The parties are to desist from all suits against each other.

3. All previous agreements are revoked.